OFFICIAL RECORD OF PROCEEDINGS

Wednesday, 10 March 1999
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.

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

THE HONOURABLE FRED LI WAH-MING

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

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 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.

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.

THE HONOURABLE FUNG CHI-KIN

DR THE HONOURABLE TANG SIU-TONG, 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

THE HONOURABLE ELSIE LEUNG OI-SIE, 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 GORDON SIU KWING-CHUE, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

MR NICHOLAS NG WING-FUI, J.P.
SECRETARY FOR TRANSPORT

MR DOMINIC WONG SHING-WAH, J.P.
SECRETARY FOR HOUSING

MRS KATHERINE FOK LO SHIU-CHING, J.P.
SECRETARY FOR HEALTH AND WELFARE

MR RAFAEL HUI SI-YAN, G.B.S., J.P.
SECRETARY FOR FINANCIAL SERVICES

MR JOSEPH WONG WING-PING, G.B.S., J.P.
SECRETARY FOR EDUCATION AND MANPOWER

MR KWONG KI-CHI, G.B.S., J.P.
SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING

MISS DENISE YUE CHUNG-YEE, J.P.
SECRETARY FOR THE TREASURY

MR LAM WOON-KWONG, J.P.
SECRETARY FOR THE CIVIL SERVICE

MR BENEDICT KWONG HON-SANG, J.P.
SECRETARY FOR WORKS

MR DAVID LAN HONG-TSUNG, J.P.
SECRETARY FOR HOME AFFAIRS

MRS REGINA IP LAU SUK-YEE, J.P.
SECRETARY FOR SECURITY

MR IAN GRENVILLE CROSS, S.C.
DIRECTOR OF PUBLIC PROSECUTIONS

MS MARIA KWAN SIK-NING, J.P.
SECRETARY FOR ECONOMIC SERVICES

CLERKS IN ATTENDANCE:

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

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

MS PAULINE NG MAN-WAH, ASSISTANT SECRETARY GENERAL

MRS JUSTINA LAM CHENG BO-LING, ASSISTANT 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.
Telecommunication (Amendment) Regulation 1999	58/99
Dangerous Drugs Ordinance (Amendment of Second Schedule) Order 1999	59/99
Dangerous Goods (Consignment by Air) (Safety) Regulations (Amendment of Schedule) Order 1999	60/99
Stamp Duty (Amendment) (No. 2) Ordinance 1998 (33 of 1998) (Commencement) Notice 1999	61/99
Tax Exemption (1997 Tax Year) Order	62/99

Sessional Papers

No. 104	─	The Lord Wilson Heritage Trust Annual Report 1997 - 1998
No. 105	─	Traffic Accident Victims Assistance Fund Annual Report by the Director of Social Welfare Incorporated for the year from 1 April 1997 to 31 March 1998
No. 106	─	Report by the Commissioner of Correctional Services on the Administration of the Correctional Services Department Welfare Fund for the year ended 31 March 1998

Reports

Report of the Bills Committee on Film Censorship (Amendment) Bill 1998

Report of the Bills Committee on District Councils Bill

ORAL ANSWERS TO QUESTIONS

PRESIDENT (in Cantonese): Questions. I would like to remind Members that question time normally does not exceed one and a half hours, with each question being allocated about 12 to 15 minutes. When asking supplementary questions, Members should be as concise as possible. They should not ask more than one question, and should not make statements. To do so would contravene Rule 26 of the Rules of Procedure. After I have called upon a Member to ask a main question, other Members who wish to ask supplementary questions to this question need, in addition to raising their hands, indicate the wish by pressing the "Request-to-Speak" buttons in front of their seats. On the other hand, if a Member wishes to follow up and seek elucidation on an answer, or raise a point or order, please stand up to so indicate and wait for me to call before speaking. I now invite Mr Jasper TSANG to ask the first question.

Year 2000 Information and Readiness Disclosure Act

1. MR JASPER TSANG (in Cantonese): Madam President, in order to promote the exchange of information relating to the Year 2000 problem (commonly called the "millennium Bug") on computer systems among commercial organizations, the United States Congress enacted the "Year 2000 Information and Readiness Disclosure Act" at the end of last year, to exempt these organizations from the legal liabilities that may arise from the disclosure and exchange of such information. In this connection, will the Government inform this Council whether:

(a) it has assessed the impacts of this Act on the Hong Kong merchants having business links with their counterparts in the United States; if so, the details of the assessment; and (b) the relevant authorities have any plan to formulate similar legislation; if not, the reasons for that?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President,

(a) We understand that the Year 2000 Information and Readiness Disclosure Act of the United States is intended to encourage business to share Year 2000 information by limiting the ability of others to use this information against the disclosing party in court actions in the United States. The Act would apply to any business or person involved in a civil action of any kind, including a Hong Kong business or person, arising under United States Federal or United States State law in the United States provided the dispute is related to "Year 2000 Readiness Disclosure and Year 2000 Statement". There is an exception for actions brought by United States regulatory or enforcement authorities. The Act will not, however, affect liability that may arise from failures of systems or devices caused by the Y2K problem. Given the restricted scope of the legislation, its impact on Hong Kong business or person should be minimal. (b) We do not consider legislation is the best means to encourage disclosure of Year 2000 readiness information, for a number of reasons. First, given the limited time for companies or individuals to complete the rectification, testing, and contingency planning work for their systems, we believe priority should be given by them to the rectification work. Second, disclosure legislation along the line of the United States Act will not remove liability for product or service failures as a result of Year 2000 failures. Third, to attempt to introduce such disclosure legislation at this time might have the perverse effect of delaying voluntary disclosure as companies and individuals wait to see the precise scope of protection under that legislation before agreeing to share information on the state of their Year 2000 readiness. (c) We have actively encouraged our essential service providers to adopt voluntary disclosure. So far, 14 organizations providing essential services in the health care, energy supply, social welfare, tertiary education, financial services and telecommunications sectors have done this through their dedicated websites. Also, all listed companies on the Stock Exchange of Hong Kong (SEHK) are required to disclose their Year 200 compliance status in their interim and annual reports.

MR JASPER TSANG (in Cantonese): Madam President, just as the Secretary pointed out in his main reply, the United States legislation mentioned by me in the main question is targeted at court actions arisen from disputes related to the "Year 2000 Readiness Disclosure and Year 2000 Statement". As the Government has decided not to enact similar legislation, has it assessed the extent of similar actions that may arise in Hong Kong and reminded relevant organizations to pay extra attention in disclosing such information?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, the disclosure of Year 2000 information is in fact similar to the disclosure of other information by a commercial organization. This means that if that organization causes damage to certain people or organizations after disclosing some information, the problem thus arising will be taken as commercial disputes. We have already provided some information on the handling of legal problems that may arise from the Y2K problem in our dedicated homepage. If commercial and industrial sectors wish to obtain further information, they may do so by accessing it from our homepage.

MR SIN CHUNG-KAI (in Cantonese): Madam President, will the Securities and Futures Commission (SFC) or SEHK require the listed companies to disclose, in addition to how they handle the Y2K problem in their interim or annual reports, how much capital has been spent on solving the Y2K problem as well as whether they are involved in any disputes arising from the Y2K problem?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, the SEHK has issued a guideline in June last year requiring all listed companies to disclose in their performance reports, annual reports or interim reports information relating to the Y2K problem. The contents of the disclosure should include the following:

1. the criteria for compliance with the Y2K standard according to the understanding of the issuer himself; 2. risks involved in the Y2K problem; 3. the structure of plans for handling the Y2K problem; 4. the rectification plans formulated by the issuer for reducing the potential risks of the Y2K problem at the business operation level; 5. the current work progress; 6. the date of compliance as estimated by the issuer; and 7. the estimated expenses and relevant financial arrangements involved in handling the Y2K problem.

MR GARY CHENG (in Cantonese): Madam President, just now, the Secretary mentioned in paragraph (c) of the main reply that he will actively encourage and remind various organizations. But as the issue at stake involves public interests, relevant organizations will be penalized if they cause damage to other parties. In this connection, will the Administration consider taking compulsory measures to require the organizations to disclose relevant information?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, if the supplementary question raised by the Honourable Gary CHENG is about listed companies, then according to the information we have obtained, all the 672 listed companies throughout the territory have disclosed information regarding the millennium Bug in accordance with the request of the SEHK.

MR GARY CHENG (in Cantonese): Madam President, I was referring to all the other public bodies or even private organizations as this issue directly involves clients using their products or people who have business exchanges with them.

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, we have no intention to make disclosure compulsory. This is because the disclosure of information on the Y2K problem and the disclosure of other information on the products of companies are similarly subject to the relevant commercial contracts.

DR RAYMOND HO (in Cantonese): Madam President, the problem is rather pressing at the moment but we are only taking a comparatively passive approach of giving encouragement. As a result, only 14 organizations have disclosed relevant information when the actual number of organizations involved may be several thousand. Why have only such a small number of organizations disclosed their information? They will not disclose the information if the Government only gives encouragement instead of making it compulsory. To what extent do they need to shoulder the legal liabilities? If the Government relies on encouragement alone and all parties concerned do not take the initiative to disclose information, even if the public, such as energy companies or modes of transport, are affected in future, it will be extremely difficult for the relevant contingency plans to be executed. In this respect, what view does the Secretary hold?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, in fact, many major service providers are also listed companies. Examples are, in the area of telecommunications, Smartone Mobile Communications Limited, Star Telecom Limited, City Telecom, Hongkong Telecom; in the area of energy, China Light and Power Company Limited, Hongkong Electric Company Limited, Towngas; and in the area of transport, Hongkong and Yaumati Ferry Company Limited, Kowloon Motor Bus Company Limited, Citybus Limited and so on. According to the information I provided earlier, these companies have disclosed information on Y2K in accordance with the request of the SEHK.

DR RAYMOND HO (in Cantonese): Madam President, the Secretary has not answered my supplementary question. What I mean is in the circumstances that public interests are involved and the public are affected, since the Government has failed to actively request the relevant organizations to disclose information and the organizations have also failed to act accordingly, what consequences will it lead to if contingency plans really need to be executed while all parties concerned have no idea of what to do? What will the Government do with respect to its concern about this issue?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, this question is related to contingency plans instead of disclosure. Just as I mentioned in the meeting held by the Legislative Council Panel on Information Technology and Broadcasting on 8 March, the Government is now considering an overall contingency plan. We will also report to the Panel when the plan nears maturity.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, in paragraph (a) of the main reply, the Secretary mentioned that the impact of the relevant legislation should be minimal. Will the Secretary inform this Council how minimal the impact is? Secondly, if a member of the public or an organization encounters such a situation, does the Administration have specific measures to help them make their claims?

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung, you should raise only one question in each supplementary question. Can the Secretary give Mr YEUNG a concise answer?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, I thought I have stated the major scope of the legislation in paragraph (a) of the main reply. If Mr YEUNG asks to know the specific scope of the legislation, I can only provide information at another time because we are no expert on United States legislation. Secondly, concerning the lodging of claims, just as I said earlier, problems caused by Y2K should be treated in the same way as problems arising from other commercial disputes. If our local companies encounter any commercial disputes in overseas countries, they should deal with them in accordance with the laws of the countries concerned.

MR CHAN KAM-LAM (in Cantonese): Madam President, it was reported recently that the banking sector intended to reserve more capital at the end of this year to deal with the Y2K problem in case it arises. In the main reply, the Government indicated that legislation was not the best means. It seems that the Government has been asking those organizations to deal with the Y2K problem on their own. May I know how the Government is going to ensure that the Y2K problem will not cause chaos to the commercial and industrial sector, financial sector as well as the Hong Kong economy?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, I have said in the main reply that this is related to the progress of the rectification work in respect of Year 2000 information rather than the contingency issue.

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, computer systems have been widely used by various trades and industries. Given the Y2K problem, various commercial organizations are also faced with different disputes related to the millennium Bug. Will the Secretary inform this Council whether the Government has studied or assessed the possible commercial disputes and claims faced by commercial and industrial organizations in Hong Kong as a result of the Y2K problem?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, as I have indicated repeatedly just now, commercial disputes caused by the Y2K problem should be dealt with in the same manner as other disputes arising in connection with general company administration. We have not studied the issue of disputes caused by the millennium Bug in particular.

MR ALBERT HO (in Cantonese): Madam President, the Secretary indicated in paragraph (c) of the main reply that he would adopt the approach of giving encouragement. When being questioned just now, he also indicated that he had no intention to legislate to require the relevant organizations, including public bodies and service providers, to disclose information. Given the fact that the Government has firmly refused to legislate to make it compulsory for relevant organizations to disclose information, does it mean that, as clients of public bodies, the public have no right to information? Does it infer that the Secretary also share the view that the public have no right to assess the situation so as to formulate a contingency plan they deem essential?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, as far as individual companies are concerned, it is of course up to them to decide whether it is necessary to disclose information on their progress in handling the Y2K problem. But for those essential service providers, the Government has been keeping close contact with them and noted their relevant progress. We have in fact already tabled these progress reports to the Panel on Information Technology and Broadcasting on Monday, and Members have discussed in detail the contents of the reports and agreed that individual important scope of service shall be followed up by the respective panels. Under these circumstances, the public can be kept abreast of the relevant work progress through these panels or the Panel on Information Technology and Broadcasting.

MR ALBERT HO (in Cantonese): Madam President, the core of the supplementary question I raised just now is: If the Government refuses to enact legislation, does it mean that it does not recognize that the public have a quasi-statutory right to some information that should be disclosed?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, if Mr HO asks me whether the public have the right to know in the legal sense, I think I cannot answer his question.

PRESIDENT (in Cantonese): Second question.

Reassessment of Business Plans for Infrastructure Projects

2. MR ERIC LI (in Cantonese): Madam President, in view of the downturn of the economy, the protracted high interest rates as well as the sluggish investment and consumer markets in the territory, will the Government inform this Council whether it has reassessed the business plans, including the expected fees, profitability and debt-repayment ability, in respect of the proposed infrastructure projects, and to compare the results of such assessments with the original estimates; if so, the details of the reassessment; if not, the reasons for it?

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, before the Government decides whether to invest in a major infrastructural project, we will assess its financial viability based on pertinent planning parameters. These may include projections of population growth to be served by the proposed project, the project's capital cost estimates based on preliminary design and engineering site investigation, its operating cost estimates based on past experience where relevant, and its operating revenue estimates based on preliminary fare structure. We will work out the proposed project's internal rate of return (IRR) by comparing the revenue stream over the period of the project's operational life with the initial investment to be made. We will determine whether the derived IRR for the proposed project meets our target rate of return. When the infrastructural project is considered financially viable, we will then evaluate if the project can be funded from the internal resources of the executing entity, from debt to be raised by the executing entity on an assumed trend interest rate, from equity injection by the Government into the executing entity, or different combinations of all of the above. We will hold discussions with the executing entity. When the preferred optimal funding module is formulated, we will seek policy and financial approvals from the Executive and Legislative Councils respectively. The Government has adopted this approach when evaluating various major infrastructural projects, including the just commenced construction of the West Rail Phase I by the Kowloon-Canton Railway Corporation (KCRC) and the Tseung Kwan O Extension by the Mass Transit Railway Corporation (MTRC); and the newly completed Airport Express Link by the MTRC and the new airport by the Airport Authority.

We do not expect the economic downturn which we are experiencing to extend beyond the near term. While we agree that some of the assumptions adopted for the purpose of calculating the individual project IRR may be different from the actual position in the short term, we do not see a need to reassess the target rate of return set for each of the major infrastructural projects which is applicable for the life of the projects which is expected to last at least 40 years. However, we will continue to monitor closely the financial performance of the major completed infrastructural projects. Insofar as the two railway corporations and the Airport Authority are concerned, they have a statutory obligation to operate on prudent commercial principles. Their governing bodies and executive management are responsible for maintaining the financial well-being of their respective entities, including keeping the capital costs of projects under construction under tight control, lowering the operating costs of completed projects where justified, and revising the annual business plans as necessary in order to achieve the target rate of return over a period of time.

MR ERIC LI (in Cantonese): Madam President, in the fourth paragraph of the main reply, the Administration tends to place great emphasis on the assumptions behind the calculation of the IRR. Of course, the IRR may determine when fees should be frozen, but in the original question, I am more concerned about uncompleted projects which are still under planning and their expected fees which are related to the affordability of the public. There may not be many changes in the project rate of return, but the affordability of the public is obviously a far cry from the original estimates. It appears that the Administration has not scaled down projects the construction works of which will continue as planned. I am talking about those projects which are being planned but have not yet completed, such as the final stage of the West Rail project and the Tseung Kwan O Extension project of the MTRC. Since the business plans for those projects have already been made, I would like to know whether the Administration has made any preparations or has any measures to control the construction costs, so that the fare levels of the finished projects will be affordable to the public?

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, the Honourable Eric LI has mentioned two examples, and they are, Phase I of the West Rail project and the Tseung Kwan O Extension project; construction works of these two infrastructural projects has commenced, and the two railway corporations are now tightly controlling their construction costs. For example, the KCRC has done a lot on the design aspect of the project in order to reduce the construction costs of West Rail Phase I as much as possible without affecting the quality of the works. So far, the KCRC has been quite successful in doing so. As regards the Tseung Kwan O Extension, the MTRC's Board of Directors and its senior management are also working on controlling the costs of the project, and to this day, they have achieved great success. Furthermore, I would also like to mention that perhaps it is because Hong Kong is now experiencing an economic downturn, the cost-effectiveness of the contract value of the two railway corporations is very high, with the actual costs of the contracts being far lower than the original cost estimates of the two railway corporations. The differences are actually in favour of the two corporations. In other words, the actual costs of the contracts awarded are far lower than that of the original estimates made by the engineers. This shows that the two railway corporations have actually paid due attention to this issue.

MR NG LEUNG-SING (in Cantonese): As regards the fifth paragraph of the Administration's main reply, I fully agree that the two corporations should operate on prudent commercial principles. However, since Mr Eric LI was asking about the situation in times of economic downturn, I would like to ask the Administration that since the two corporations are asked to operate on prudent commercial principles, will the commencement date for some projects be postponed or will some projects be even cancelled under such circumstances?

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, as of today, as regards the commitments made by the Chief Executive in his 1997-98 policy address, none of the major infrastructural projects mentioned in the policy address has actually been deferred or cancelled. Of course, the Administration is still conducting studies on several major projects, including Phase II of the West Rail project. The Planning Environment and Lands Department and the Transport Department are now carrying out a mid-term review on the transportation and infrastructural need and condition of Hong Kong beyond the year 2010, and up to 2016, and we are now making plans in this respect. Of course, after all, these projects are still at the planning stage and to date, the Administration has not confirmed that these projects will go ahead. In fact, I do not think Members of this Council need to be overly concerned because before the Administration decides to carry out a major infrastructural project, it needs to apply for partial or complete funding from the Finance Committee of the Legislative Council. So, actually before the construction works of these projects can be launched, Members should have adequate time to consider the rate of return for these projects, the affordability of the public, as well as the commitment to be undertaken by the public concerning the financial aspects of these projects. Members will be given the opportunity to carry out discussions on each infrastructural project before such projects are approved.

DR RAYMOND HO (in Cantonese) Madam President, the Secretary said there are no plans to reassess projects which are being planned, but more projects may be underway in the next two or three years, so even the tender prices may now be on the low side, they will go up in the future. On the other hand, the utilization rate of the infrastructural facilities may change as our population grows, and the income generated by such facilities may also be different. Why is that given these two factors, the Secretary is still reluctant to reassess the major projects under planning? Does the Secretary think that this is not the right time for reassessments?

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, perhaps I did not make myself very clear in my explanation. I was talking about projects which have been "launched", and by "launched", I meant projects which have been commenced or completed. Since the operational life of these projects, such as the railway or airport project is usually at least 40 or 50 years, or even more than 50 years, we do not believe that there is a need to regularly reassess the financial condition of such projects because of short-term economic fluctuations. Of course, for those infrastructural projects which are being planned, and that is, in other words, projects which have not been "launched" and which have not yet sought funding approval from the Finance Committee, our application for funding would definitely be based on the latest economic trends.

MR SIN CHUNG-KAI (in Cantonese): Madam President, as regards the new projects, the Administration will certainly base its assessment on the rate of return in accordance with the latest information and data, but I would like to know whether the Administration will keep us informed of projects which were under study or cancelled and, if so, how? For example, it was recently announced that a Disneyland project will be built at Penny's Bay, but Members of this Council might recall that Penny's Bay has already been chosen as the site for the construction of container terminals 10, 11 and 12. Since it would be impossible for two projects to be built on the same site, has the Administration ever, like what Mr Eric LI has suggested, reassessed the rate of return for these projects? Now that the Administration has decided that the site is not suitable for building container terminals after reassessing the situation, it has not informed us through proper channels. So, our question is: How will the Administration do to keep us informed? (Laughter)

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, I will try to answer the Honourable SIN Chung-kai's question specific to his example, and that is, the example of the container terminals. In fact, the Economic Services Bureau will regularly make forecasts on cargo throughputs, and according to the forecast compiled by the Economic Services Bureau several years ago, the volume of exported and imported goods passing through the container terminals will increase annually; and as far as I understand it, the Economic Services Bureau has carried out a review on its forecast during the past one or two year. According to its latest forecast, the growth rate for imports and exports giving through our container terminals has slowed down a great deal, and there has been even no increase at all over the past 12 months. As such, the decision on when private organizations will be invited to bid for project of new container terminals is based on the demand; and if there are changes in the demand, we will adjust our timetable, and that is, the timetable for inviting private organizations to bid for the construction of new terminals, accordingly. I have reasons to believe that the Secretary for Economic Services will regularly report to the relevant panel of the Legislative Council on these issues.

DR LEONG CHE-HUNG (in Cantonese): Madam President, as regards the various infrastructural projects under planning, will the Administration actively consider to privatize some of these projects?

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, I think the prerequisite for such a decision is whether the infrastructural project can be funded by private organizations. For example, the three cross harbour tunnels are directly funded by private organizations and the construction works of Route 3 is also done by the same approach. If we believe that the initial capital investment for a new infrastructural project is very huge and the return period long, and if we also have reasons to believe that no private organizations will be interested in investing in such projects, then we will consider to ask public bodies to undertake these infrastructural projects. In the Budget announced by the Financial Secretary last Wednesday, it was mentioned that we would like to win the support of the public and the Legislative Council to privatize part of the MTRC through a public offer in the next one to two years. I think this would have addressed the concern of Dr LEONG, and that is, if we believe that a public enterprise which is wholly owned by the Government can meet with the requirement for partial privatization, then we will consider to do so.

PRESIDENT (in Cantonese): As we have already spent more than 16 minutes on this question, those Members who would like to raise supplementary questions could take up this issue through other channels. Third question.

Bad and Doubtful Debts of Banks

3. MR FUNG CHI-KIN (in Cantonese): Madam President, it is reported that Standard and Poor's, an international credit rating agency, have forecast that the percentage of bad and doubtful debts against the total amount of loans (referred to as "bad and doubtful debt ratios" below) made by banks in the territory would probably increase to more than 10% this year. In this connection, will the Government inform this Council:

(a) of the quarterly bad and doubtful debt ratios made by banks in the territory during the past two years; in particular, the respective bad and doubtful debt ratios for the categories of industrial and commercial loans and residential property mortgages; how various categories of bad and doubtful debt ratios compare to those of banks in the neighbouring regions or financial centres; and (b) whether it has assessed the impact of the increase in bad and doubtful debts on the sound operation and capital demands of banks, especially the small and medium sized banks; if so, the details of the assessment; whether it will consider raising the amount set in 1989 for the minimum capital requirement on locally-registered banks?

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

(a) There are several commonly adopted definitions of "bad and doubtful debt ratio". One is the ratio of loans overdue for three months and rescheduled loans. A broader definition is the ratio of "classified" loans (that is, loans classified as "substandard", "doubtful" and "loss" under the Hong Kong Monetary Authority's loan classification system). This definition reflects the banks' prudent treatment of bad and doubtful debts, that is, they may classify loans which are not overdue for more than three months. Quarterly statistics on overdue and rescheduled loans ratio and classified loans ratio for local banks in Hong Kong for the period end-March 1997 to end-December 1998 are set out in the attached table. The Hong Kong Monetary Authority (HKMA) does not require banks to submit information on their problem loans by sector. We are therefore unable to provide specific information on the bad and doubtful debt ratios of industrial and commercial loans. For residential property mortgages, the HKMA's survey indicates that the delinquency ratio of residential mortgages loans (defined as mortgages loans which have been overdue for more than three months) increased from 0.29% at end-March 1997 to 0.84% at end-December 1998 and more recently to 0.96% at end-January 1999. While this may appear to be a significant increase, the overall quality of banks' mortgage portfolio remains good. The level of Hong Kong's bad and doubtful debts is generally lower than that in other countries in the region. Singapore's non-performing loan ratio (defined as loans with principal or interest in arrears of three months or more) was 6.6% at end-September 1998 which was higher than Hong Kong's ratio of 3.8%. According to market information, the levels of non-performing loans in the second half of 1998 of the harder-hit countries, for example, Thailand, Indonesia and South Korea in the region were much higher than the level in Hong Kong. It is however difficult to provide specific figures as the definition of non-performing loans is not uniform and comparable in these countries. (b) The sharp rise in provisions for bad and doubtful debts has considerably reduced the profitability of the banking sector. For 1999, it is expected that the difficult operating environment will continue for at least the first half of the year. Bad and doubtful debts will continue to rise and the profitability of local banks (including the small and medium sized ones) will continue to be under pressure. On the other hand, for local banks, the matter is likely to be a profitability issue and not a stability issue given their capital strength. Average capital adequacy ratio of local authorized institutions (including local banks) was 18.6% at end-1998, much higher than the minimum of 8% set by the Basle Committee. This should help to cushion them against the adverse impact of increases in bad and doubtful debts. From a prudential perspective, capital adequacy ratio is a more reliable and meaningful indicator of the degree of safety and soundness of an authorized institution. It shows the adequacy of an authorized institution's financial resources against the credit and market risks in its assets. On the other hand, minimum capital requirement is not directly linked to the risks adhered to an authorized institution's assets. It is therefore considered only as one of the criteria for authorization of local banks. The issue of minimum capital requirement was reviewed in the Hong Kong Banking Sector Consultancy Study (the Study). It was proposed in the Study that the amount of minimum capital for authorized institutions be reconsidered in light of inflation to maintain the effectiveness of the current minimum capital requirement. The HKMA is currently conducting a public consultation on this proposal along with other proposals in the Study until the end of March. The HKMA will take into account comments received when deciding whether to revise the minimum capital requirement on locally incorporated banks.

Table

Bad and doubtful debt ratios of local banks
	Loans overdue for more than three months and rescheduled loans	Classified loans
March 1997	2.40	2.53
June 1997	1.94	2.08
September 1997	1.82	1.94
December 1997	1.81	2.08
March 1998	2.20	2.77
June 1998	2.96	3.69
September 1998	3.81	4.92
December 1998	5.16	7.00

MR FUNG CHI-KIN (in Cantonese): Madam President, although the Secretary said that our average capital adequacy ratio was as high as 18.6%, if on the other hand, the ratio of bad and doubtful debts was high, then a portion of the capital may have already gone. But the Secretary has not given any answer to the question of whether according to his estimates or those of the Government, the ratio of bad and doubtful debts for classified loans will reach two digits, that is, more than 10%, as predicted by international credit rating institutions, given that such a ratio has reached 7% at the end of 1998 and that the outlook for 1999 is bleaker?

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, whether the ratio of bad and doubtful debts will reach two digits may in itself be nothing of much significance, for we must look at the basic strength of the banking system as a whole, in particular the capital adequacy and risk management aspects. I have explained this point in my main reply that the most important thing is whether the capital adequacy ratio is high or low. The Hong Kong economy in 1999 will not be particularly strong, especially in the second half of the year. But if the banks are strong, even if there are bad and doubtful debts, the stability of the banks will not be affected.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, in part (a) of the Secretary's main reply, it is said that the delinquency ratio of residential mortgage loans which are overdue for more than three months has risen sharply from 0.29% at end-March 1997 to 0.96% at end-January 1999. May I ask the Secretary what are the figures for mortgage loans overdue for more than half a year or a year?

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, as I do not have such information at hand, I need to ask the HKMA to see whether such detailed figures exist in the information the banks are required to submit. If so, I would be happy to provide these figures to Mr HUI. (Annex I)

MR SIN CHUNG-KAI (in Cantonese): Madam President, the attached table uses two ways of calculating the bad and doubtful debts ratio. May I ask how much of the bad and doubtful debts come from outside the territory, that is, that such loans are lent to clients outside Hong Kong?

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I would like to apologize again for I do not have any information on this at hand. But I have mentioned in my main reply that from the prudential perspective, the HKMA thinks that the most important thing is to classify the loans. As to whether there is any distinction between overseas and local loans in the data available and in the information submitted, to the best of my knowledge I think there is. However, I do not have the detailed figures with me. I would certainly give a written reply to Mr SIN's supplementary question. (Annex II)

DR TANG SIU-TONG (in Cantonese): Madam President, in part (b) of the Government's main reply, it is said that although bad and doubtful debts will affect the profitability of banks, they will not affect their stability. Should bad and doubtful debts continue to grow, and if the interest rate agreement is to be scrapped in phases by the Government, this will obviously affect the stability of the banks. Does the Government have any solution for this matter?

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, the Study does recommend the abolition of the interest rate agreement, but the HKMA is still collecting views in this aspect. Their position is in line with that of the Government, that is, this is something we should do for the sake of opening up the market and enhancing competitiveness. But that depends mainly on the timing. That means to scrutinize the operating environment to decide whether it is the right thing to do at that time. I think even if the proposal is to be accepted by the HKMA or the Government, prudent considerations will be made to ascertain when is the right time.

MR NG LEUNG-SING (in Cantonese): Madam President, the last paragraph of the main reply says that the public consultation on the Study will finish at the end of March. I would like to ask the Government after the consultation is finished at the end of March, will there be some more in-depth studies to be made in this respect with the banking sector and what key issues will be looked into for solutions?

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I think even if the HKMA has made decisions on some proposals after taking into account views from all parties concerned and having gone through its own internal consultation mechanism, it will still hold discussions and further consultations with the sector. As far as I know, there are some issues which are being widely discussed, including issues as to whether a branch of a bank or a deposit-taking institution can directly participate in the real time gross settlement system and so on. Such issues, I think, would be given a higher priority.

PRESIDENT (in Cantonese): The fourth question.

Council of International Advisers Meeting

4. MR NG LEUNG-SING (in Cantonese): Regarding the meeting of the Council of International Advisers (CIA) held in Hong Kong on 20 January this year, will the Government inform this Council whether:

(a) it has assessed the effectiveness of this meeting and reviewed if there are areas in need of improvement; if so, the details of the assessment; (b) it will consider formulating detailed and definite themes and agendas prior to holding such meetings in future; if not, the reasons for that; and (c) it has considered extending the exchanges of information and opinions with these international advisers beyond the span of the meetings; if so, the specific plans; if not, the reason for that?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President,

(a) The Chief Executive considers the first meeting of the CIA held on 20 January very useful and productive. The international advisers provided insightful perspectives on the economic prospects in the United States, Europe and Japan and their potential impact on Hong Kong. They tendered useful advice on the measures that Hong Kong should take to enhance its role as an international financial centre and a premier international city in Asia. The meeting also enhanced the advisers' understanding of the Government's vision and strategy for the long-term development of Hong Kong, and as a result boosted their confidence in Hong Kong. The Government hopes that these international business and corporate leaders would act as Hong Kong's "ambassadors" to tell the world the Hong Kong story. Moreover, the advisers' endorsement of the road map the Government had charted for Hong Kong's long-term development strengthened the Government's resolve to make its way forward. (b) The first meeting of the CIA had clear and concrete themes and topics for discussion. The main items discussed were as follows: (i) Asia's adjustment to the financial turmoil; (ii) improving Hong Kong's competitiveness; and

(iii) the long-term development strategy for Hong Kong.

We shall also formulate clear and concrete agendas for future CIA meetings. (c) When necessary, the Chief Executive will exchange views with the international advisers outside CIA meetings, such as consulting them through correspondence on specific issues. The Government will also send to the advisers reference material about Hong Kong. For instance, the Budget published by the Financial Secretary last week has been sent to each member of the CIA. If these advisers visit Hong Kong outside CIA meetings, the Chief Executive may set up meetings with them to exchange views.

MR NG LEUNG-SING (in Cantonese): Madam President, I strongly support this splendid idea. The meeting of the CIA has attracted much public attention and the Government has also briefed the relevant panel of this Council. I am grateful to the Secretary for providing further information to us today. Still I would like to ask a supplementary question about the issue. In paragraph (a) of the main reply, the Government mentioned that the international advisers provided insightful perspectives on the economic prospects of Europe, the United States and Japan and their potential impact on Hong Kong. They have also advised on the measures that Hong Kong should take. Can the Government further elaborate whether the advisers have highlighted any internal unfavourable factors in Hong Kong's business environment and advised on the solutions?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, Mr NG has actually put a multi-barrelled supplementary. Perhaps I have to repeat what the international advisers had said during the six-hour meeting. In fact, as Mr NG already pointed out, the issue has been fully discussed at the meeting of the Panel on Financial Affairs on last Monday, 1 March. We also tabled a document at the meeting and our discussion lasted for more than an hour. But I would try my best to answer Mr NG's supplementary question.

First, advisers from Europe, the United States and Japan on the whole tended to be very cautious in assessing the economic development of Europe and the United States this year because, in their opinion, there might be some uncertainties. Although the United States economy has performed quite well over the past few years, yet it would face certain constraints. Concerning Japan, although the Japanese Government has time and again implemented rescue packages, including a couple of those last year, to stimulate the economy, they hoped that the Japanese Government would have the greatest determination this time to revive the economy and restore economic growth. Only by doing so will the East Asian regions and countries, which have been seriously hit by the financial turmoil, see a better chance to revive their economies.

Measures proposed by the advisers can be summarized as follows. In their opinion, Hong Kong should strive for four objectives in order to maintain and enhance its role as an international financial centre: first, to maintain the stability of our financial and banking sectors; second, to further improve our regulatory regime in order to keep it abreast of the latest international standards; third, to improve our financial framework with well-trained and adaptive people and advanced information technology; fourth, to further develop our financial markets, especially the bonds market. They had also expressed their views on the long-term development of Hong Kong. They appreciated the Chief Executive's resolve to maintain Hong Kong's position as an international financial centre and a premier international city in Asia. They were also of the view that the economic development in mainland China and the ever increasing close co-operation between the Mainland and Hong Kong will bring a lot of opportunities to the territory. In order to sustain Hong Kong's long-term development, the CIA suggested that Hong Kong give full play to its existing advantages as far as possible. These include: first, to ensure sufficient supervision on the financial markets; second, to enhance Hong Kong's appeal to tourists by developing new recreational and cultural facilities in particular; third, to increase value added by improving the quality of Hong Kong products and services, and to establish the status of Hong Kong brands in international markets. The advisers agreed that Hong Kong should expand its economic base, with respect to technology and innovation in particular. To attain this goal, Hong Kong, in their opinion, should devote itself to the development of quality education and attract professionals from overseas, which certainly include those from the Mainland.

The advisers also pointed out that publicity should be stepped up in major overseas markets in order to effectively promote Hong Kong's good image. As far as Hong Kong's internal business environment is concerned, they are of the view that asset costs in Hong Kong in the past were too high. They noted the slump of Hong Kong's property market and a further drop in rentals during the past 10 months or so since the financial turmoil hit the territory in October 1997. Compared with the past, Hong Kong's competitiveness in this aspect has increased. But they reckoned that salaries in Hong Kong were still on the high side. Although they noted that wages were cut and new recruits got lower salaries over the past 10 months or so, they still felt that salaries were on the high side. They, being entrepreneurs and businessmen, would certainly not advise the Government on specific issues, such as how to further lower the salary level. They only pointed out these problems from a macro perspective.

DR LUI MING-WAH (in Cantonese): Madam President, it is an excellent idea for the Chief Executive to invite these renowned international business leaders to give advice to Hong Kong. But apart from getting their confirmation of the ways Hong Kong has currently adopted and increasing Hong Kong's international reputation, have these advisers suggested any advice and solution to economic problems which are new or never mentioned by Hong Kong people?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, Hong Kong people are so smart, Hong Kong businessmen have very good business acumen and Hong Kong politicians are forward-looking. I believe they already know the crux of the problem. They have also put forth various proposals, although some of them are contradictory to each other. Although these dozen of international advisers are prominent people, helmsmen of the biggest enterprises in the world, I think it is difficult to expect them to come up, within just six hours, with ideas which are beyond the wisdom of Hong Kong people. So, Dr LUI might find my reply disappointing. Despite that, that the Chief Executive has managed to invite these prominent entrepreneurs from different industries in the world to advise on Hong Kong affairs is in itself highly commendable. As I said earlier, they have gained an improved understanding of Hong Kong. They may provide free publicity for Hong Kong when they serve as advisers for other countries if the opportunity presents itself in the future. From this perspective, I think it is very worthwhile.

PRESIDENT (in Cantonese): Dr LUI Ming-wah, which part of your question has not been answered?

DR LUI MING-WAH (in Cantonese): Madam President, the Secretary said that none of their ideas has never been mentioned by Hong Kong people. Is that a waste of public fund then?

PRESIDENT (in Cantonese): Dr LUI, if you want to ask another supplementary question, you have to wait for your turn again because many Members are waiting for theirs, and I have to let them ask questions as soon as possible.

MR LEE KAI-MING (in Cantonese): Madam President, in part (a) of his reply, the Secretary said that the meeting had enhanced the advisers' understanding of Hong Kong, and as a result boosted their confidence in Hong Kong. If these advisers, some of whom are entrepreneurs and bankers, really have more confidence in Hong Kong, how much has the investment in Hong Kong increased after they left? Have the German bankers, for instance, come back to invest in Hong Kong?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I do not think we should evaluate the effectiveness of the CIA from this perspective. As a matter of fact, some of these advisers have already set up subsidiary companies to run business in Hong Kong. So, we cannot say whether these dozen of entrepreneurs would increase their investment in Hong Kong or whether their home countries would increase investment in Hong Kong after the meeting. I think we absolutely should not evaluate the effectiveness of the CIA in this way. Let me reiterate the point that we just have to spend only about $1 million a year on inviting a dozen of prominent entrepreneurs to Hong Kong to study Hong Kong's long-term development with us and offer their views on our current direction of development. I think this is very important to us, especially when we in Hong Kong hear everyday from the media the criticism by Councillors, members of the public and the journalists that the government officials are brainless and so on. Our success in inviting outside people, particularly those prominent entrepreneurs who appreciate and show a positive attitude towards our work, has boosted our morale and especially the Chief Executive's.

MR LEE KAI-MING (in Cantonese): Madam President, in his reply, the Secretary said that the advisers' confidence in Hong Kong had been boosted. I hope the Secretary can cite some examples to illustrate how their confidence in Hong Kong has been boosted. For instance, their investment in Hong Kong has been increased or the credit rating of Hong Kong has been upgraded. We do not have the least inkling of this aspect.

PRESIDENT (in Cantonese): Secretary, do you have anything to add?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, this kind of advisory councils are in fact not uncommon in the world and Hong Kong people are just fussy about it. For instance, many big multinational corporations have taken the initiative to appoint international advisory bodies of the same functions. These bodies do not advise these corporations how to run their businesses or make investments in them. I do not want to repeat this point as I have just elaborated on it. As far as a country or a government is concerned, we are actually learning from Shanghai. More than 10 years ago when Premier ZHU Rongji was still the mayor or the secretary of municipal Party committee of Shanghai, an international council similar to Hong Kong's had already been set up there. Some of its members are now serving on our CIA. China is a big country in the world and Shanghai is a major municipality directly under the Central Government of China. Since the secretary of municipal Party committee, the mayor of Shanghai, found it useful, we should not nitpick on our CIA.

PRESIDENT (in Cantonese): Honourable Members, although we have spent more than 15 minutes on this question, there are still many Members waiting for their turn. I would allow two more supplementary questions from Members.

MR MA FUNG-KWOK (in Cantonese): Madam President, after hearing the Secretary's reply, I wonder if I should ask my supplementary question since the CIA is public relations-oriented, according to the Secretary's reply. The supplementary question I originally intended to ask is: With these advisers on hand, will the Government formulate agendas on specific policies in the future according to their professional knowledge and specialities? For instance, as we have more than 10 advisers, will the Government ask them questions specific to their expertise? But after hearing his reply, I wonder whether the Secretary still needs to answer my question.

PRESIDENT (in Cantonese): In that case, do you think it is necessary to put your supplementary question? If not, I will invite other Member to ask his question.

MR MA FUNG-KWOK (in Cantonese): I hope the Secretary can answer my question.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, the answer is in the negative. The reason is very simple. The CIA is macro in its functions, tendering us advice from an international perspective. We have sought their advice on our development direction without specific reference to their respective speciality or trade. Since members of the CIA are all very busy, to have them visiting Hong Kong annually is a real treasure to us. We should not think that they should do something for us simply because we have spent tens of thousands of dollars on their air passage. As a matter of fact, some of them even own private jets, but they did not ask for reimbursement of the expenses incurred on the trip to Hong Kong. We should not be so narrow-minded, thinking that we have to get our money's worth from their appointment.

MISS CYD HO (in Cantonese): Madam President, I notice that there is a Mr Jerome MONOD, Chairman of the Supervisory Board of Suex Lyonnaise des Eaux, on the CIA. It happened that in the recently published Budget, there is mention of the privatization of the Water Supplies Department. Will the Government consult Mr MONOD about the privatization of water supply services inside or outside the meeting? If his advice is adopted and Hong Kong benefits from it, will the Government adopt some special measures to demonstrate to the public that there is no conflict of roles or interests between the adviser and the privatization of water supply services?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I can tell Miss HO that we have not asked any adviser about such trivial or micro issue inside or outside the meeting. And there is no question of conflict of interests at all.

PRESIDENT (in Cantonese): Fifth question.

Prevention of the Abuse of "Viagra"

5. MR MICHAEL HO (in Cantonese): Regarding the prevention of the abuse of the anti-impotence drug "Viagra", will the Government inform this Council of:

(a) the measures in place to ensure that the drug which is routed through Hong Kong for re-export purpose will not be sold in the territory;

(b) the number of prosecutions against the operators of pharmacies and drugstores for selling the drug illegally since its coming into existence; and

(c) the measures taken to tackle the problem of the drug being casually prescribed by some private medical practitioners without regard to the condition of patients, and to educate the public not to abuse the drug?

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

(a) pharmaceutical products for local sale or distribution must be registered with the Pharmacy and Poisons Board under the Pharmacy and Poisons Ordinance. Some pharmaceutical products are imported into Hong Kong under the condition that they are for re-export purpose only. They cannot be sold locally. Inspectors of the Department of Health have been carrying out inspection against sale of such kinds of pharmaceutical products. Prosecution will be initiated against illegal possession and transactions of them. Such inspections have been stepped up. The Pharmacy and Poisons Board is also consulting the relevant government departments on mechanisms to further strengthen the control on pharmaceutical products for re-export only. For example, a re-exporter may be required to apply for the corresponding export licence at the same time when he applies for an import licence for importing pharmaceutical products which are for re-export purpose. This facilitates checking and investigation by the relevant authorities.

(b) The Department of Health has conducted 261 test purchases on illegal sale of Viagra by drug retailers. One dispensary has been convicted for the illegal possession of Viagra before its registration was approved and was fined $5,000. Prosecution proceedings have been initiated against five other retailers on illegal sale and possession of Viagra.

(c) Medical practitioners are expected to maintain a high standard of professional conduct and integrity in providing proper treatment to patients. Any complaints or information received relating to improper prescription of Viagra by doctors will be referred to the Medical Council of Hong Kong. The Council may initiate disciplinary proceedings on professional misconduct against such doctors. The Department of Health has been advising the public through the media about the proper use of drugs such as Viagra. The highlight of the health education hotline of the Department in March is "Never abuse sex drugs". Moreover, information on Viagra has been incorporated into the Department's drug information hotline.

MR MICHAEL HO (in Cantonese): Madam President, since the appearance of the drug on the Hong Kong market, it has been extensively reported that some pharmacies, drugstores or medical practitioners have been prescribing the drug casually without clearly assessing the condition of patients. Will the Government inform this Council of the distinction between its present policies toward the illegal sale of drugs in pharmacies or drugstores and the illegal sale in disguise of drugs in doctors' clinics? What are the reasons behind the distinction?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, the illegal sale of drugs is definitely against the law, therefore the Department of Health will initiate prosecutions accordingly. In part (b) of the main reply, I have already said that many test purchases have been conducted. Wherever the drug is sold, it is against the law as long as the drug is not registered. If a doctor inappropriately prescribes drugs, including Viagra, in his clinic and members of the public lodge complaints, we will refer the case to the Medical Council of Hong Kong. After investigation, the Council may consider penalizing the doctor for professional misconduct.

MR MICHAEL HO (in Cantonese): Madam President, the Secretary has not answered part of my supplementary question. Madam President, I asked what the differences there are between the Government's present policies toward pharmacies or drugstores and medical practitioners, and why there are such differences. The Secretary replied just now that test purchases have been conducted in pharmacies and drugstores and prosecution will be instituted against drug retailers if evidences are found, whereas medical practitioners have to undergo disciplinary hearing in the same circumstances. However, the Secretary has not explained why there is such a difference.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): The sale of unregistered drugs is a violation of the Pharmacy and Poisons Ordinance and therefore is against the law. If a medical practitioner prescribes inappropriate treatment in a private clinic, it belongs to professional conduct which should be handled by the Medical Council of Hong Kong. This is the difference in terms of policy and the difference exists because the former conduct is against the law and the latter professional misconduct.

DR LEONG CHE-HUNG (in Cantonese): Madam President, in part (b) of the Government's main reply, it is said that a total of 261 test purchases have been conducted because of one single drug. For the sake of public safety, it is of course a good thing. But does the Government adopt the same proactive attitude by conducting test purchases on other drugs? If so, how is the manpower deployed? If not, will other drugs be neglected if so much manpower is put on one drug?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, we will inspect pharmacies and drugstores when necessary and in response to complaints lodged and information provided by the public. We will not stop conducting test purchases on other drugs because of the action taken against one single drug.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, the Secretary's reply shows that the Government's action is mainly directed against drug retailers such as pharmacies but not doctors. It is reported that, in certain clinics, a person does not even need to see the doctor; he can get a doctor's prescription by merely paying $150, he can then go buy Viagra from any pharmacy on power of that prescription. Is this not legalizing the illegal sale of Viagra? Is the Government aware of this situation? Has the Government done anything against these clinics to check the spread of this trend?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): It is inappropriate for a doctor to sell this drug without making a prescription. If we receive such a complaint, we will definitely deal with it. However, it is professional misconduct if a doctor writes out an inappropriate prescription.

MR LAW CHI-KWONG (in Cantonese): Madam President, both the Honourable Michael HO and CHEUNG Man-kwong said that it is a matter of misconduct. I have also read in newspapers about a medical practitioner who, after prescribing two Viagra pills, told the undercover reporters that the pills might as well be taken as a medicine for stomach-ache. So, behind the issue of misconduct I think actually lurks a very grave problem, that is, the drug prescribed may be an unregistered drug. Under such circumstances, will the Government carry out investigations? In fact, other than a problem of integrity, this may also be an offence in law. Is it the case that even when a medical practitioner violates the law, he is only answerable to his professional body and the Government would just brush the matter aside?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, no unregistered drug can be sold in Hong Kong. If there is evidence, we will definitely initiate prosecution no matter where the drug is being sold.

MR FRED LI (in Cantonese): Madam President, I would also like to follow up on the issue about medical practitioners. Madam President, last week bills which read "tonic for men" were found posted outside certain clinics. This one here reads "aphrodisiac for men". Such bills are also found in some registered medical practitioners' clinics. While the Government conducts test purchases in pharmacies, should it not also conduct test purchases in those clinics outside which promotional bills are found openly posted to see if the drug can be bought when it should not be made available so easily?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, we have not done so in the past, but I will ask the Department of Health to thoroughly consider all feasible methods and what can and cannot be done in terms of action. We will give thought to the issue.

MR SIN CHUNG-KAI (in Cantonese): Madam President, the Secretary's main reply has mentioned pharmaceutical products for re-export purpose, but these may be sold locally without being re-exported. Is this practice illegal? If so, why do other government departments have to be consulted? Why actions are not taken to plug the loophole?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): It is not illegal to import pharmaceutical products for re-export purpose and the merchants concerned must have an import licence and an export licence for doing so. Such licences are issued in accordance with the Import and Export Ordinance. However, we have discovered that certain pharmaceutical products for re-export purpose have entered Hong Kong without being re-exported and are sold illegally in the territory, which is an illegal act. We are now considering if there are better methods to plug this loophole. For example, a re-exporter may be required to apply for the corresponding export licence at the same time when he applies for an import licence, so that we can follow up more easily. For implementation, we have to co-ordinate with other government departments such as the Customs and Excise Department and the Trade Department, therefore we have to consult them. We hope re-exporters will not import pharmaceutical products by falsely claiming that they are for re-export purpose and yet in reality sell them in Hong Kong.

MR MICHAEL HO (in Cantonese): Madam President, just now when the Secretary answered a question about test purchase in private clinics, she said that she would ask the Department of Health to thoroughly consider the matter. Does that mean the Government has never considered doing so before? Why has it not considered doing so to date?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I said that we are not doing so at the moment, but as to whether we have considered doing so, I believe that we definitely have. However, we have to give thoughts to more situations because the present situation is new. Regarding the ways to deal with private clinics, while it is very easy for us to conduct test purchases in pharmacies, the circumstances of clinics are completely different and so we have to think carefully about feasible methods.

DR LEONG CHE-HUNG (in Cantonese): Madam President, I would like the Government to clarify one point. If a doctor posts those promotional bills outside his clinic as described by the Honourable Fred LI earlier, does the Medical Council of Hong Kong have the power to ask the police to conduct investigation immediately? If the Medical Council has such power, is it the present practice?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, if a medical practitioner sells a drug without prescription or sells unregistered drugs, it is already an offence in law against which we can initiate prosecution.

PRESIDENT (in Cantonese): Last oral question.

Rehousing of Bedspace Apartment Lodgers

6. MR JAMES TO (in Cantonese): Madam President, regarding the rehousing of lodgers of bedspace apartments (commonly known as "cage homes") which have ceased operation, will the Government inform this Council:

(a) whether it is aware of the present living conditions of lodgers whose cage homes were registered under the Bedspace Apartments Ordinance (Cap. 477) last year but have now ceased operation; among the lodgers, the respective numbers of households who are now living in private rental housing, paying higher rents than that when living in cage homes, and having two or more family members; (b) of the present occupancy rate of the singleton hostel at Shun Ning Road; whether all units of the hostel are now open for accommodation application by eligible applicants; if not, the expected date when all units will be open for application; and (c) whether it has estimated the respective numbers of cage homes that cannot have their licences renewed in March next year due to the failure to complete the building alteration works stipulated by the Administration and the household therein; and the plans in place to rehouse the households concerned?

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, my answer to the question is as follows:

(a) The Bedspace Apartments Ordinance was introduced in 1994 to implement a statutory licensing scheme to regulate the fire and building safety of bedspace apartments. After enactment of the Ordinance, we implemented a long exemption period for the bedspace apartment operators to carry out the required building and fire safety improvement works for compliance with the safety requirements under the Ordinance to apply for licences. The exemption ended on 30 June 1998. Thereafter, all bedspace apartments must obtain licences for operation. It is an offence to operate a bedspace apartment without licence. To date, the Office of the Licensing Authority of the Home Affairs Department (HAD) has issued licences to 66 bedspace apartments with about 1 200 lodgers living therein. In addition, 29 bedspace apartments with about 550 lodgers did not comply with the fire and building safety requirement under the Ordinance. As a result, the operators did not wish or could not obtain licences for operation after the exemption period expired in mid-1998. Staff of the HAD visited all of these bedspace apartments and offered assistance to the displaced lodgers. 124 of them have accepted the HAD's offer to move to the HAD's singleton hostels. The monthly rental ranges from $430 to $1,500 as hostels vary. Another 44 lodgers have moved into public housing through the Social Welfare Department's compassionate rehousing scheme. The remaining lodgers chose to arrange accommodation themselves. I regret that we do not have records of their existing living conditions, the rent they are paying and the number of lodgers who have family members. (b) The Sunrise House in Shun Ning Road, Sham Shui Po, commenced operation in September 1998. This is the HAD's first multi-storey singleton hostel to rehouse the displaced bedspace apartment lodgers as a result of the implementation of the Bedspace Apartments Ordinance. There are 310 single person rooms. At present, the number of occupants is 121 and the occupancy rate is 39%. All rooms in Sunrise House are now for accommodation application by eligible persons. I wish to take this opportunity to explain that Sunrise House and other HAD singleton hostels are for the purpose of accommodating those bedspace apartment lodgers displaced by the implementation of the statutory licensing scheme. These singleton hostels are not part of the public housing programme and we do not intend to allow non-bedspace apartment lodgers to apply for accommodation. (c) Of the 66 licensed bedspace apartments, the operators of 35 apartments are required, under the respective licences, to carry out the required improvement works. Otherwise, their licences will not be renewed upon expiry in June 1999. From inspection by the Office of the Licensing Authority, most of these bedspace apartments have commenced the improvement works. The Licensing Authority is monitoring the remaining bedspace apartments and has requested the operators to commence the works as soon as possible and complete the works according to the schedules for licence renewal. At this stage, we cannot accurately estimate the number of bedspace apartments the licences of which will not be renewed due to the non-completion of the required improvement works. I wish to reiterate that lodgers below 60 years old may apply for accommodation in the HAD's singleton hostels. We have now some 440 unoccupied spaces which should be adequate to accommodate the displaced lodgers. Those lodgers aged 60 or above, or those with medical and health needs, may apply admission into the Social Welfare Department's welfare institutions, or into public housing through the compassionate rehousing scheme. The lodgers may also apply for public housing through the normal channel.

We will continue to implement the Bedspace Apartments Ordinance to regulate the safety of bedspace apartments. Those lodgers displaced by the implementation of the statutory licensing scheme will be offered rehousing.

MR JAMES TO (in Cantonese): Madam President, according to part (b) of the main reply, the current occupancy rate at Sunrise House in Shun Ning Road is only 39%, while part (a) mentioned that 550 persons had to move out of the non-compliant bedspace apartments, with only 100 or so of whom having settled in singleton hostels. Has the Government looked into the reasons for such a low occupancy rate at Sunrise House? Has it asked these persons as to whether they are now living in other bedspace apartments? Does the Government think that these persons' views can help to improve the situation at Sunrise House, so that eligible persons can move in?

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, just as I have said in my main reply, it is true that only 120 or so persons have accepted the arrangement to move to singleton hostels and some have turned down our rehousing offer in favour of accommodation in private buildings. In view of this, we have made no follow-up to ascertain their reasons for rejecting our rehousing offer. After all, Hong Kong is a free society. We will follow up only if they have run into difficulties and asked for help. In fact, facilities at Sunrise House are good. Of course, some people might find its conditions unsatisfactory as they are required to pay rents punctually and keep the place clean, in addition to many other restrictions, for example, pets are not allowed and smoking is forbidden. Some people might not find such restrictions acceptable. But these restrictions are imposed for the safety and comfort of those who live in the hostels.

MR JAMES TO (in Cantonese): Madam President, I was asking whether the Government had consulted those persons who had chosen not to move to singleton hostels and whether it considered their opinions could be useful to improving the occupancy rate of singleton hostels. The Secretary said in his reply just now that some people might have refused to move to singleton hostels due to some restrictions, for example, the ban on keeping pets and smoking. But the Government can in fact ask them whether they have refused to move to singleton hostels simply because of such restrictions. If this is the case, a better compromise can be reached. Or they may have refused to move to singleton hostels due to other reasons.

PRESIDENT (in Cantonese): Mr TO, as far as I can remember, your question was: Has the Administration asked those who have refused to move to singleton hostels for their reasons of turning down the offer?

MR JAMES TO (in Cantonese): I think those opinions should be helpful.

PRESIDENT (in Cantonese): Secretary, do you have anything to add?

SECRETARY FOR HOME AFFAIRS (in Cantonese): To our knowledge, no one has pointed out any major problems with Sunrise House. We therefore do not see the need to conduct an investigation. I do not think that we should waste our time on an investigation unless people from the relevant district have expressed serious concern about this matter or have serious reservations about the restrictions we have imposed. In fact, both the HAD and the Home Affairs Bureau have a heavy workload. Only when people from the relevant district see such a need will we consider launching an investigation.

PRESIDENT (in Cantonese): As quite a number of Members are waiting for their turns to raise supplementaries, I hope Members will be as concise as possible with their supplementaries so that more Members can ask questions.

MR LAU CHIN-SHEK (in Cantonese): Now that the Government has allocated the resources, we very much hope that they will be used by those who need them. I think that such a high vacancy rate in the singleton hostels is a major cause for concern. The Secretary seemed to be unwilling to do something to find out the real reasons in his answer to Mr James TO's question. In fact, the restrictions imposed by the Government on occupants of singleton hostels are an infringement of their privacy and private space. Has the Government ever considered converting those vacant hostels into independent rooms rather than bedspaces in order to optimize the utilization of these resources?

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, both the Home Affairs Bureau and the HAD, as I have made it very clearly just now, do not intend to take over the responsibility for providing public housing. These hostels are reserved for a special purpose, and that is, as we have promised, to rehouse those cage home lodgers displaced as a result of the operators of their cage homes failing to obtain a licence after registration. Therefore, this is a special task for us. The licences of some cage homes will be subject to renewal in June this year, and if they have to cease operation due to their failure to complete the required improvement works, we will take care of their lodgers. We do not plan to make these hostel places available as public housing.

PRESIDENT (in Cantonese): Mr LAU Chin-shek, which part of your question has not been answered? Please point out only that part.

MR LAU CHIN-SHEK (in Cantonese): The Secretary has failed to say whether those restrictions will be reviewed, for they are a real problem.

SECRETARY FOR HOME AFFAIRS (in Cantonese): If people in the relevant district are concerned about those restrictions, I will have further discussions with my colleagues. If they feel that those restrictions are a real cause for concern, then we can discuss them again.

MR JASPER TSANG (in Cantonese): Madam President, apart from the 66 licensed bedspace apartments and the 29 bedspace apartments which must cease operation, is the Government aware of the possible existence of a large number of unregistered bedspace apartments which have yet to be discovered? Has the Government taken active measures to find out such bedspace apartments and take actions as appropriate?

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, I would like to say something in this respect. Hong Kong people's housing problem has long been a cause of concern in the community. In the past, a large number of people were said to be living in cage homes. Some social workers even claimed that some 10 000 people lived in cage homes unknown to the Government. However, we have found after investigation that many of them are not cage homes per se but cramped partitioned rooms. Mr Jasper TSANG said just now that some cage homes might have remained unknown. We have followed this up with social workers and people from all walks of life. Recently, we also felt there was a need to carry out an investigation into the number of such unknown cage homes. If it turns out to be the case, we will follow it up.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, the singleton hostels provided by the HAD have long been the subject of criticism. Many Honourable colleagues said just now that the management and regulation of these hostels were overly strict, and their rents too high, hence discouraging some singletons from seeking accommodation there and leaving the hostels vacant for a long time. If this is the case, will the Government tolerate it? Many singletons have asked whether they can be given an opportunity to hold joint meetings with the hostel management on how to improve their management. Why does the HAD not organize such meetings so that these singletons can sit down and talk with the management companies with a view to making improvements in this respect?

SECRETARY FOR HOME AFFAIRS (in Cantonese): It is the job for both the HAD and the Home Affairs Bureau to communicate and talk with people. We are more than happy to talk. However, we must be careful in interpreting the meaning of expensive rents, for all singleton hostels under the HAD are non-profit-making, with most of them being managed by the Salvation Army or other non-profit-making organizations. With regard to rents, I understand that the rents at Sunrise House range from $900 to $1,500. Some other hostels rented by the Government charge lower rents. As I have said earlier, the rents in some hostels cost as little as $400 something. If some people think that some of the restrictions are too harsh and hope to talk with us, we are more than happy to do so. Nevertheless, I wish to point out that occupants need to pay rents at reasonable levels if we are to have good management of, and a tidy and clean environment in the hostels. As to whether some restrictions, such as those forbidding the causing of nuisance to other lodgers and gambling, are overly strict, this is a matter of opinion. Some people may find the ban on playing mahjong too harsh. But they are living in a singleton hostel instead of a unit on his own, hence playing mahjong poses a genuine nuisance to others. It is therefore difficult to solve these problems in a few words. However, we are ready to talk to them if they so wish.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung, the last supplementary. Please only raise the part you want to follow up. We have already spent 21 minutes on this question. Please make it quick.

MR LEUNG YIU-CHUNG (in Cantonese): I understand, Madam President. The Secretary has not said whether the Government will tolerate the continued vacancy of these hostels?

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, these vacant hostels do serve a special purpose, and that is, to rehouse displaced cage home lodgers. In this connection, we still have a lot of work to do, for example, one of the most urgent tasks concerns the renewal of the licences of some bedspace apartments in June this year. If they fail to meet our requirements, then we will prosecute them and they will close down. We must rehouse their lodgers as promised. Therefore, I do not think that these hostels will be vacant for a long time.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, I do appreciate the difficulties encountered by the Government in handling the cage home problem. But now it is very clear that, of the more than 500 lodgers, very few have chosen to move to the hostels. I very much hope the Government will understand that these people's wish to have a better living environment. Why has the Government failed to do a better job since last year? As very few people have moved to the hostels, the rest of them are apparently living in other places where the conditions could be worse. Why has the Government not made more efforts to solve this problem?

SECRETARY FOR HOME AFFAIRS (in Cantonese): We will continue to try our best to facilitate those who are eligible to move to the HAD singleton hostels. I can undertake to raise this matter for detailed discussions when I have a meeting next Tuesday with the Director of Home Affairs and my colleagues.

WRITTEN ANSWERS TO QUESTIONS

Construction Works of the West Rail

7. MR ALBERT HO (in Chinese): With regard to the construction of the West Rail (Phase I), will the Government inform this Council:

(a) whether it knows:

(i) the progress of land resumption at present; how it compares with the original schedule; if there is any delay, how far it is behind schedule and the reasons for that; (ii) if there is any delay in the construction works; if so, the details of the delayed items and the time delayed; and (b) whether it has assessed if the Tsuen Wan - Yuen Long section and the Yuen Long - Tuen Mun section of the West Rail will be completed by the end of 2002 and 2003 respectively as scheduled?

SECRETARY FOR TRANSPORT (in Chinese): Madam President, following authorization of the railway scheme by the Executive Council in September 1998, land resumption work for the implementation of the West Rail (Phase I) has commenced. The first phase of the land resumption, which involves about 83 hectares of private land in Yuen Long and Tuen Mun, is progressing on schedule to meet the land take requirements of the West Rail (Phase I) project. The first physical clearance was completed on 4 February, and the land handed over to the Kowloon-Canton Railway Corporation (KCRC) immediately for construction to start. Further clearance will be carried out in the next few months.

Railway construction also commenced in September 1998. Of the 17 civil construction and 20 electrical and mechanical contracts, the construction contracts for the Tai Lam Tunnel and Kwai Tsing Tunnel have been awarded and majority of the remaining ones, including all 15 construction contracts, are expected to be awarded later this year. There has been no slippage in the West Rail (Phase I) project and so far, all major programme activities, including construction and land resumption, have been achieved either on target or ahead of target. The KCRC is confident that the West Rail (Phase I) will be completed and commence operation by the end of 2003 in accordance with the project agreement. Originally, it was planned that the West Rail (Phase I) would be completed in phases. After reviewing its construction programme against the land resumption and pre-commissioning test requirements, the KCRC has decided that the entire West Rail (Phase I) will be more efficiently completed and commissioned at the end of 2003 in one go rather than in phases.

Application for Conversion or Extension of School Premises

8. DR TANG SIU-TONG (in Chinese): Will the Government inform this Council:

(a) of the application, vetting and approving procedures for the conversion or extension of the school premises of government and aided secondary and primary schools at present; (b) whether the relevant authorities have set a quota on the number of such applications to be approved every year; (c) of the total number of such applications received in the past three years, the reasons for the applications and the amount of money applied for, the time required by the relevant authorities for vetting and approving the applications, the amount of grants made, and the conditions imposed in giving approval; and (d) whether the relevant authorities have taken the initiative to check if the secondary and primary schools have converted or extended their premises without authorization; if so, the number of such cases discovered by the relevant authorities and the follow-up measures taken by them in the past three years; if not, the reasons for that?

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

(a) (i) Conversion or extension works for school premises of government secondary and primary schools The application, vetting and approval procedures for the conversion or extension of the school premises of government schools are the same as those for government buildings in general. For works with costs not more than $15 million, the Education Department (ED) will make an application to the Architectural Services Department (ASD) direct. For works costing more than $15 million, the ED will first obtain the consent of the ASD and the Education and Manpower Bureau (EMB). The EMB will then seek the funding approval of the Public Works Subcommittee and the Finance Committee of the Legislative Council for the application. (ii) Conversion and extension works for school premises of aided secondary and primary schools The schools concerned have the discretion to decide whether to carry out conversion and extension works if the project costs less than $3,000 for primary schools, or less than $8,000 in the case of secondary schools. The amount is deductible from the recurrent grant for the school. Primary schools may apply to the ED for subvention to carry out works which cost $3,000 or more but not exceeding $2 million, whereas secondary schools may apply for subvention to carry out works which cost $8,000 or more but not more than $2 million. If the ED considers the application worth supporting, it will, after obtaining the consent of the ASD, request the Finance Bureau to include the required funds together with other approved subventions for school works in the ED's expenditure items in the draft Estimates for the next financial year. The draft Estimates will then be submitted to the Finance Committee of the Legislative Council for approval. Primary and secondary schools intending to carry out works which cost more than $2 million but not exceeding $15 million may apply to the ED for subvention. If the ED considers the application worth supporting, it will, after obtaining the consent of the ASD, submit the application to the EMB for consideration. If the EMB agrees to the application, it will request the Finance Bureau to include the required funds together with other subventions for approved school works in the block allocations under the Capital Works Reserve Fund for the EMB for the next financial year. Each year the Finance Bureau submits to the Public Works Subcommittee and the Finance Committee of the Legislative Council for approval of all block allocations for the next financial year. For works costing more than $15 million, primary and secondary schools may apply to the ED for subvention. If the ED considers the application worth supporting, it will, after obtaining the consent of the ASD, submit the application to the EMB. If the EMB agrees to the application, it will submit the application to the Public Works Subcommittee and the Finance Committee of the Legislative Council for funding approval on a case by case basis. (b) In principle, the ED has not set a quota on the number of applications to be approved each year. (c) (i) In the past three years (from 1 September 1995 to 31 January 1999), 129 conversion applications and six extension works applications were received by the ED from government and aided primary and secondary¹ . Of these, 104 conversion applications and four extension works applications have been approved. (ii) The main reason for making these applications was to provide additional classrooms or special rooms to meet the needs of curricula; other reasons were for the optimization of school space and upgrading of school facilities. (iii) As applications for conversion projects are often made, and works carried out in conjunction with other major repair works, it is not possible to separate the cost of conversion projects from the total cost of the major repair works involved. (In the past three years, the total funds approved for the implementation of major repair works in government and aided schools amounted to about $620 million.) The applications for extension works are submitted separately. The funds approved in the past three years for such purposes were about $110 million. (iv) Since there is a need to seek the advice of relevant departments, and funding applications have to be made, where necessary, to the Public Works Subcommittee and the Finance Committee of the Legislative Council, it takes time for the ED to vet and approve each application. The time required depends on the nature and scope of works. Normally, it takes three to 12 months for vetting and approving an application for conversion works. As for extension applications, the time required is longer, from nine months to more than a year. Normally, upon funding approval of each application, the conversion or extension works concerned cannot go beyond the approved scope and costs of the project. Besides, the relevant authorities may impose certain safety requirements on individual applications for conversion or extension.

(d) During their inspection, District Education Officers will inspect the school premises and check if any unauthorized or illegal conversion or extension has taken place. According to the ED's records, there were 10 cases of illegal or unauthorized conversion in aided secondary schools and four such cases in primary schools over the past three years. As for unauthorized extension, three cases were found in secondary schools, but no such cases were found in primary schools.

In respect of the above cases, the ED has already warned the schools concerned and required the schools to re-submit applications. The ED has also sought the advice of relevant departments on these conversion or extension cases, and has required the schools to take follow-up measures to ensure that the works concerned satisfy safety requirements.

Oil (Conservation and Control) Ordinance

9. MR FRED LI (in Chinese): In connection with the exercising of the powers conferred upon government officials by virtue of the Oil (Conservation and Control) Ordinance (the Ordinance) (Cap. 264), will the Government inform this Council:

(a) whether the Administration has exercised these powers; if so, the dates when such powers were exercised, together with the relevant provisions and the reasons therefor; (b) whether government officials' exercising of such powers is limited to situations where emergencies exist or where the supply of oil is in acute shortage; if so, the justifications for that; and (c) if the answer to item (b) is in the negative, the scenarios (such as the emergence of a monopolized market of oil products) under which the Administration will make use of these powers to control the price at which oil may be supplied or sold?

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

(a) The powers under the Ordinance (Cap. 264) have so far been invoked once in May 1979, when the Advertising, Display and Floodlighting (Restriction) Order 1979 was made by the then Governor in Council. The objective of the order was to reduce the consumption of fuel oil through restrictions on the use of electricity, as there was a worldwide shortage of crude oil at that time. The Order was revoked in October 1979. (b) and (c) The purpose of the Ordinance and how the powers thereunder would be used was clearly explained to the Members of the then Legislative Council in May 1979 by the then Secretary for Economic Services when moving the Second Reading of the Oil (Conservation and Control) Bill. He made it very clear that the Oil Conservation and Control Bill 1979 was, "in effect a bill with enabling powers basically to be used only if the oil supply situation becomes tight." He further said that these powers were in 1973 conferred on the Director of Oil Supplies under the Emergency (Control of Oil) Regulation 1973 and that "It is intended, in this instance, that if the Bill now before the Council is enacted, it should remain on the statue books so that swift remedial action can be taken whenever oil supply difficulties arise in the future." He also assured the then Legislative Council that "only such powers as are necessary to deal with the circumstances of a particular moment will be used." This has been and remains our policy.

Burden of Paging Service Industry

10. MR SIN CHUNG-KAI: The paging service industry is cornered by the thriving mobile phone service industry. In this connection, will the Government inform this Council:

(a) of the amount of licence fees, broken down by the types of licences, collected by the Office of the Telecommunications Authority (OFTA) in 1998; (b) of the respective expenses incurred by the OFTA in 1998 on matters related to the paging service industry and the mobile phone service industry; (c) given that the rates of returns on fixed assets of the OFTA Trading Fund were 56.9% and 43.8% in 1997-98 and 1996-97 respectively and well above the target rate of 14.5%, whether it has assessed if the current licence fees were set at an appropriate level; if so, the results of the assessment; (d) given that, as a result of severe competition, many paging service companies are paying the pager licence fee on behalf of their subscribers, whether it will consider lowering such licence fee; if so, the proposed amount or percentage of reduction and the commencement date of the new rate; and (e) of the measures that the OFTA has taken to lighten the burden of the paging service industry?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING: Madam President,

(a) A breakdown of the licence fees collected by the OFTA, by licence type, in 1997-98 is at the Annex. (b) Both paging services and mobile telecommunications services are operated under the Public Radiocommunication Service Licence. The OFTA incurred an estimated cost of $53 million in 1997-98 for administering this type of licence. It does not have a further breakdown of the respective costs of regulating paging services and mobile telecommunications services separately. (c) The licence fees administered by the OFTA have stayed unchanged since 1990. Despite this, the revenue generated from these licence fees has increased substantially as a result of the remarkable growth in the telecommunications markets in recent years. To reduce the gap between revenue and cost, the OFTA undertook to freeze the licence fees for five years upon the establishment of the OFTA Trading Fund in 1995. The continued high net growth rate in the number of mobile stations has prompted the OFTA to review the projected revenue from the licence fees for mobile stations. Based on the outcome of this review, the OFTA has proposed that these licence fees should be reduced by $20 a year per mobile station. At this fee level, the OFTA anticipates that the rate of return of the OFTA Trading Fund will fall below the target rate of 14.5% in 2002-03. (d) To give effect to the OFTA's proposal, the Telecommunication (Amendment) Regulation 1999 was made by the Executive Council on 2 March 1999, gazetted on 5 March, and tabled in this Council on 10 March. Subject to Members' endorsement of this Amendment Regulation, the annual licence fee for each pager will be reduced from $75 to $55, a decrease of 26.7%, with effect from 1 May 1999. (e) Apart from reducing the licence fee, the Administration has simplified the type-approval procedure for pagers. In the past, new pager models could only be introduced into Hong Kong after the OFTA has tested them. Now, type-approval may be granted on the availability of a supplier's declaration of compliance of its equipment with the pertinent technical specification. The streamlined procedure enables the paging service operators to introduce new pager models into the market faster and at a lower cost. Another measure the OFTA has taken to facilitate the development of the paging service industry is to reserve an adequate number of radio frequencies for paging roaming services between Hong Kong and the Mainland.

Annex

Licence fees collected by the Office of the Telecommunications Authority,
by licence type, in 1997-98

Type of Licence	No. of Licences Issued/Renewed	HK$
Aeronautical Very High Frequency Fixed Station	18	27,000
Aircraft Station	105	15,163
Amateur Station	1 374	200,001
Broadcast Radio Relay Station	9	5,563
Broadcast Relay Station	4	23,126
Demonstration (Unrestricted)	219	71,571
Experimental Station	238	75,603
Fixed Telecommunication Network Services	4	32,408,841
General Communication Radio Receiving Station	18	1,667
Hotel Television Services	65	2,601,440
Induction Communication Station	3	450
Industrial, Scientific and Medical Electronic Machine	648	54,134
Mobile Radio System	96 866	29,482,308
Model Control	9	683
Press Reception (Direct)	4	4,750
Private Telegraph	1	1,089
Public Non-exclusive Telecommunications Service	254	307,188
Public Radiocommunication Service Licence1	74	200,408,933
Radiocommunication School	11	3,300
Radio Dealers (Restricted)	21	13,250
Radio Dealers (Unrestricted)	1 975	2,839,925
Radio Paging System2	81	1,323,405
Radiodetermination and Conveyance of Commands, Status and Data	242	9,667
Satellite Master Antenna Television	69	3,661,528
Self Provided External Telecommunication System	86	196,758
Ship Station	1 282	199,163
Space Radiocommunication Telemetry, Tracking, Control and Monitoring Station	6	525,083
Wide Band Link and Relay Station	36	70,938
Miscellaneous	471	110,125
Total:	104 193	274,642,652

Note 1: This type of licence covers public paging service.

Note 2: This type of licence covers only private paging service, for example, paging system used in hospitals.

Checking of Arriving Passengers at the Airport

11. MISS CHRISTINE LOH: Will the Administration inform this Council of:

(a) the respective numbers of persons, broken down by gender and nationality, who were asked to be stripped checked and to undergo a urine test (collectively called "such checks" below) upon their arrival at the airport in the past 12 months; (b) the percentage of such checks whereby the persons checked were found to possess illicit articles in the past 12 months; (c) the circumstances under which arriving passengers will be asked to undergo such checks; (d) the guidelines given to front-line officers in selecting persons for such checks; and (e) the explanations given to the selected person before such checks; the languages in which such explanations are given; and the instructions given to front-line officers when the persons do not understand the languages used?

SECRETARY FOR SECURITY: Madam President,

(a) During the 12-month period from February 1998 to January 1999, personal search was conducted by Customs officers on 8 785 arriving passengers (7 469 male and 1 316 female) which involved taking off their shirts/blouses, trousers/skirts and shoes. A breakdown of these checks by nationality is at Annex A. Among these passengers, 460 (436 male and 24 female) also underwent urine test. A breakdown of these tests by nationality is at Annex B. (b) Of those passengers searched, three (0.03%) were found to be in possession of narcotics. (c) Customs checks are performed based on intelligence and risk assessment. Arriving passengers are selected for personal search by adopting profiling techniques, which take into account intelligence and information received and whether the passenger's travel routing, itinerary and place of embarkation include high risk drug source countries. Personal search and/or urine tests will also be conducted on other passengers detained for suspected customs offences. (d) The Customs Procedural Manual for front-line staff contains detailed guidelines on the application of the profiling techniques for the selection of passengers for personal search and urine tests, as well as how, where and in what manner such passengers should be searched and tested. (e) When a personal check is to be undertaken, the passenger will be invited to the Customer Search Room. Before the search, Customs staff will explain to the passenger, in English or Cantonese or Putonghua, the responsibility of the Customs and Excise Department to prevent illegal import of contraband, including narcotics and firearms, and the purpose of the search to be conducted on the passenger. If the passenger does not understand the language used, his/her friends, if any, will be invited to assist. Customs officers or airlines officers on duty who can speak the same language or dialect also assist where appropriate. Interpreters may be hired if necessary.

Annex A

Incoming Passengers at the Airport Selected for Personal Search

February 1998 - January 1999

Annex B

Incoming Passengers at the Airport Selected for Urine Test
February 1998 - January 1999

Residence Requirement for CSSA Scheme

12. DR DAVID LI: It is reported that despite the one-year residence requirement for approval of Comprehensive Social Security Assistance (CSSA) applications, non-complying applications are nonetheless approved on discretionary basis. In this connection, will the Government inform this Council:

(a) of the percentage of CSSA recipient families which have one or more family members not meeting the residence requirement; (b) of the total amount of CSSA granted to such families in the past three years; and (c) whether the relevant authorities will consider enforcing the residence requirement in vetting and approving CSSA applications?

SECRETARY FOR HEALTH AND WELFARE: Madam President,

(a) As at the end of January 1999, 4 411 CSSA cases had one or more family members who had resided in Hong Kong for less than one year, which represents about 2% of the total caseload. (b) We do not maintain separate records for the amount of CSSA payments made to such families. (c) To be eligible for assistance, CSSA applicants must meet the relevant eligibility criteria. They must be Hong Kong residents and have resided in Hong Kong for at least one year. However, in exceptional circumstances, the Director of Social Welfare may exercise his discretion to grant assistance to an applicant who encounters genuine hardship but does not satisfy the residence requirement.

Review of the New Territories Small House Policy

13. MISS EMILY LAU: Regarding the New Territories small houses, will the Executive Authorities inform this Council of:

(a) the exact point in time that the review of the New Territories Small House Policy will be completed; (b) the number of small house applications approved in 1998 and the number of outstanding applications at present; and (c) the average waiting time for each application before it is processed by the relevant authorities?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Madam President,

(a) we expect the review to be completed by mid-1999; (b) a total of 1 460 small house applications were approved in 1998, and there were 17 330 outstanding applications as at 31 January 1999; and (c) the waiting time for each application before it is processed varies from district to district. The waiting time for major districts such as Yuen long and North is about four years, and that for districts having fewer applications such as Sai Kung and Sha Tin is about one to one and a half years.

Programmes on Legislative Council Elections Produced by RTHK

14. MR ERIC LI (in Chinese): Regarding programmes on Legislative Council elections produced by the Radio Television Hong Kong (RTHK) last year, will the Government inform the Council:

(a) of the respective numbers of such programmes produced by the Radio Division and the Public Affairs Television Division of RTHK; (b) of the production costs of each programme; and (c) whether additional funding was allocated to RTHK for producing such programmes; if so, of the amount allocated?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Chinese): Madam President,

(a) and (b)

During the first Legislative Council election of the Hong Kong Special Administrative Region in 1998, RTHK produced various special programmes to report on the election campaign and publicize the electoral arrangements. The production costs of these special programmes, which amounted to about $8.48 million, were covered by the approved funding made available to the Registration and Electoral Office (REO) for organizing the first Legislative Council election. Details of the programmes and their respective production costs are as follows:

Programme	Type of Programme	Media	Duration (Min.)/ episode	No. of Episodes		Total Time (Min.)		Broadcasting Period		Production Costs ($)
Election Flash (EC subsectors elections)	Introduction to the election method for the Election Committee subsectors election	Radio	15	10		150		March - April		140,000
Documentary for the 1998 Legislative Council election	Introduction to the election methods for the first Legislative Council Election	TV	60	3		180		March - May		1,074,830
Election Kick-off Carnival	Ceremony to unveil the series of election programmes; variety show	TV Radio	60	1		60		April		800,000 70,000
Documentary for Functional Constituency Election	Documentary programmes on the functional constituencies election	TV	30	5		150		May		1,000,000
Election Platform	Introduction to the election platforms of candidates	TV Radio	5	29		145		April - May		1,200,000 30,000
Election Committee Forum	Election forum	TV	90	1		90		May		350,000
Geographical Constituencies Forum	Election forum	TV	60	5		300		May		800,000
Geographical Constituencies Question and Answer	Election forum	TV	30	10		300		May		800,000
Geographical Constituencies Forum	Election forum	Radio	120	12		1 440		April - May		800,000
Election Committee Forum	Election forum	Radio	60	3		180		April		550,000
Functional Constituencies Forum	Election forum	Radio	30-60	28		1 260		April - May
Election Platform and Forum	Self-selected programmes on election campaign	Internet	-	-		-		April - May		150,000
API (TV/Radio)	API	TV Radio	0.5	8		4		May		575,000
Election Countdown	Brief information on election campaign	Radio	0.5	20		10		May		140,000
Election Flash	Introduction to the election methods for the first Legislative Council Election	Radio	10	10		100		April - May
								TV		6,599,830
								Radio		1,730,000
								Internet		150,000
								Total		8,479,830

Apart from the above special programmes, the Radio Division and the Public Affairs Television Division of RTHK also made use of their regular television and radio programmes, including Hong Kong Today, Talkabout, Party Line, Legislative Council Review, Headliner and Common Sense, to report on, present and analyse the electoral process from time to time during the first Legislative Council election. Since the programmes concerned were in fact RTHK's regular programmes, their production costs were covered by RTHK's recurrent expenditure on programme production. (c) As mentioned above, since the production of RTHK's special programmes was funded by the REO under the approved amount of resources allocated for organizing the first Legislative Council election, there was no need for RTHK to acquire additional funding for such purpose. These special programmes, therefore did not affect RTHK's budget for producing its regular programmes.

Membership Applications to SEHK

15. MR ALBERT HO (in Chinese): Regarding the mechanism adopted by the Council of the Stock Exchange of Hong Kong Limited (SEHK) for vetting and approving membership applications, will the Government inform this Council whether:

(a) it knows the respective numbers of individual and corporate membership applications received by the SEHK in each of the past three years, together with a breakdown of approved and rejected applications under each category as well as the reasons for rejecting the applications concerned; (b) it knows the reasons why the Council of the SEHK has adopted the existing "blackball voting system" instead of a simple majority voting system; whether the SEHK will review its voting system; if so, the timetable for such a review; if not, the reasons for that; and (c) it will put up a request to the SEHK or if it knows whether the SEHK plans to revise its procedure for vetting and approving membership applications and to increase the transparency of the process; if the SEHK has such a plan, the specific revision timetable; if not, the reasons for that?

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

(a) The SEHK received and approved all 36 membership applications in 1996 (two individual and 34 corporate). It received 56 applications in 1997 (all corporate) and one was rejected. It received 40 applications (all corporate) in 1998 and one was rejected. Since the beginning of the 1999, it received four applications (one individual and three corporate) and all were approved. The reasons for the above rejections are not known as under the "blackball voting system", Council members who cast negative votes were not required to provide reasons.

(b) The current voting system is a continuation of the practices of the four former stock exchanges prior to their unification in 1986. The system provides that an application for membership shall be rejected if four or more Council members out of 31 have cast a blackball (that is, negative vote) on it.

On 3 March 1999, the Council of the SEHK by resolution adopted a new voting mechanism that requires Council members to identify in writing, on an anonymous basis, their concerns with regard to a membership application. If there are four or more members having noted their concerns, the concerns will be forwarded to the applicant for a response. If, after considering the applicant's response and following a revote, there are still four or more Council members casting a negative vote on the application, the application will be rejected with the reasons identified for the applicant.

It is understood that the new mechanism aims to address the main criticisms expressed by the court in the judgement of Pearl Securities Limited v. the SEHK (1998 HCAL No. 39) with regard to the lack of opportunities by applicants to address Council members' concerns and the lack of reasons given to applicants if their applications are rejected. The Securities and Futures Commission is now considering the revised SEHK procedures in detail to determine whether they address fully the concerns of the court.

(c) The Administration shares the view that applications for membership in the two Exchanges should be processed in a transparent and fair manner. While the new procedures in (b) above were a step forward in enhancing transparency, a lot more should be done to address the problem of insufficient transparency and fairness for applying for membership in the two Exchanges. Unaddressed, this entry barrier would erode our market's competitiveness vis-a-vis other regional and global financial markets. Against this background, the Administration issued a policy paper on 3 March 1999 outlining a comprehensive reform of Hong Kong's securities and futures market, including abolishing the current membership-owned exchanges operation and replacing it by demutualization and merging of the two Exchanges and three clearing houses to form a new holding company (NewCo). Ownership of NewCo will be separated from the right to trade in the new stock exchange. Under the new arrangement, trading rights on the exchanges would not be restricted and would be subject only to meeting the qualifications set under the relevant legislation and paying applicable fees. The Administration believes that the new measures would enhance competition within the markets and fully address the concerns on transparency and fairness.

Female University Professors in Hong Kong

16. MISS EMILY LAU: In 1996-97, only 5% of the university professors in Hong Kong were women. In this connection, will the Executive Authorities inform this Council whether they know:

(a) the breakdown by gender of the numbers of professors, readers and lecturers in each tertiary institution funded by the University Grants Committee at present; and (b) of the plans adopted by the tertiary institutions to boost the number of women appointed to such academic posts?

SECRETARY FOR EDUCATION AND MANPOWER: Madam President,

(a) The breakdown of professors, readers and lecturers by gender in University Grants Council (UGC)-funded tertiary institutions as at end February 1999 is as follows:

Rank1		Male		Female	Male		Female	Male		Female	Male	Female
Institution
City University of Hong Kong		35		1	24		3	554		174	613	178
Hong Kong Baptist University		17		2	23		2	218		95	258	99
Lingnan College		11		0	19		1	72		38	102	39
Chinese University of Hong Kong		66		4	58		5	565		138	689	147
Hong Kong Institute of Education2		0		0	0		0	209		179	209	179
Hong Kong Polytechnic University		28		4	93		20	502		191	623	215
Hong Kong University of Science and Technology		62		5	7		0	325		35	394	40
University of Hong Kong		78		7	72		17	521		147	671	171
Total		297		23	296		48	2 966		997	3 559	1 068
% of female academic staff		7%			14%			25%			23%

Notes

1. Heads of institutions are not included. Some of the institutions have their own grade structures for academic staff, which have been adapted for consistence of presentation. 2. The Hong Kong Institute of Education does not have professor/reader rank at present. (b) All the UGC-funded institutions aim at placing the best qualified persons available to their academic posts. To achieve this objective, academic staff of the UGC-funded institutions are recruited and promoted on the basis of their merits such as academic achievement, performance in teaching and teaching-related activities, research and scholarship. These criteria are promulgated by individual institutions. In recruiting and promoting academic staff, all the UGC-funded institutions adhere strictly to the principles of equal opportunities and non-discrimination. Male and female academic staff are assessed according to the same set of criteria as described above. Gender has never been, and will never be, a consideration by the institutions in the appointment and promotion of academic staff. Adopting gender-specific recruitment or promotion plans for academic posts in the tertiary institutions may undermine the institutions' ability to attract and retain the best academic staff, and will be inconsistent with the principle of equal opportunities.

Labelling of Meat

17. MR WONG YUNG-KAN (in Chinese): Will the Government inform this Council whether the Administration will consider introducing legislation to the effect that sellers are required to label clearly whether the meat on sale is chilled or fresh, so as to safeguard the interests of consumers; if so, of the details of the implementation plan; if not, the reasons for that?

SECRETARY FOR HEALTH AND WELFARE (in Chinese): Madam President, in the Provisional Regional Council area, any chilled meat sold at licensed fresh provision shops are required to be stored and displayed under refrigeration in accordance with the licensing requirements of fresh provision shops. The tenants selling chilled meat in Provisional Regional Council markets are also required to follow such requirement. The Urban Services Department is at present considering imposing similar requirements for the sale of chilled meat in the Provisional Urban Council area. The above measures are adequate for enabling consumers to identify whether the meat they purchase is fresh meat. We do not consider it necessary at present to introduce further legislative controls for this purpose.

Emergency Medical Service Centre

18. MISS CHAN YUEN-HAN (in Chinese): As most private medical practitioners do not provide consultation services on Sundays and public holidays, attendances at the accident and emergency (A&E) departments of public hospitals on such days are higher than those on normal weekdays. In this connection, will the Government inform this Council:

(a) of the mechanism in place to meet the public's demand for accident and emergency services on those days; (b) whether it will consider allocating resources to the Hong Kong Medical Association (the Association) for enhancing and promoting its MediLink teleline service, so that the public can have information on the private medical practitioners who provide consultation services on Sundays and public holidays; if so, the details of such consideration; if not, the reasons for that; and (c) whether it will consider working in collaboration with the Association to set up an emergency medical service centre and engaging private medical practitioners to provide consultation services for the public on a rotation basis at the centre on Sundays and public holidays; if not, the reasons for that?

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

(a) At present, there are 11 general out-patient clinics under the Department of Health (DH) which provide holiday clinic services in the morning of all Sundays and public holidays, except Lunar New Year Day. These general out-patient clinics are distributed in Hong Kong, Kowloon and the New Territories to meet the needs of the public and to relieve the situation that the attendance at A&E departments of public hospitals increases drastically during holidays. Whenever before long public holidays, the DH will decide whether it is necessary to enhance the service depending on needs. For example, in anticipation of increase in influenza cases, general out-patient services were provided in the past Lunar New Year Day and the operating hours of the holiday clinic service during the Lunar New Year holidays were extended to 5 pm. The Hospital Authority (HA) has adopted measures in its A&E departments to cope with the increase in attendance on Sundays and public holidays. These measures include deploying additional medical staff to work on anticipated busy sessions; launching public appeals for proper use of A&E services before long holidays and providing the MediLink hotline of the Association through Announcement of Public Interest and press statements; as well as displaying posters and distributing pamphlets in A&E departments to provide information on the DH's hotline and general out-patient services during long public holidays. The triage system adopted in the A&E departments will also ensure that patients requiring urgent medical attention are treated promptly. (b) The DH publicizes its holiday clinic services and the Association's MediLink service through various channels, including the display of posters in various housing estates, district offices, community centres and the A&E department of public hospitals to promote the services. The DH also informs the public of the addresses and opening hours of the clinics providing holiday clinic services and the information on the MediLink through its 24-hour telephone hotline, pager companies and press release and so on. (c) According to the DH's information, its general outpatient clinics providing holiday clinic services in general still have capacity to cater for more patients. For example, in the past three Lunar New Year holidays, the average utilization rate of these clinics only reaches 58%. The triage system adopted in the HA's A&E departments will ensure that patients requiring urgent medical attention are treated promptly at all times. We consider that there is no need to separately set up an "emergency medical service centre". The DH will continue to monitor the utilization of Sunday and public holiday clinic services, to maintain close liaison with the HA and the Association, to strengthen publicity and information dissemination, and to review the service needs and introduce appropriate measures when necessary.

Detection of Speeding Vehicles

19. MR LAU KONG-WAH (in Chinese): In connection with the use of portable laser guns by the Hong Kong Police Force (the police) for the detection of speeding vehicles, will the Government inform this Council:

(a) when the police began to use this type of portable laser guns to detect speeding vehicles; (b) of the criteria adopted by the police in deciding to use this type of laser guns, and whether it had made reference to the practices in other countries in detecting speeding vehicles before making such a decision; if so, the details of that; (c) given that in the process of detecting speeding vehicles, one police officer is responsible for holding the laser gun to measure the speed of vehicles while another officer is responsible for observing the speeding vehicles with binoculars and jotting down the plate numbers of such vehicles, how the police can ensure that the vehicle the plate number of which has been jotted down is exactly the speeding vehicle detected earlier by the laser gun; (d) of the number of complaints received by the Independent Police Complaints Council (IPCC) over the past year in connection with allegations against the police for mistaking speeding vehicles and for instituting mistaken prosecutions against the involved persons for speeding; the criteria adopted by IPCC to determine whether these complaints were substantiated; and (e) of the measures adopted by the police to minimize such mistaken prosecutions?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) The police began to use portable laser guns to detect speeding vehicles in May 1994. (b) The police decided to adopt this type of laser gun because of its proven accuracy and reliability in detecting speeding vehicles. According to the police's research, it has been widely and successfully used in many developed countries including Australia, European countries and the United States. It should also be noted that this type of laser gun is small and can easily be transported by motorcycle. The portability allows rapid deployment and change of operation site. It is also effective on winding and narrow roads while the usual radar equipment can only be deployed on straight stretches of road. (c) The police officer operating the laser gun is responsible for both identifying the target vehicle and capturing the registration mark. The second officer standing next to him is solely present to record the details, for example, speed reading and registration mark given to him by the first police officer. The arrangement is designed to prevent the possibility of error in the evidence collection process. If the police officer operating the laser gun is unable to obtain both the speed reading and registration mark, the matter is not to be pursued. The detailed operational procedures of this type of laser gun are set out in Chapter 4 of the Traffic Procedures Manual. (d) The IPCC does not keep a specific category of statistics on complaints relating to allegations against the police for mistaking speeding vehicles and for instituting mistaken prosecutions. However, the IPCC received in 1998 five complaint cases in connection with the police's use of portable laser gun. Impolite conduct and neglect of duty (such as failure to explain the operations of the laser gun to the complainants) are the major allegations. Among these five cases, two were resolved by mediation, one was withdrawn by the complainant and one unsubstantiated. The remaining one in which the complainant denied speeding is being investigated. (e) The laser gun operators are thoroughly trained and are required to operate under supervision of their instructors for a period of time until their qualification to use the equipment is confirmed. However, the police are reviewing the operation of the system with a view to computerizing the process.

Two-way Exit Permit Holders Working Illegally in Hong Kong

20. MR CHAN WING-CHAN (in Chinese): It is reported that a service contractor for the Housing Department was suspected of having employed a Two-way Exit Permit (TWP) holder to work in a public housing estate. In this connection, will the Government inform this Council:

(a) of the number of cases in which TWP holders were found taking up employment in Hong Kong illegally, as well as the number of such cases in which the employers concerned were contractors providing services in public housing estates, in each of the past three years; whether prosecutions have been instituted against such service contractors; and (b) whether it will consider formulating measures to strengthen supervision over service contractors of public housing estates to prevent them from employing TWP holders; if so, whether such measures will include a provision in the service contracts to the effect that the Housing Department shall have the right to terminate the relevant contract if the contractor is proved to have employed illegal workers?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) 1 251, 1 114 and 1 769 TWP holders were convicted of taking up illegal employment in 1996, 1997 and 1998 respectively. According to records available, 15 of them (none in 1996, 11 in 1997 and four in 1998) were cleansing workers in public housing estates. Seven service contractors were involved in these cases and penalized (none in 1996, five in 1997, and two in 1998) under the system operated by the Housing Authority. However, they were not prosecuted due to insufficient evidence. (b) The Housing Authority has put in place the measures described below to deter public housing estates contractors, mainly cleansing service providers, from employing illegal workers. At administrative level, all cleansing service contractors are subject to a penalty system under which the relevant contracts would not be renewed if illegal workers (including TWP holders) are found working within their working areas. The offending contractor would also be barred from tendering for Housing Authority's cleansing contracts for a certain period. In more serious cases, for example, where a large number of illegal workers are found, the offending contractor would be demoted or removed from the Authority's list of approved service providers. At contractual level, the General Conditions of Cleansing Contract explicitly require contractors to comply with relevant ordinances, enactments, regulations or by-law, including those prohibiting the employment of illegal workers. Contravention of the requirement may lead to early termination of the contract. Similar provisions are included in other public housing service (for example, security) contracts granted by the Housing Authority. In addition, the General Conditions and the Special Conditions of the Cleansing Contract also require contractors to furnish staff records of those who are on the deployment list and their attendance records to facilitate supervision by estate housing managers. The above measures have been working well. The Housing Authority will continue to monitor the situation and take additional measures as appropriate.

BILLS

First Reading of Bills

PRESIDENT (in Cantonese): Bills: First Reading.

INTERPRETATION AND GENERAL CLAUSES (AMENDMENT) BILL 1999

ADAPTATION OF LAWS (NO. 5) BILL 1999

ADAPTATION OF LAWS (NO. 6) BILL 1999

ADAPTATION OF LAWS (NO. 7) BILL 1999

COMPANIES (AMENDMENT) BILL 1999

CLERK (in Cantonese):

Interpretation and General Clauses (Amendment) Bill 1999 Adaptation of Laws (No. 5) Bill 1999 Adaptation of Laws (No. 6) Bill 1999 Adaptation of Laws (No. 7) Bill 1999 Companies (Amendment) Bill 1999.

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.

INTERPRETATION AND GENERAL CLAUSES (AMENDMENT) BILL 1999

SECRETARY FOR JUSTICE (in Cantonese): Madam President, I move that the Interpretation and General Clauses (Amendment) Bill 1999 be read a Second time.

The Bill follows the recommendations of the Law Reform Commission, made in its Report published in March 1997, to codify and clarify the law regarding the use of extrinsic material as an aid to statutory interpretation. The proposed amendments apply only to Ordinances, not to the Basic Law.

It is important that the rules regarding the use by the courts of extrinsic material when interpreting Ordinances be made clear. All persons, whether private individuals or government officials, would be in a better position to know how to carry out their activities in accordance with an applicable Ordinance if the rules of interpretation guiding the courts were incorporated in easily understood legislation.

As is made clear in section 19 of the Interpretation and General Clauses Ordinance, Hong Kong law requires Ordinances to be interpreted purposively. That is, the words of an Ordinance are to be given their plain meaning, not in isolation but in their fullest context, with a view to giving effect to the purpose of the legislation. However, the interpretation given must be one which the words can legitimately bear.

The importance of extrinsic material to interpretation is that in order to give effect to the purpose of legislation it is necessary to discover that purpose. This is achieved by considering the statutory words in their context, which includes material that is both within the Ordinance (called internal aids to interpretation) and external to it (called extrinsic aids).

The external material which may be used to aid discovery of the purpose of an Ordinance is extensive. It includes, for example, the body of law of which the Ordinance forms part, other Ordinances on the same or a related topic, the legislation or common law which the Ordinance may have replaced, international obligations undertaken by treaty, and social and economic factors. The most controversial extrinsic material, and the main focus of the Law Reform Commission's work, is the "legislative history" of the Ordinance.

By "legislative history" is meant material created preparatory to, and in the course of, the passage of an Ordinance. It covers four main categories:

first, reports of committees or commissions recommending the legislation, for example, a report of the Law Reform Commission; secondly, the explanatory memorandum accompanying the Bill when it was introduced to the legislature; thirdly, the changes made to the Bill during its passage through the legislature; and fourthly, the debates in the legislature during its passage. The courts traditionally took a very restrictive approach to the use of such material. The material in the first category could be consulted by the court but only to discover the mischief the Ordinance was intended to remedy, not the purpose or meaning of the legislation proposed. The material in the other three categories could not be referred to at all.

In recent years, the admissibility of "legislative history" has undergone substantial change in Hong Kong and other jurisdictions. The restrictive rule largely applied in Hong Kong until 1992, when (in the case of Pepper v Hart) the House of Lords set criteria for the admissibility of parliamentary material according to a two-stage approach. It must first be decided whether or not the legislation in its ordinary meaning is ambiguous or obscure or leads to an absurd result. If so, it is permissible to move to the second stage and refer to material consisting of one or more statements by a minister or other promoter of the Bill, provided that such statements are clear.

However, despite Pepper v Hart, unresolved questions remain. For example, it is uncertain which parliamentary material other than the Second Reading speech may be used. Legislation would give the courts a clearly defined and controlled discretion to consult a wider range of material relevant to the "legislative history" of an Ordinance.

Judicial clarification of such questions would be slow and incomplete, since the common law develops only in answer to practical problems as and when they arise. The Law Reform Commission therefore recommended that the relevant rules of the common law be incorporated and supplemented in a clear and certain legislative code modelled on an Australian provision.

By implementing this recommendation, the Bill will enhance the utility of our interpretation Ordinance, by clearly specifying, in bilingual form, the extrinsic material which may as necessary be used as an aid to interpretation and the weight which may be placed on such material. This would increase public accessibility to the law and help to reduce the costs of litigation. By enhancing predictability and consistency in the application of law, it would also increase public confidence in the judicial system.

I now turn to the provisions of the Bill.

Clause 3 implements the main recommendation of the Law Reform Commission that legislative criteria for the use of extrinsic aids to statutory interpretation be provided in a new section 19A of the Interpretation and General Clauses Ordinance based on the Australian section.

Section 19A(1) provides that, where a provision of an Ordinance is ambiguous or obscure, or its ordinary meaning in the context in which it is used leads to a result that is absurd or unreasonable, then material not forming part of the Ordinance but which is capable of assisting in ascertaining the meaning of the provision (extrinsic material), may be considered for the purpose of ascertaining the meaning of the provision.

Section 19A(2) sets out a non-exhaustive list of items of extrinsic material that may be considered in the interpretation of a provision of an Ordinance.

Section 19A also:

- provides for the records of proceedings in the Legislative Council to be admissible in court for the purposes of section 19A; - enables a note to be added to a provision of an Ordinance stating when the Bill was read the Second time; - provides that the weight to be attached to extrinsic material is not to be more than is appropriate in the circumstances; - provides that section 19A is to apply to all Ordinances including those in operation before the commencement of section 19A; and - makes it clear that section 19A is in addition to and not in derogation of the common law applicable to statutory interpretation. The Bill also makes certain associated amendments. Madam President, this Bill will remove complexity and uncertainty and improve public accessibility to the law. It will help the efficiency of court proceedings and the reduction of the costs of litigation concerning the interpretation of Ordinances. I commend it to this Council for early passage into law. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Interpretation and General Clauses (Amendment) Bill 1999 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.

ADAPTATION OF LAWS (NO. 5) BILL 1999

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Cantonese): Madam President, I move that the Adaptation of Laws (No. 5) Bill 1999 be read the Second time. This Bill seeks to make adaptations to 10 Ordinances relating to lands and buildings and their subsidiary legislation, so as to bring them into conformity with the Basic Law and the status of Hong Kong as a Special Administrative Region of the People's Republic of China.

Some of the terminologies used in these 10 Ordinances, such as "Governor", "Governor in Council" and "the Crown", are inconsistent with the Basic Law, or the status of Hong Kong as a Special Administrative Region of the People's Republic of China. They therefore have to be amended appropriately.

Although the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance have already made provisions on how terminologies inconsistent with the Basic Law or the status of Hong Kong as a Special Administrative Region of the People's Republic of China should be constructed, the retention of these terminologies in the laws of Hong Kong should still not be acceptable. That is why we need to draw up this Bill to introduce the required textual amendments to these Ordinances.

Most of the proposed amendments involve only changes in terminology, and once passed into law, shall take effect retrospectively as from the date of the establishment of the Hong Kong Special Administrative Region. This Bill obviates the need to make references to the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance. I hereby urge Members to support its passage. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 5) Bill 1999 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.

ADAPTATION OF LAWS (NO. 6) BILL 1999

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I move that the Adaptation of Laws (No. 6) Bill 1999 be read the second time.

The Bill aims at effecting necessary adaptations to seven Ordinances concerning health and welfare matters, in order to make them consistent with the Basic Law, and with Hong Kong's status as a Special Administrative Region of the People's Republic of China.

Most of the proposed amendments are terminological changes. For example, references to the "Governor" are replaced by "the Chief Executive".

Other amendments include reference in the Traffic Accident Victims (Assistance Fund) Ordinance to the recovery of any duplicate payment from the Fund in respect of the same traffic accident. As this is a matter under the responsibility of the Hong Kong Special Administrative Region (SAR) Government, it is proposed to adapt the reference to "the Crown" to "the Government" in accordance with Schedule 8 to the Interpretation and General Clauses Ordinance.

Also, in accordance with the Residential Homes (Elderly Persons) Ordinance, any costs awarded in an appeal to the Director of Social Welfare is a debt due to the Crown and recoverable in the District Court, and any sum payable by the Director under such an award is a charge on the General Revenue. Under the Interpretation and General Clauses Ordinance, "general revenue" is defined to mean the general revenue of the Hong Kong Government. Thus the award is a matter for the Hong Kong Government and accordingly, the reference to "Crown" should be adapted to "Government".

The Bill also provides that, subject to Article 12 of the Hong Kong Bill of Rights, the adaptations when passed into law will take effect retrospectively, as from 1 July 1997, the date of the establishment of the SAR.

Madam President, I beg to move.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 6) Bill 1999 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.

ADAPTATION OF LAWS (NO. 7) BILL 1999

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I move that the Adaptation of Laws (No. 7) Bill 1999 be read the Second time. The Bill seeks to effect adaptations to seven Ordinances relating to financial services and their subsidiary legislation, so as to bring them into conformity with the Basic Law and the status of Hong Kong as a Special Administrative Region of the People's Republic of China.

Although the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance have already made provisions on how terminologies inconsistent with the Basic Law or the status of Hong Kong as a Special Administrative Region of the People's Republic of China should be constructed, the retention of these terminologies in the laws of Hong Kong should still not be acceptable. That is why we need to draw up this Bill to introduce the required amendments to the terminologies used in these Ordinances. Most of the proposed amendments involve only changes in terminologies such as "立法局" and "Governor".

Other amendments cover section 55A of the Insurance Companies Ordinance (Cap. 41) and exempt the Crown from legal liabilities arising from public officers discharging on its behalf the powers vested in it by the Ordinance. And, since the powers are discharged by public officers, they are within the full authority of the Hong Kong Special Administrative Region Government. So, according to section 2, Schedule 8 of the Interpretation and General Clauses Ordinance, we now propose to repeal "Crown" and substitute "Government". Subject to Article 12 of the Hong Kong Bill of Rights Ordinance, the proposed adaptations, when passed into law, shall take retrospective effect, as from the date of the establishment of the Hong Kong Special Administrative Region.

Adaptations which introduce provisions that are yet to come into operation shall take effect from the date when the relevant provisions come into operation. With these remarks, I beg to move. I hope Members will support this Bill. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 7) Bill 1999 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.

COMPANIES (AMENDMENT) BILL 1999

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I move that the Companies (Amendment) Bill 1999 be read the Second time. The Bill, which contains a number of amendment proposals, seeks to update and simplify some specific provisions of the Companies Ordinance. One of the major proposals of the Bill is the introduction of a provision on merger relief. Under the existing Companies Ordinance, when a company merges with another company by issuing shares at a premium, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to the share premium account, and the new company formed after the merger shall be permitted to use the money in the share premium account only under some specified circumstances. But such a requirement has produced the result of freezing some of the capitals of the new company by making them part of its share capital. The original intent of this requirement is to retain the assets of the acquired company and thus to protect the interests of its creditors. All mergers are subject to this requirement regardless of scale.

But we have noticed that if the shareholders of the two companies involved in a merger or reconstruction enjoy roughly the same interests, and if no transfer of assets to any other third companies is involved, there should be no practical need to freeze some the capitals of the new company in its share premium account. In other jurisdictions such as the United Kingdom, merger relief of varying degrees has long been permitted, so that when companies engage in mergers or reconstructions on a share-for-share basis, they do not need to transfer some of the capitals to their share premium accounts. For this reason, some locally registered companies have made use of overseas registered companies as a means of merger and reconstruction, to avoid compliance with the restriction imposed by the existing Ordinance. In order to facilitate the mergers and reconstructions of companies in Hong Kong, we have decided to follow the example of the Companies Act 1985 of the United Kingdom and introduce a provision on merger relief. It is hoped that when locally registered companies engage in mergers and reconstructions, they can benefit from more flexible accounting arrangements and use their capitals in a more flexible manner.

Under our proposed provisions, if a company holds 90% or more of the share capital of another company through transfer of shares, merger relief shall apply. And, if a holding company and its wholly-owned subsidiary companies engage in a group reconstruction which does not involve any changes in share structure, or which does not result in any transfer of assets to any other companies outside the group, merger relief shall also apply. In other words, in both cases, the need to transfer any sum equal to the aggregate amount of the premiums on the shares issued to the share premium account will be obviated.

Another proposal of the Bill aims to reduce the number of particulars contained in the register which a company must keep on its directors and secretaries. Under sections 158 and 333 of the existing Companies Ordinance, every locally registered company and every overseas company which has established a place of business in Hong Kong must keep a register of its directors and secretaries. Such a register must contain, among other things, the nationalities of directors and secretaries, and all companies must also submit such information to the Registrar of Companies for public inspection. But given the globalization of commerces nowadays, the disclosure of the nationalities of company directors and secretaries may not be of any extra help to the people inspecting such registers. That being the case, and also because of the unnecessary administrative costs companies thus have to shoulder, we propose to the waive the requirement on a company to record and report the nationalities of its directors and secretaries.

Sections 158 and 333 of the existing Companies Ordinance also require a company to report to the Registrar of Companies the directorship held by each of its directors in other listed or unlisted companies and all the changes relating to such directorship. The purpose of this requirement is to ensure that the Registrar of Companies can maintain, for public inspection, an index of the current directorships held up directors of listed companies. The Registrar of Companies is right now conducting a project on expanding its database, and it is expected that a new index of directors will be completed by the end of this year. When the new index is completed, members of the public will be able to access on-line all the directorships held by directors of listed companies. This will obviate the need for a listed company to report regularly on the directorships held by its directors in other companies. We propose to abolish the current reporting requirement as soon as the new index is put in place.

Another major proposal of the Bill introduces a new deregistration procedure for solvent, defunct private companies. At present, before a solvent company can dissolve, it must first complete the statutory winding up procedure. But this procedure is extremely complicated and costly. That is why very few companies actually adopt this procedure. Many defunct private companies will simply allow its name to remain in the register kept by the Registrar of Companies, making it necessary for the Registrar of Companies to strike off their names by invoking sections 290A and 291. The original intent of these two sections is to enable the Registrar of Companies to strike off the names of those inactive companies from the register, so that the accuracy of the register can be maintained. But it has now turned out that these two provisions are abused by defunct private companies. Over the past five years, the Registrar of Companies has invoked sections 290A and 291 to strike off the names of over 120 000 companies. The Registrar of Companies thus has had to expend huge resources on such work. Since the Registrar of Companies does not charge any fees for striking off the names of companies under these two sections, the Government is in effect providing a free deregistration service to private bodies, and the costs are of course borne in turn by taxpayers. In view of this, we propose to introduce a simplified procedure whereby solvent, defunct private companies can apply for deregistration. Under the proposed procedure, if a private company having no outstanding debts has never operated any business, or if it has already stopped operation for three months or more, it can apply to the Registrar of Companies for deregistration after obtaining the unanimous consent of all its members. The Registrar of Companies will charge a fee of $422 to on a cost recovery basis. But this new deregistration procedure will not apply to financial institutions subject to supervision, including approved institutions as defined in the Banking Ordinance, registered securities traders, investment consultants and so on.

The Bill also contains other technical and procedural proposals. Similar to the proposals I have outlined above, these technical proposals all aim to simplify and update the Companies Ordinance, so as to facilitate the smooth operation of companies. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Companies (Amendment) Bill 1999 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.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will resume the Second Reading debate on the Film Censorship (Amendment) Bill 1998.

PRESIDENT (in Cantonese): Under Rule 21(4) of the Rules of Procedure, I have permitted Mr Andrew CHENG, Chairman of the Bills Committee on Film Censorship (Amendment) Bill 1998, to address the Council on the Committee's Report.

FILM CENSORSHIP (AMENDMENT) BILL 1998

Resumption of debate on Second Reading which was moved on 9 December 1998

MR ANDREW CHENG (in Cantonese): Madam President, as the Chairman of the Bills Committee on Film Censorship (Amendment) Bill 1998, I now table the Report and would like to address the Council on the main deliberations of the Bills Committee.

The Bill amends the Film Censorship Ordinance (Cap. 392) so as to simplify the existing censorship requirements for still films, that is slides, and streamline the operation of the Ordinance. This includes simplifying the appeal procedures in connection with film censorship matters.

During the detailed study of the Bill, the Bills Committee has taken into account the submissions of the Law Society of Hong Kong and other non-commercial organizations. Members are particularly concerned about the Bill proposals to exempt non-commercial slides from submission for classification purposes. Members have also sought clarification from the Government on how the Film Censorship Authority would determine if a slide is of a cultural or educational nature satisfying one of the conditions for exemption.

The Administration has explained that the amendments seek to reduce the unnecessary administrative burdens on non-commercial organizations. Nevertheless, upon receipt of a complaint from any member of the public, the Authority would, if deemed necessary, invoke the proposed section 8A(3) to require the submission of the slide(s) for classification, irrespective of whether or not the same has been granted exemption. Any person aggrieved by the classification of the slide(s) on moral, religious, educational or other grounds may, by virtue of the existing section 19, may seek a review of the Authority's decision by the Board of Review.

Madam President, the Administration has also assured Members that if an exhibitor has taken advantage of the exemption and shown indecent slide(s), he is liable to prosecution under section 7(1) of the Ordinance. Nevertheless, in proceedings for such an offence, the onus of proof is on the prosecution.

Noting the support expressed by non-commercial organizations to the exemption provision, the Bills Committee did not object to the amendment.

Members have also raised concern on whether the existing provisions of the Film Censorship Ordinance are adequate to cover new forms of media, such as VCD, DVD, or CD-ROM, and whether an updated term which can encompass all different forms of visual moving images is required. In response, the Administration has reviewed the Ordinance and proposed amendments to the relevant sections to keep abreast with the advancement in technology. The Administration has confirmed that the term "laser disc", which has been proposed to be added to the said provision, would include VCD, DVD and CD-ROM.

The Bills Committee has also requested the Administration to consider the comments made by the Law Society on the Chinese version of the Bill. The Administration has agreed to amend the Chinese wordings of some sections of the Bill.

In conclusion, the Bills Committee supports the proposals put forward by the Administration in the Bill and the resumption of the Second Reading debate of the Bill.

Madam President, I so submit.

PRESIDENT (in Cantonese): Does any other Member wish to speak? Please raise your hand to so indicate.

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Secretary for Information Technology and Broadcasting, do you wish to reply?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, I wish to thank Honourable Members for supporting the Film Censorship (Amendment) Bill 1999, in particular, members of the Bills Committee and its Chairman, the Honourable Andrew CHENG, who studied the Bill in such great detail and depths.

The principal purpose of the Bill is to implement the Government's objective of promoting the services industries and the relevant pledges made in the policy address. Specifically, it seeks to simplify the operation of the Film Censorship Ordinance by eliminating the unnecessary restrictions and procedures, so as to make it more comprehensible and easier to apply. I am very pleased that the Bill is supported by both the film industry and the Bills Committee.

When the Bills Committee discussed the proposed exemption from censorship of slides for cultural, educational, teaching, publicity, religious and non-commercial purposes, members raised the concern that the exemption might be abused and thus lead to illegal exhibition of slides. On this, we explained in detail to the Bills Committee the ways in which this problem could be tackled. I wish to reiterate here that no one can get away with any abuse of the exemption mechanism or evasion of the requirement of censorship, because in case of complaints and suspected abuses, the Film Censorship Authority is empowered by the Ordinance to order the people concerned to submit the slides suspected of violation for censorship. The authorities concerned can initiate prosecution under section 7 of the Film Censorship Ordinance against violations, if any.

With respect to the proposal on authorizing the Film Censorship Authority to draw up the forms necessary for the implementation of the Film Censorship Ordinance, some members of the Bills Committee expressed the worry that if the forms were revised too frequently, the film industry might be confused. In response, we made it very clear to the Bills Committee that the Film Censorship Authority would always take account of the practical needs and the objectives of simplifying procedures and improving service quality when considering any revisions of the forms. We also assured the Bills Committee that as a usual practice, the industry would be consulted on any proposals to revise the forms.

Besides, some members of the Bills Committee also advised us to examine the existing Film Censorship Ordinance, so as to ensure that it could keep abreast of technological advances. I am very grateful to these members for making such a valuable proposal. Having examined the existing Film Censorship Ordinance, we find that with the exception of sections 9(3A), 13(4C) and 29A(1)(a) which require some minor amendments, the existing Ordinance is on the whole able to keep abreast of technological advances. At the Committee stage to follow, we will move the necessary amendments. These amendments, which mainly involve sections 9(3A) and 13(4C), specify that in addition to videotapes, other media (such as laser discs, VCDs, DVDs and CD-ROMs) may also be accepted when film copies are submitted to the Film Censorship Authority for future inspections of film contents. The purpose of amending section 29A(1)(a) is the same.

We have also taken the advice of the Law Society and proposed amendments to the wording of some particular provisions in the Bill, so as to achieve greater clarity.

Madam President, the streamlining of the Film Censorship Ordinance and the removal of some of its unnecessary provisions will not only facilitate the work of enforcement, but will also create a simple environment conducive to the good operation of the film industry. I hereby commend the Bill to Honourable Members of this Council.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Film Censorship (Amendment) Bill be read the Second time.

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 of the Members present. I declare the motion passed.

CLERK (in Cantonese): Film Censorship (Amendment) Bill.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Committee stage. Council now goes into Committee.

FILM CENSORSHIP (AMENDMENT) BILL 1998

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the following clauses stand part of the Film Censorship (Amendment) Bill 1998.

CLERK (in Cantonese): Clauses 1, 2, 3, 6, 9 to 13.

CHAIRMAN (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(No hands raised)

CHAIRMAN (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CLERK (in Cantonese): Clauses 4, 5, 7 and 8.

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam Chairman, I move that clauses 4, 5, 7 and 8 be amended as set out in the paper circularized to Members. The amendments proposed for clauses 4, 5A and 8C aim to achieve greater clarity for the Chinese version of the provisions. The proposed amendments to clauses 5B and 7 aim to improve the operation of the Film Censorship Ordinance, so that it be kept abreast of the times and technological advances. Thank you, Madam Chairman.

Proposed amendments

Clause 4 (see Annex III)

Clause 5 (see Annex III)

Clause 7 (see Annex III)

Clause 8 (see Annex III)

CHAIRMAN (in Cantonese): Does any Member wish to speak? Please raise your hands to so indicate.

(No Member indicated a wish to speak)

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the amendments moved by the Secretary for Information Technology and Broadcasting be passed. Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(No hands raised)

CHAIRMAN (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CLERK (in Cantonese): Clauses 4, 5, 7 and 8 as amended.

CHAIRMAN (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(No hands raised)

CHAIRMAN (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CLERK (in Cantonese): New clause 12A Authority to maintain repository

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam Chairman, I move that new clause 12A as set out in the paper circularized to Members be read the Second time.

The aim of new clause 12A is the same as that relating to the amendment of clauses 5B and 7, namely, to improve the operation of the Film Censorship Ordinance, so that it be kept abreast of technological advances. Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That new clause 12A be read the Second time.

CHAIRMAN (in Cantonese): Does any Member wish to speak?

(No Member indicated a wish to speak)

CHAIRMAN (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(No hands raised)

CHAIRMAN (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CLERK (in Cantonese): New clause 12A.

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, I move that new clause 12A be added to the Bill.

Proposed addition

New clause 12A (see Annex III)

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That new clause 12A be added to the Bill.

CHAIRMAN (in Cantonese): I now put the question to you as stated. Will those in favour please their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(No hands raised)

CHAIRMAN (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CHAIRMAN (in Cantonese): Council shall now resume.

Council then resumed.

Third Reading of Bill

PRESIDENT (in Cantonese): Bill: Third Reading.

FILM CENSORSHIP (AMENDMENT) BILL 1998

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, the

Film Censorship (Amendment) Bill 1998

has passed through Committee with amendments. I move that the Bill be read the Third time and do pass.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Film Censorship (Amendment) Bill 1998 be read the Third time and do pass.

PRESIDENT (in Cantonese): 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.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CLERK (in Cantonese): Film Censorship (Amendment) Bill 1998.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will resume the Second Reading debate on the District Councils Bill.

PRESIDENT (in Cantonese): Under Rule 21(4) of the Rules of Procedure, I have permitted Mr Ambrose LAU, Chairman of the Bills Committee on District Councils Bill, to address the Council on the Committee's Report.

DISTRICT COUNCILS BILL

Resumption of debate on Second Reading which was moved on 16 December 1998

MR AMBROSE LAU (in Cantonese): Madam President, I would like to a report on the deliberations of the Bills Committee on District Councils Bill of which I was elected Chairman.

The Bill seeks to provide for:

(i) the declaration of districts, the establishment of a body known as a District Council for each district, the composition of membership in a District Council, the qualification for membership and disqualification from being a member; and

(ii) in the case of elected members, the procedures for electing members to District Councils.

The Bill contains a large number of clauses in which there are a lot of details requiring close scrutiny. Since 1 April 1999, the Bills Committee on District Councils Bill has held a total of 13 meetings (17 sessions) to discuss with the Administration the principles, policy intent and detailed provisions of the Bill. The Bills Committee has received a total of 139 submissions from organizations and members of the public and met 21 deputations so as to listen to their views on the Bill.

After a series of tight-scheduled meetings, the Bills Committee finally completed its scrutiny of the Bill. Since our deliberations are all contained in the Committee's Report, I would like to highlight some salient points only.

Some of the provisions in the Bill are rather controversial and members have expressed divergent views over these issues, in particular in connection with the provisions for appointed and ex officio membership in the District Councils, the functions of a District Council, the qualifications and disqualification of membership, powers of the Chief Executive and the Chief Executive in Council.

Some Members are strongly opposed to the retention of appointed and ex officio seats in District Councils. They consider it a retrogression in democracy. They do not agree with the arguments put forward by the Government for retaining appointed seats, and they are of the view that capable people who wish to contribute to district affairs should join the District Councils through direct elections of District Councils. But there are other members who do not have any strong views regarding appointed membership. Some agree to the retention of appointed seats on the grounds that such members can enhance the representativeness of a District Council as an advisory body since the appointed members will be drawn from different sectors of the community.

Some Members queried whether appointed membership is in contravention of Article 39 of the Basic Law and the provisions of the International Covenant on Civil and Political Rights (ICCPR). The Secretary for Justice considers that the Bill does not contravene the Basic Law or the ICCPR. In this regard, the Legal Advisers advised that on a strict application of the ICCPR, the statutory scheme of making appointments to an advisory body falls outside Article 25 of the ICCPR.

Some members have urged the Administration to specify the criteria for appointing members to the District Councils by way of legislative provisions or publication of guidelines. Some others are of the view that persons who have been defeated in the elections should not be appointed to the District Councils during the same term. Another member has proposed other criteria for appointment to the District Councils. The Administration is of the view that appointment would be made with regard to the person's capability, experience and his potential contribution to district affairs and it would be inappropriate to make provision for additional criteria in the legislation.

As for the ex officio membership, some members think that the Chairmen of the 27 rural committees should not be ex officio members of the nine District Councils in the New Territories. They think that indigenous villagers, like other residents in the districts, can elect their representatives to the District Councils through direct elections. But some other members have indicated support for a retention of ex officio membership, which has been a long standing practice in district boards in the New Territories. The Administration, in acceding to some district board members' views, has agreed to set out clearly in Schedule 3 the number of ex officio seats in the nine District Councils in the New Territories and the District Councils to which these rural committees belong. With regard to disqualification of District Council membership, some members consider that the original clauses are rather unclear in the calculation of the period of absence from District Council meetings. They think that as District Council meetings are normally held bimonthly, District Council members who are absent for more than four, instead of six, consecutive months from District Council meetings without prior consent of the District Council should be disqualified. The Administration accepted members' suggestion and agreed to move a Committee stage amendment (CSA) to specify the formula for calculating the absence period and to cater for the situation under which no meeting or only one meeting is held during the period.

Some members have questioned the addition of "including matters relating to food and environmental hygiene services" in clause 59, which spells out the functions of the District Councils, on the ground that it would give people the impression that the proposed abolition of the two Municipal Councils has been confirmed. The Administration has agreed to move a CSA to delete reference to "including matters relating to food and environmental hygiene services" in clause 59(a). The Administration has also agreed to propose a CSA to add in clause 59(b) the wording "community activities within the District" so as to dispel any doubt that the District Councils cannot organize community activities such as the "Fight Crime Campaign" at the district level.

Members have discussed with the Administration about other issues, including the term of office of District Councils, the quorum of a District Council meeting, enhanced functions of a District Council, disqualification criteria and restraints on the powers of the Chief Executive. Some members cannot accept the Administration's explanation and intend to move their CSAs.

The various CSAs proposed by the Administration include the suspension of the operation of the District Council before an ordinary election; a CSA requiring that any further amendment by the Chief Executive in Council to Schedules 1, 2 and 3 shall be subject to the Legislative Council's "positive" (a positive resolution) rather than "negative" vetting; and deletion of some consequential amendments irrelevant to the District Councils Bill.

Time is required to scrutinize the Bill in detail since there are a lot of clauses in this Bill. So, Members were very dissatisfied with the initial legislative timetable proposed by the Administration. In response, the Administration agreed to defer the resumption of the Second Reading debate from 10 February to today (10 March).

Madam President, I have already briefly outlined the deliberations of the Bills Committee to the Council. I would like to take this opportunity to thank Members for their active participation in the work of the Bills Committee. Thank you, Madam President.

PRESIDENT (in Cantonese): Honourable Members, since we are not going to use the "Request-to-Speak" button for this debate, anyone who wish to speak please raise their hands.

MR GARY CHENG (in Cantonese): Madam President, on behalf of the Democratic Alliance for the Betterment of Hong Kong (DAB), I will speak on the general principles of the District Councils Bill while other Members of the DAB will speak on various specific amendments later.

That the DAB supports this Government Bill does not mean that we did not have any divergent views during our scrutiny of the Bill. During the course, we raised different views on many issues. Our views have been accepted and incorporated into the existing Bill such as those concerning the disqualification of membership, term of office of appointed members, the definition of ordinary election and the functions of a District Council.

The thrust of the many amendments is on appointed membership. Some have criticized that the proposal of having appointed seats ─ in fact, we should say the retention of appointed seats ─ is a retrogression in democracy. The DAB begs to disagree. Appointed membership in district boards had been a long standing practice until it was abolished by Mr Chris PATTEN in the former British Hong Kong Administration in an effort to constitute a fully elected Election Committee in his political reform package. Since those who are against appointed membership strongly deplore it, why did they not reject their appointment to the district boards on 1 July 1997? The reason may be very simple. It is for the continuity of elected district board membership and smooth transition. However, elected district board membership returned in 1994 should have expired in September 1998 even if the law signed and consented by Mr PATTEN were observed. Yet those who strongly deplore appointed membership did not call out loudly that it was a retrogression in democracy at that time. Instead, they remained in the purely appointed seats after September 1998. What is their explanation on that? Have they taken a retrograde step themselves? What the Bill proposes is just a retention of an existing system. How can it be regarded as a retrogression in democracy?

If we look at the main functions of a District Council, we can clearly see that a District Council is to advise the Government on the provision and use of public facilities; environmental improvements and the promotion of recreational and cultural activities within the district; and the use of public funds allocated to the district for local public works and community of activities. There has been little change to the functions of district boards since their inception through Chris PATTEN's days and to date. These functions tell us that a District Council is an advisory body rather than an organ of political power. It is also stipulated in Article 97 of Basic Law that "District organizations which are not organs of political power may be established in the Hong Kong Special Administrative Region, to be consulted by the Government of the Region on district administration and other affairs, or to be responsible for providing services in such fields as culture, recreation and environmental sanitation."

Based on the understanding of a District Council's functions, we think that the appointment system has merits. However, we should not simply equate the retention or abolition of appointed membership with democracy. As a matter of fact, all government advisory bodies are basically set up through appointment of members. I can recall that during Mr PATTEN's days, most of the elected members in the 18 district boards indicated support for appointed seats. In 1993 when PATTEN's political reform package was under debate, public opinion polls published by newspapers showed that the majority of our community were against the abolition of appointed seats in the two Municipal Councils and the district boards, while those who were in support were the minority. If anyone who wishes to veto the present proposals on the basis of PATTEN's political reform package, claiming that it is "a retrogression in democracy", and to criticize the retention of the long standing appointed seats, he is simply trying to revive the debate over PATTEN's package which is all history.

Moreover, one of the reasons in support of abolishing appointed membership is to prevent the Chief Executive from creating a pro-government camp to dilute public opinion. According to this logic, political parties which oppose the appointment of members to advisory bodies by the Government should turn down their own appointment to these bodies. A Member who opposes clause 69 of the Bill concerning "District Council may appoint committees" tries to amend it by proposing that "A District Council may appoint to a committee any person who is not a member so as to provide more flexibility in the appointment of members to committees under District Councils to enable more people from different sectors to participate and assist in the work of District Councils, thus providing District Councils with a greater diversity of views". Would that not mean a dilution of public opinion too?

The DAB considers that with suitable appointed members in the District Councils, District Councils would be able to play a more comprehensive and better advisory role and professionals from different sectors of our community can all contribute in our District Councils. Their participation and contribution should be regarded as part of public resources.

Of course, the DAB is also of the view that even though it is necessary to have appointed seats, the appointed members should be dedicated to community work in order to serve the public and truly reflect their views.

As regards amendments in connection with appointed membership, there is yet another set of amendments concerning the restrictions on appointed membership. We hope that the criteria of nominating candidates should be the ability to fully reflect the public views and the appointed professionals can serve their very best. Even if there are clear restrictions in the law, it does not necessarily ensure fairness and parity in the appointment. So, the DAB opposes the imposition of any restrictions, save age and permanent resident status in Hong Kong, in the legislation.

As for the restriction on the proportion of co-opted members, the DAB has come to the view that it is neither a question of principle nor necessary because the rule of procedures of the District Councils must provide for this.

I so submit. Thank you, Madam President. (A hubbub in the public gallery)

PRESIDENT (in Cantonese): Keep quite! Keep quite! If you do not keep quite, I will have you removed from the Chamber by the security guards. (The protesters kept making a hubbub in the public gallery)

PRESIDENT (in Cantonese): Security guards, take them out of the Chamber.

MR LEE WING-TAT (in Cantonese): Madam President, I speak in support of the resumption of the Second Reading debate. Regarding the development of district boards, I think Members in this Council can give a lengthy debate on it.

With its inception in 1982, district boards were composed of appointed members who accounted for two thirds of the total number of seats while elected members only one third at the initial stage. Over the past decade or so, appointed seats gradually decreased with the development of district boards. In the 1994 district board elections, with the exception of ex officio seats taken up by chairmen of rural committees, all district board members were returned by election.

Hence, I cannot agree to the Honourable Gary CHENG's saying that our positions on election or democratic development differ simply because of Mr Chris PATTEN. In fact, even if we look at the issue from the perspective of historical development, district boards have gone through over a decade of development. Hence, whether we look at it from the perspective of public participation in politics, or the fact that the operation of the district boards over the past decade or so has been widely accepted by the public, we cannot see why our District Councils still need a mixture of appointed and ex officio membership after Hong Kong's reunification with the motherland.

Mr Gary CHENG said a moment ago that we supported the abolition of appointed seats just because Mr Chris PATTEN had them abolished. In fact, this is not true. The Democratic Party and its predecessor, the United Democrats of Hong Kong, and Meeting Point, have been in support of general elections for all tiers of government. In Hong Kong's political development, the gradual and orderly approach has dragged on for too long and sometimes become a pretext to stifle democratic development. We think that the re-introduction of the appointment system in the coming District Council elections is indeed a big retrogression in democracy, whatever rhetoric or reasons are used to defend it. The fact remains that, under this system, some people are appointed by the Government without a public mandate or an assessment of their work through elections.

Whenever we talk about appointed seats, many people, including Mr Gary CHENG, would raise many specious arguments to support the necessity of an appointed system. The arguments for an appointed system include that the operation of a District Council would be more balanced; the best people can be found to fill the seats and advise the Government accordingly; and professionals who are not interested in running in an election could get a seat and serve as the Government's advisers. I think these are just specious arguments fabricated without justification.

First, concerning the balance in a District Council, I have raised it many times in the Bills Committee. A Principle Assistant Secretary of the Constitutional Affairs Bureau has time and again propagated the grounds for introducing an appointed system, such as to balance the influence of people of different professions, abilities or political opinions. However, when we referred to 1994's record, we found that the 300 odd elected members were representatives from almost all trades and industries in society. All of them were returned by the district board elections in 1994. Even people from the commercial and industrial sectors and professionals had taken up 30% to 40% of the seats of that term. In other words, quite a number of businessmen and professionals can win in the district board elections. It is not necessary for them to go into a council by appointment. Hence, the argument of so-called balance fails to hold water.

Another argument is that the Government can get more capable people to serve on District Councils. Again, this is a specious argument. Who are those capable people? Does it mean that the District Councils only need capable people who do not need the people's support and mandate or to be responsible to the public? All these competent or capable people will be appointed according to the criteria laid down by the Government. Who are those competent people? As I said earlier, if people whom we regard as competent and responsible can be returned by elections, why do we need another channel to identify those so-called competent people? The only justification is that the introduction of appointed seats would allow professionals who do not want to stand in an election to serve on District Councils. As I mentioned this point a moment ago, some professionals had also run in the 1994 district board election and had a good chance of success. Also, a certain number of them are returned by the district board elections.

The ultimate purpose of the retention of an appointed system is that the Government wants to control the operation of District Councils. Small though the proportion of appointed seats now may be, only one fifth of the total, the appointed members are united in their pro-government stance, which is quite obvious. I am not saying that all appointed members are pro-government. However, my experience tells me that in general they are more inclined to support the Government. These appointed members, accounting for one fifth of the total membership though, can greatly affect the opinions collected by the Government in consulting the District Councils and the results of other functional elections such as the elections of District Council chairmen. In 2000, there will be a seat in the Legislative Council, the only seat to be returned by District Councils, to replace the one returned by the two Municipal Councils after their abolition. Although the relevant legislation has not been passed, the Government has a well-thought-out plan for this. Obviously, the inclination of those elected members can be balanced by these appointed members, who thus have an important part to play in electing their representative to the Legislative Council. Some may think that one fifth is not a big ratio. However, a relatively unanimous opinion or a tendency to reach consensus will have very great effect on an election. Hence, I cannot support or remain to be convinced that we still need an appointed system in this age.

Just now, Mr Gary CHENG mentioned that the term of office of district board members elected in 1994 should have expired on 30 June 1997. That statement is correct. However, our view is that apart from a minority, most re-appointed members were returned by the 1994 elections. We have accepted the appointment on this basis. We cannot agree that this appointment system or our appointment by the Government has rendered our argument illogical. Neither can we accept that the re-introduction of an appointment system in the coming elections is justified by what we have done. I must reiterate that appointed seats should no longer exist unless we have cogent reasons to prove that the public do not have sufficient wisdom to elect their district representatives. Moreover, a District Council does not have any political power. It is not a legislature, nor is it going to be a municipal council. It is just an advisory body. Our question is: Why should a council being advisory in nature still have an element of appointment? We feel that the Government should give the public a free hand to elect their representatives so as to reflect their opinions within the terms of reference of the District Councils. Despite the limited functions and powers, a District Council can at least play a role in reflecting public opinion.

Madam President, I now turn to the change of district boards' functions. Over the past decade or so, the question as to whether the functions of district boards should be changed was raised from time to time. In each discussion, the Government seemed to appease the district board members, deliberately or not, by telling them that they would have different functions under a new system. I remember that I started to be a district board member in 1985 and became a chairman in 1988. I was no longer a district board member in 1994. Every time when there was a review on district administration, which has in fact been conducted many times, the district offices or the bureau concerned would raise the point that the district boards' functions might need to be enlarged so that the district boards would no longer be an empty talk shop and would not feel that their opinions raised during the routinely-held bimonthly meetings were often ignored by the Government. But every time, the district board members were very disappointed. I believe those district board chairmen now sitting in the public gallery also know that, as they have served much longer than I, numerous reviews have been conducted over the past decade or so. May I ask whether there is any difference in the existing functions of a district board compared with those in 1982 and 1985? Basically there is none. And unfortunately, in each review, there must be some who were convinced by the Government that there would be changes. Just like in the summer of 1998 the Government said in a high profile that after the abolition of the two Municipal Councils, some of the functions of the two Municipal Councils would be "considered" to be transferred to the district boards. But what has happened? The answer is in the negative. Besides, some also proposed that apart from recreational functions, sports and cultural functions might also be transferred to district boards. But have that happened? The answer is also in the negative. So, I advise those who labour any trust in the Government to have no more illusions. They should not deceive themselves that by making compromise, the functions of the two Municipal Councils would be transferred to the new District Councils. This is just wishful thinking.

Personally, I feel that the functions of District Councils can be gradually expanded by devolving to them administrative power over district matters and the power to supervise works projects at the district level. Of course, all these changes would amount to an operation, which warrants many more debates. However, if the District Councils do not have any substantive influence on district facilities and minor projects, they would feel that they can do nothing and become disinterested in their functions and prospects. This is because it is a general feeling among many district board members that their opinions are often ignored by government officials. In my opinion, the new Bill has failed to address a request raised by most district board members, including the chairmen, over the past few years, and that is, they should be given certain administrative power over district matters and supervisory power on works projects at the district level. Since district boards have been operating for many years and some have become very mature, I do not see why the Government not transfer these functions to them gradually.

Madam President, I come to my last point which is related to the scrutiny of this Bill, during which I met extreme disappointment and dissatisfaction. I first became a Member of the Legislative Council in 1991 through to 1997. I took up the office again in July last year. I have scrutinized a lot of Bills but I have never come across one which makes me so disappointed, dissatisfied and even angry. No matter how divergent are the views of the 59 Members here, we all think that the Legislative Council should have the due dignity which means that whenever a bill is tabled to us, we should have sufficient time to debate on it, to question the Government why the bill is so drafted, and why Members' views cannot be accepted. When we first scrutinized the Bill, Mr Michael SUEN, the Secretary, said that there was only one month or one and a half months for us to finish our work. Are we really regarded as a "rubber stamp"? Where goes our dignity? Is it that once this Council has received a blue bill, we have to, in any case, finish our scrutiny work within one or one and a half months? Even if we totally agree to the Government's amendments, does it mean that we should also identify with the Government's insult to our dignity and trampling on our authority? I hope those political parties which support the Government would think about this point: As legislators, should we be more serious in our scrutiny of bills?

Thank you, Madam President.

DR TANG SIU-TONG (in Cantonese): Madam President, the Hong Kong Progressive Alliance (HKPA) supports the District Councils Bill proposed by the Government and the relevant amendments. The most controversial part of the Bill is the retention or abolition of appointed seats and ex officio seats. The HKPA is of the view that appointed and ex officio seats do merit retention.

As a matter of fact, many professionals aspire to serve on district boards but give up running for the district board elections due to their own character, low-profile style, or the fact that they are not used to or skilled in dealing with the public. In view of this, the Government has introduced appointed seats which have indeed helped attract more professionals to participate in district work, thus increasing the district boards' efficiency and efficacy in monitoring the Government and serving the public.

I am also of the view that it is necessary for the Government to retain ex officio seats. One of the important reasons for the Government to establish district boards is nothing but to ensure that government services provided can best cater for the varied needs of various districts. The rural committees are important opinion bodies in the New Territories. One may well say that they have occupied a critical position in the development process of the rural areas as they are adept at communicating with people in the rural areas and understand their unique social environment and cultural traditions. Exactly because of this, ex officio seats have been set up in district boards for the representatives of the rural committees in order that there is a standing communicative and co-operative mechanism between these two different kinds of bodies. This is certainly conducive to the development of district services which tally with the people's needs in the New Territories. In fact, the system of ex officio seats has been proven effective and broadly accepted. Many district board chairmen posts in the New Territories are taken up by ex officio members by way of election among the district board members. This is the strongest evidence to support my point.

Furthermore, as the Honourable LEE Wing-tat has mentioned, a District Council is just an advisory body without actual administrative functions or financial power. Hence, it will make more contribution to the district and the Government if more appointed and ex officio members, who represent a wider spectrum of public opinion, can participate in it. Furthermore, our past experience tells us that appointed members have made a lot of contribution to the district boards.

Madam President, the suggestions in the District Councils Bill proposed by the Government strive to strike a balance and adhere to the progressive principle, albeit with some imperfections. Apart from that, in the HKPA's opinion, the Government has, in the Bills Committee stage, humbly incorporated many constructive and feasible suggestions into the Bill and proposed many amendments as well. For instance, the requisite absence period from District Council meetings for disqualification purpose is shortened; the Chief Executive is required to seek the Legislative Council's approval before gazetting any amendment to Schedules 1, 2, and 3; and the Chief Executive's discretion in determining the term of office of appointed members is withdrawn. The Government has, on the whole, looked after the needs of people in various sectors of the community and made a positive response to our colleagues' opinions.

The only point I have noted with regrets is that the part concerning the two Municipal Councils has obviously been deleted from the Bill. Before there is any debate over the retention or abolition of the two Municipal Councils, such a move is too tricky and deviates from the facts. I really feel sorry for this.

Madam President, I so submit.

MISS EMILY LAU (in Cantonese): Madam President, I rise to speak in support of the resumption of Second Reading of the Bill. However, I believe that we will not support the Bill in the end because the stance of the Frontier is very clear: We only support District Councils which are fully returned by direct elections. But we support the Bill's Second Reading as Mr LEE Wing-tat will move an amendment on behalf of the Democratic Party later on which seeks to delete all appointed and ex officio seats. The Frontier extends its full support to Mr LEE's amendment. However, if Mr LEE's amendment is unfortunately negatived, the Frontier will not take part in the following Committee stage amendments debate and we will only return to the Chamber to vote against the Bill at Third Reading.

Madam President, I feel that today — 10 March — is a very dark day. Why do we have to pass a bill which allows persons who are not elected by the people to continue to sit on our District Councils? Just now the Honourable Gary CHENG and Dr the Honourable TANG Siu-tong said that the District Councils are advisory bodies, which may be true as the District Councils do not have real powers. However, Madam President, the district boards were one of the three tiers of representative government as stated by the former government, though it is very likely that the three tiers will be reduced to two tiers very soon. Nevertheless, the District Councils are still part of the representative government and so we should not compare it to other advisory bodies. I absolutely do not concur with Mr Gary CHENG in his saying that members of other advisory bodies are all appointed. Madam President, it is true that members of the District Councils are called "councillors" and not everybody can be called a "councillor". The members of other advisory bodies cannot be called "councillors" as the title of "councillor" carries a special meaning. It means that the councillor is elected by the people and represents public opinions. Although this representative of public opinions may not have much power, he still represents the views of the public. Therefore, it is absurd that people here should talk black into white and allege that the District Councils are like any other advisory bodies. I cannot accept their views at all.

Madam President, neither can I accept the legal advice the Secretary for Justice has given to the Government and the opinion of the Legal Advisers of this Council. They say that the proposed restoration of the appointment system and the continuation of appointing ex officio members do not contravene the International Covenant on Civil and Political Rights (ICCPR). In fact, the Commission on Human Rights (the Commission) of the United Nations has discussed the electoral system of Hong Kong many times and its members strongly condemn the non-direct elections conducted by our Government. Yet the issue of the District Councils has not been touched on. However, the Government has recently submitted a report to the Commission and I believe the United Nations will hold a hearing at the end of the year. We will attend the hearing and raise this new issue of the District Councils in the Commission.

Madam President, please let me remind Honourable Members why we think that the appointment system and ex officio seats constitutes a contravention of the ICCPR; because it is clearly stated in Article 25 of the ICCPR that every citizen shall have the right and the opportunity:

(a) to take part in the conduct of public affairs, directly or through freely chosen representatives;

(b) to vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors;

(c) to have access, on general terms of equality, to public service in his country.

Madam President, therefore, in my view, I do not think this provision or Article 25 is applicable only to the administration or the legislature. I think that it should also be applicable to all the councils in the representative government, no matter whether it is a grassroots council or not. Therefore, I believe we have to bring it up for discussion in the United Nations Commission.

In fact, Madam President, what is the most important thing in a democratic system? It is the people's mandate obtained through a process agreeing that the persons in power have the authority to rule the people. As for the appointment system, I concur with Mr LEE Wing-tat's views expressed just now. The appointment system uses an unreasonable and unnecessary method to restrain people from taking part in the conduct of public affairs since it dilutes the power of an elected council. How is it diluted? The appointment system selects a bunch of people for no reason. Madam President, this is a council and I should not care what people are selected. But, Madam President, you also know that most of the selected district board members at present belong to the Democratic Alliance for the Betterment of Hong Kong (DAB) or some other whatever alliances. Even so, the Government still cannot rest assured and wants to dilute more. Is this not dilution? Some people are put in the councils and they are not elected by the people. Many people will vote for members of the DAB in the future District Council elections and the DAB may have one to two hundred seats in the election this year. But the Government still wants to dilute more. Therefore, I can say that it is an action of dilution. After the dilution, people's expression of will would be challenged and exploited by the Government, whereas the power of elected members will suffer a direct blow. When the people have elected a certain elected member, he will represent the people in the councils and try to influence the Government together with other elected members. Originally, more elected members will form a certain influence, but the sudden "insertion" of a bunch of people will dilute the influence and the original majority will become minority. This is really too much, for it will directly deal a blow to the elected members' electors, as well as indirectly at other electors. When I go to vote I want to express my will, but now my view is twisted for no reason. Originally we elected a large number of representatives to join the councils, but now a bunch of people are suddenly "tucked" in. Therefore, Madam President, I think it is very absurd. Absurd that today we still have to discuss such things in a civilized society as Hong Kong. There are times when I really have to pinch myself to prove that I am not dreaming and that this is actually the reality. Such practice of the Government should definitely be condemned.

Earlier on Mr LEE Wing-tat talked about balance. What is there to be balanced? The most important balance is political balance. When a District Council is elected, if a certain side is found to be inadequate, people will be added on that side. It will be restored to what it was like before. What is the ultimate goal of striking a balance? The ultimate goal is of course to help it, right? Madam President, what actually is the most valuable function of an election? It is not to elect the most capable persons, but to provide an opportunity for the people to dismiss and replace the councillors they find unsatisfactory through a peaceful, rational and non-violent way on a periodical basis. It is very unfortunate that the Government now deprives the people of this right by the appointment system which will appoint certain persons to sit on the District Councils. Like it or not, the people cannot object to it. How do people have the power to dismiss such councillors? Madam President, I find this utterly preposterous.

Moreover, this proposal of the Government is also a very bad design from the constitutional angle. Why? Because not only grassroots elections are manipulated, the election at the uppermost level is also influenced. Madam President, I believe both you and I have read the Basic Law very well. Annex I to the Basic Law spells out the method for the selection of the Chief Executive of the Hong Kong Special Administrative Region. Mr TUNG was selected by 400 persons in 1997. As his term of office is five years, the next election will be held in 2002. I do not know if he will stand for the election again. At that time, the Chief Executive will be selected by an Election Committee of 800 members which is but a small circle. Among these 800 members, 200 will come from the labour, social services, religious and other sectors, whereas another 200 will come from Members of the Legislative Council, representatives of district organizations, Hong Kong deputies to the National People's Congress (NPC) and Hong Kong delegates to the Chinese People's Political Consultative Conference (CPPCC). Madam President, while the terms of office of the District Council members elected or appointed this time will last from 2000 to 2004, the selection of the Chief Executive will be held in 2002. In the Bills Committee, we have repeatedly asked whether there will be the possibility of illicit deals because, to be frank, we do not know how those 200 persons will be selected and we still have to legislate for that. However, District Council members will certainly be among the 200 persons. Will there be incumbent appointed or ex officio members of the District Councils? We are unable to know what dealings there will be under the table. For example, the Government may tell a person that since it appoints him as a District Council member, he should know what to do next time in order to return a favour with a favour. Will such things happen? Madam President, if we really believe this will happen, would you think that we are "measuring the stature of great men by the yardstick of small"? Or, would you think that we are right to think so and we are making a highly justifiable guess? Because, frankly, such appointments, such scandalous matters are arranged secretly under the table. When I do not know what criteria the Government employs for the appointment, how do I know what sorts of deal lurk behind? With the Basic Law stipulating such arrangements, we have no idea what kind of people will be appointed in the future unless we demand to legislate against the Government's appointing certain people, such as not allowing appointed councillors to be included in the 200 members of the Election Committee. However, this is of course impossible. The whole issue is therefore suddenly raised from a grassroots level election to the uppermost level election of the Chief Executive and the election is tarnished. It is already improper to have an election controlled by 800 people, now another complication is thrown in. Why do we have to do this, Madam President? Besides, what kind of people will be appointed? People on the Government's side, of course. There is no way that people enjoying a popular mandate can be appointed in any way?

Madam President, if we take a look at the Provisional District Boards, we would find that among the 96 members appointed last year, 41 have been appointed before, 53 were once District Affairs Advisors appointed by the Chinese Government and 15 are members of the DAB — I may have counted short, if so, I hope the President will correct me later on as sometimes I am not very clear about who are DAB members. Furthermore, seven belong to the Hong Kong Progressive Alliance and yet another 14 are even more striking: they are candidates defeated in the 1994 election. Madam President, at that time I criticized the Governor, Sir David, saying that he simply loved to appoint losers at elections. He was infuriated, but I believe anybody would have been infuriated at being criticized like that. Anyway, that was the fact and he could do nothing with me. We are people who would only talk about facts.

Madam President, certain people have asked whether it can be stipulated clearly in the present Bill that losing candidates are not allowed to be appointed. This is of course impossible because the Government has never told us what the criteria for appointment are. But such a way of doing things is really aggravating. Why do we have to say so much? Because the source of power will dictate whom the councillors (though the appointed ones are not worthy of the title) are accountable to. If I am elected by a large group of people, I am accountable to them. What if I am appointed by one single person? Then I am only accountable to that particular person. Therefore, I find this arrangement absolutely unacceptable. Madam President, now that the Government has done so much, what do you think it seeks to achieve? Of course it wants to hear less criticisms in councils and that councillors will be more peaceful and give more support to the Government. I believe the Administration does understand that it is presently facing a crisis of public confidence, which is also a crisis about its credibility ...... (A hubbub in the public gallery)

PRESIDENT (in Cantonese): Silence! Security guards, take them out! If you keep on clamouring, I will suspend the meeting.

Miss LAU, please go on.

MISS EMILY LAU (in Cantonese): Madam President, rarely do we have the chance to witness your humour. In this time of turbulence, I believe humour will make the long night easier on us.

As the Government is already facing such a crisis at the moment, if it still wants to juggle with the councils and create a false impression that the councils are actually very quiet and supportive, I believe the result will only be counterproductive and further undermine public confidence. In this connection, I feel that the Government should think twice. The Frontier can in no way support this Bill. If the Bill is passed into law, it will take effect on 1 January next year. This date is the beginning of a new century, a very important date. While the whole world is talking about spending tens of millions of dollars on celebration, this thing is happening to Hong Kong which will definitely bring us into disrepute in the international community. By doing so, I think the Government is entrapping Hong Kong in an unjust position and this arrangement is utterly outrageous.

Madam President, let us take a look at the situation in the Mainland, with which I think you are much more familiar than most of us. In mainland villages, all the seats in village committees are returned through one-person-one-vote elections. Therefore, even though those electoral systems may not be just, fair and open, I believe the Chinese Government has already told people that this is the direction the grassroots should follow, and the village committees have taken the first step. Recently, I read in reports (because, Madam President, I cannot go back to the Mainland, whereas you and other Members have just returned from Beijing) that, in the CPPCC meeting, 35 village committee members had put forward a proposal hoping to raise the one-person-one-vote electoral system to the county level. I heard that certain deputies to the NPC, in particular those from Guangdong and Anhui Provinces, had also intended to put forward such a proposal. Then why does Hong Kong have to backtrack? Is it true that, under "one country, two systems", we have to remain stagnant waiting for China to catch up so that we can dovetail at a certain stage? Are we not being dragged in this way, Madam President? I object absolutely to the Government's plan this time and neither will we support the ex officio seats. Do you know how these people are selected? They are selected among village representatives. We have said numerous times that the election of village representatives is unfair, especially to women. The village representatives elected in this way form the rural committee, and the chairman of the rural committee becomes an ex officio member. This practice is even condemned in a United Nations hearing of the Committee on the Elimination of Discrimination against Women, so we have no reason to support it. I also completely fail to understand why the indigenous residents of the New Territories can enjoy this political prerogative. In the present situation of Hong Kong, all citizens should be electors and have the right to vote. Why are we retaining certain seats for these people in the New Territories District Councils? Is there a special reason for that? This is something that I can in no way support.

Lastly, Madam President, I hope that the functions of the District Councils can be expanded instead of merely carrying out the so-called duties such as fire safety or building management. Power should really be conferred on them to deal with district affairs. I believe that District Council members do have the ability to discharge such duties. Moreover, I also hope that the Government will consider appointing more District Council members to advisory bodies in the future. I so submit.

MISS CHRISTINE LOH: Madam President, whilst I support the resumption of Second Reading, I feel strongly that the Government has lost a significant opportunity to reform district administration.

The Bill before us could have given more responsibilities to the reconstituted District Councils. Indeed, if we are to have two tiers of elected representation, the District Councils should have the necessary powers to be more like local authorities. Only then will district representatives be able to serve their localities better and have a chance to stand up against the Administration.

However, this is exactly what the Administration does not want. It prefers District Councillors to remain glamourized advisors with no real power to drive district reforms. What we have in this Bill is the Government's tinkering at the edges of the existing district board system. Worse still, it seeks to retrench appointed seats in legislation. The Government has come up with no convincing arguments for this regression.

The Honourable Gary CHENG has given the version of history of the Democratic Alliance for the Betterment of Hong Kong (DAB). It appears that the DAB does not recognize that both life and time have moved on. The direction is towards direct representation. Perhaps the DAB has a vested interest since it is one of the major beneficiaries of the appointment system to the Provisional District Boards. The Honourable Miss Emily LAU kindly reminded us just now in her speech of the numbers that the DAB benefited in.

The appointed members of the current Provisional District Boards, as we just said, are really an unusual bunch. Apart from those who have benefited from certain political parties, we also have many losers in previous elections. I believe that this kind of political arrangement is unheard of in the world. The appointments were, and remain, laughable. I would laugh, Madam President, if it was not so sad, if it was not so shameful. Yet, our top policy makers seem to feel no shame. Our Chief Executive appears to be totally immune. History will not treat these despicable efforts kindly. Hong Kong cannot feel any pride in this further watering-down of what little democracy we enjoy. How can Hong Kong and how can Hong Kong people hold our heads up high as we move towards the millennium?

Members are aware that the Citizens Party and the Honourable Andrew WONG co-operated to devise three amendments originally. Let me say that it was a pleasure to work with him. More than anyone in this Council, he has thought long and hard about the evolution of Hong Kong's representative system for many, many years, longer than many people who are in the Administration right now who have jobs to think about the transformation of these systems. He does have a clear vision of where we are and where Hong Kong can go. I wish to state for the record that I appreciate having an opportunity to work with him and to learn from him.

I had thought at one stage that if appointed seats are going to be brought back, an attempt should be made to ensure that losers at elections or those from favoured political parties could not be appointed. Mr Andrew WONG will move an amendment to that effect. This attempt will fail because I believe that the majority of Members will not support it. I must also state for the record that I will also vote against it, because the Citizens Party believes that it could give the mistaken impression that we favour any kind of appointment system. However, we also wish to say that we respect the spirit with which this attempt has been made. And also out of respect for Mr Andrew WONG, I thought that it is important that I give an explanation for the record.

The second amendment we co-operated on was an attempt to have the chairpersons of the District Councils directly elected. We believe that this would result in a much stronger chair who would then have a similar status to the mayors under the American system. This was part of our vision for a stronger local administration. However, Mr Andrew WONG cannot move this amendment as it has been ruled out of order.

Our third area of co-operation, Madam President, is an attempt to expand the functions of the District Councils, if the powers and funds are to be granted to them at a later stage. In order to save time, let me explain why I am moving these amendments later, because I think we are all aware that we are here for a long night. My proposed additions to the various clauses make it possible for the District Councils to assume powers and functions if conferred upon them by a future law or if directed by the Chief Executive. Although the advisory function is retained, the power of the District Councils to make decisions when the Government makes funds available, is enlarged.

In all, my proposed amendments do not change the status of the District Councils at this stage. I have no way to make amendment in this direction because it would then certainly be ruled out of order. However, they make it possible for the District Councils to eventually develop into quasi-local authorities through the conferment of functions and impositions of duties as well as through the provision of the necessary funds.

I would like to make a final comment on what Dr the Honourable TANG Siu-tong said earlier on. His view seems to be that since the District Councils are only advisory, therefore appointments are quite in order. That is like saying that since the District Councils are not very important, let us not worry too much about who sits there or how they get there. This is an extremely narrow vision for district administration.

My vision remains that our district representative bodies should have a chance to transform themselves into something truly meaningful, but it seems that the vision of the Administration as a whole is also very narrow. I do not know how long Hong Kong will have to wait for that day when we have tiers of government that are truly representative and truly democratic. Perhaps I am hopeful, if I am going to stay in politics for two more elections, I wonder whether at the end of that we might see some progress.

MR LAU CHIN-SHEK (in Cantonese): Madam President, I agree that the " retrogression in democracy" does not begin only today with the introduction of the District Councils Bill. It can actually be traced back to July 1997 when the appointment system was restored. However, at that time we thought it was only a transitional product, not realizing that it would become more and more aggravated now. Certain Honourable Members have questioned why those Members criticizing the District Councils Bill as a"retrogression in democracy" today accepted appointments in 1997? I believe I have to point out one fact, that is, this group of Members who were appointed by the Chief Executive then were not appointed because of "infinite royal graciousness", neither was it because they were particularly appreciated, it was because they had won in elections and obtained the status of councillor. In terms of status, they are utterly different from those who did not take part in elections but enjoyed political free lunchs and those who lost in elections. If we do not admit this point, I feel that we are not admitting a fact.

Mr SUEN once pointed out when he was answering questions in this Council that a few overseas councils were also appointed and he cited the District Council of New York, United States, and the Taiwan Provincial Government as examples. However, I would like to remind the Government that the mayor of New York and the Governor of New York State are both elected through one-person-one-vote elections, whereas the President of Taiwan is also elected through a one-person-one-vote election. The situation of Hong Kong cannot be mentioned in the same breath.

I believe that the restoration of the appointment system is obviously directed against democrats, aiming at reducing their influence in councils as much as possible so as to maintain the Government's so-called "controlling power" to the greatest extent. However, I must point out here that the restoration of the appointment system also discloses Chief Executive Mr TUNG's distrust of Hong Kong people. He is unwilling to see the persons elected by the people sitting tightly in councils, and he is even more unwilling to run an accountable administration in which all citizens can participate.

The era of people in power giving out "political free lunches" to their supporters should have ended with the colonial age. But now history is reversed and the proposed arrangement is even more conservative than that stipulated in the Basic Law.

When Mr TUNG insists on restoring the appointment system, I believe he is actually saying to the people: "You decide? Humph! It'd be better if I make the decision!"

In fact, after the reunification, the design of the whole political system in Hong Kong is to exhaust every means to reduce the degree of democratization. For example, the Legislative Council is formed through different forms of elections and thus the legislature is all split up; proportional representation is used in direct elections of geographical constituencies and thus the emergence of more divergent opinions make a majority hard to form; and the functions of the Legislative Council are further shriveled by voting in groups. On the pretext that he is relatively more conservative, the Chief Executive insists on refusing to amend the Basic Law to speed up the pace of democratization and scraping the two Municipal Councils to cripple the democratic decision-making mechanism in municipal services. Now, appointed members are even added in District Councils to dilute the democratic element.

While the political system undermines democratization, an even greater crisis lurks behind. That is, just as I said a moment ago, the Chief Executive's distrust of the people and his belief that those persons appointed by him are more reliable than the representatives elected by the people.

I must sound a serious warning here: Such distrust of the people is exactly the present administration crisis. If the Chief Executive does not get a clear understanding of this point and refuses to thoroughly change his attitude towards the people, it does not help the situation no matter now many public relations exercises are launched.

I reiterate that I resolutely oppose the restoration of the appointment system. If the amendments for abolishing appointed seats are negatived, I will walk out in protest and I will not move the three proposed amendments I originally intended to move!

Madam President, I so submit.

THE PRESIDENT'S DEPUTY, DR LEONG CHE-HUNG, took the Chair.

MISS CYD HO (in Cantonese): Mr Deputy, at noon today, I took part in a protest march against retrogression in democracy and it made me feel deeply the danger of walking backwards. When we walk backwards, we cannot see any of the stairs, road works or pot holes on the road, and we cannot know what changes there are. In fact, walking backwards is very dangerous and people may tumble very easily. When we walk backwards, we cannot concentrate and have to turn our heads every now and then to look over our shoulders, spending much more time than we should before we can reach the destination. Such a waste of time and efforts is due to the fact that we are unable to know what is going on around us when we walk backwards, so we lack confidence our steps. It is particularly dangerous if a large crowd of people walk backwards at the same time, because no matter who or which group of people trip, a dominoes effect will be triggered off and the whole crowd or even the whole society will collapse like a landslide.

In fact, it is the same with the composition of councils. If certain people are appointed to the councils without going through a process of approval by citizens, the transparency of councils will be reduced and citizens will not have much confidence in such councils. The Government may think that, after appointing certain people to a council, it can guarantee that the results of consultation in this council will definitely be useful to the Government's implementation of policies. When dissenting voices are stifled, all motions can be passed easily. But justice is actually in everybody's mind. Even though the Government can control the composition of a council, it will only lose people's trust. Even though the Government wins in the council, it will encounter a lot of difficulties when it implements its policies.

However, the "backwards" protest march has given us a very good experience today. We walked a very tough section of road together and we gave full play to the spirit of mutual help and solidarity on the way. I hope Hong Kong people will also solidarize in the difficult process of democratization. The Frontier extends its full support to the Democratic Party's amendments of abolishing the appointment system and ex officio seats.

The way how a council is formed is very important to its credibility and if it can carry out its duties impartially. Whether or not a council member can discharge his duty justly and fair-mindedly without succumbing to any pressure hinges on the source of his power. I simply want to point out one thing, that is, the Bill allows the Chief Executive to appoint 20% of all the District Council members. These members may have the chance to join the 800-member Election Committee in the future and select the next Chief Executive. So there may be a political deal in this: while I appoint you today, you will vote for me in the future. As long as the appointment system exists, the tide will not be turned and the doubts of the public will persist.

Earlier on, both organizations of the legal profession and the Bar Association stated that "justice must be done and manifestly seen to be done". We cannot get by saying that loopholes in the system can be tolerated because the appointed members will definitely be selfless and impartial. Such a saying cannot dispel people's doubts. In fact, the Government has lost an opportunity to seriously review district organizations. The Frontier supports streamlining the structure and reducing the councils to two tiers. If there is a need and if the Municipal Councils and district boards are to be amalgamated, we will support the conduct of a serious review. However, a thorough public consultation exercise must be carried out. It is because a streamlined structure can not only control public expenditure, but will also provide more channels for the public to concern themselves with and participate in public affairs. However, instead, the Government has made use of this opportunity to resume powers and centralize the functions of the Municipal Councils. Signs of such intention are evident in many of the Bills introduced by the Government to the Legislative Council lately. For example, the Elections (Corrupt and Illegal Conduct) Bill we discussed this morning states that it aims at monitoring the elections of the Legislative Council and the District Councils, whereas the Municipal Councils are not mentioned. Therefore, the Government's intention of "scrapping" the Municipal Councils is crystal clear. However, when the Municipal Councils are "scrapped", the channels for citizens to participate in public affairs are also eliminated. The Government does not have any intention or action to delegate the functions of the Municipal Councils to the District Councils, and this is the reason for our objection to the Bill. In fact, the present district boards are only advisory bodies without real powers, so the functions removed from the Municipal Councils will not be vested in the District Councils. Although we have proposed an amendment to extend the functions of the District Councils and add the provision of "receive and handle public complaints" to the Bill in order that District Council members can legitimately perform their duties and have more credibility. Unfortunately, the amendment was eventually negatived and this function cannot be officially included in the duties of the District Councils. We deeply regret this. On the whole, what we see now is not only a retrogression in democracy in the District Council structure, but also an explansion and resumption of powers by the whole Administration. Such a trend is really worrying.

Mr Deputy, if the Democratic Party's amendments to abolish the appointment system and the ex officio seats are negatived, we will not take part in the remaining part of the debate and we will also withdraw the amendment of adding new clause 70A. For this, I have already prepared a written notice. However, I absolutely hope that I need not use this notice. On the other hand, we are also very practical and do not harbour any illusion. Just now several party representatives have spoken in support of the Government's establishment of councils with appointment system and ex officio seats, and we also know that Government bills have always gone through the three tiers of councils very easily. Such examples abound. However, I have to tell the Government that even though it can influence the result of voting through manipulating the composition of councils and wins time after time in council votings, yet on the other hand, it actually loses the people's trust time after time. Thank you, Mr Deputy.

MR LEUNG YIU-CHUNG (in Cantonese): Mr Deputy, I stood for the district board election in 1985 for the first time and have been a district board member ever since. Today I am still a member of the Kwai Tsing District Board. Over the past 14 years, I have actually grown up with the district boards, so to say. Within these 10-odd years, there have been two dark days which are particularly distressing to me. The first one is July 1997 when the Government disbanded the district boards directly elected by the people and instead appointed us, the district board members returned through direct elections as well as another batch of appointed members to form the Provisional District Boards. This move severely crippled the representativeness of the district boards. The second dark day, needless to say, is today when the Government proposes to restore appointed seats again. If this Bill is passed, we all know that it will be a further retrograde step in the democratization of Hong Kong.

In 1980, the British Hong Kong Government issued the Green Paper on a Pattern of District Administration in Hong Kong and proposed for the first time that Hong Kong adults had the right to elect members for the Municipal Councils and the district boards. In the first district boards election held in 1982, elected seats only accounted for one third of all the seats and the remaining two thirds were appointed, official or ex officio seats. As the functions of the district boards have always been advisory only, at that time we did not believe the British Hong Kong colonial government was sincere in implementing a democratic system in Hong Kong. However, we still decided to stand for the district board elections because we believed that, to fight for democracy, we have to work both inside and outside the establishment.

Thanks to the hard work of many organizations and people, in 1994 ─ I do not know whether it did so wholeheartedly or hypocritically, the British Hong Kong Government eventually allowed all the seats of the district boards to be returned through direct elections except a few ex officio seats reserved for the rural faction. With the new system, the people could have more say and exercise more influence in district affairs while the democracy in Hong Kong took a great step forward. However, it has never crossed my mind that, after the reunification in 1997, we will have to take a step backwards which is a great satire on the ideology of "Hong Kong people ruling Hong Kong". It seems that Hong Kong has not returned to its motherland, but the sovereignty of Hong Kong has been transferred from an autocratic colonialist suzerain to another colonialist suzerain which is even more autocratic.

In fact, the Central Government's fear of democratic elections has already well manifested itself in the manipulation of different elections in the Mainland. As for Hong Kong, ever since the beginning of the drafting of the Basic Law, the Central Government has set up barriers after barriers against democratic elections. The enactment of the District Councils Bill by the Special Administrative Region (SAR) Government now and the dissolution of the two Municipal Councils in the future are nothing but the carrying through of the Central Government's policy to suppress the development of democracy in Hong Kong. Even though the District Councils are but advisory bodies basically and do not have the so-called policy-making power, the Government is still unwilling to let loose its efforts and tries by hook or by crook to dilute the democratic composition of the District Councils.

In the past few years, as far as we can see, how are the operations of the present district boards which are almost completely returned through direct elections inappropriate compared to the old district boards which had appointed seats? Are the present ones in any way incompetent? How are they inferior? The Government can produce no evidence for these allegations, and neither can it prove that appointed members will definitely benefit the operations of councils. Other than flattering the "masters in the north" and obeying a repressive authority, there is absolutely no grounds for the Hong Kong Government to suppress democratization in Hong Kong. Although the Government denies that the appointed District Council members will have similar inclinations, yet with my experience of over 10 years in the district board, I find that most of the appointed members tend to follow the Government's line on major issues. Therefore, no matter how the Government quibbles, its ultimate goal is to influence the development of democracy as well as the operation and decision making of the District Councils through the appointment system. Besides, the Government alleges that retaining appointed seats will allow capable persons to take part in District Council affairs, then why does the Government not encourage these capable persons to face the electors squarely? Why does it not let them stand amid electors so that the electors can vote for the ones they think fit to take up the role of councillors? Why does it not let them be genuine and dignified councillors? On the one hand, the Government says that it attaches great importance to their ability, but on the other, does it not seem that the Government actually underestimates their ability and fears that they may lose in elections? Actually, in my eyes, the Government has schemed basely but to no avail. A democratic system will only improve people's ability and enhance the Government's trust in its people. It will not go backwards. Therefore, since the Government hopes that these capable persons can take part in District Council affairs and that the electors will have an effective and smooth-running council system, I really hope that it can encourage these persons whom it wants to appoint to stand for direct elections. In this way, it will really open the public's eyes and they can see clearly for themselves how capable these persons are, and these persons will also have a chance to serve the community.

Mr Deputy, if the Bill is passed as is originally proposed by the Government, the democratic elements of the District Councils will be seriously undermined. If the Government also succeeds in "scrapping" the Municipal Councils and recalling the policy-making powers regarding food hygiene, culture, entertainment and sports, the room for the people to take part in district administration will definitely be seriously reduced compared to the situation before the reunification. If this is not a "retrogression in democracy", then what is this?

When the pro-Beijing people suppress the development of democracy in Hong Kong and object to return the Chief Executive and all Legislative Council Members through direct elections, the pretext they usually use is that the democratization of Hong Kong is not yet mature enough so we have to progress in a gradual and orderly manner. I think this is a very farfetched excuse. Even though we agree to this point, we still should think: How can we push democratization forward so that it will mature? Council experiences around the world tell us that lower-level councils are a good place to train and nurture politicians for their further promotion to central councils in the future. However, now that our Government is going to reduce the democratic elements in the District Councils and to "scrap" the Municipal Councils, as a result, some people will have no place to bring their abilities into full play. Under such circumstances, how can the democratization of Hong Kong mature? Does it not make the returning of all Legislative Council Members through direct elections more distant? Of course, this may exactly be the goal of the Government. It hopes that the pace of democratization in Hong Kong will not speed up and that direct elections will not be fully implemented. Neither does it hope that Hong Kong will have a chance to mature and our councils will be directly elected by the electors.

In order to truly realize "Hong Kong people ruling Hong Kong" and to achieve the long-term goal of returning the Chief Executive and all Legislative Council Members through direct electons, any measures which push democracy backwards will only make us feel that Hong Kong is now even worse than it was in the colonial era. Therefore, I will definitely raise my strong objection.

In the long run, I think that the District Councils should change from a consultative framework to a genuine "district management committee" which has policy-making and administrative powers in district affairs. Only by so doing can the ideal of "Hong Kong people ruling Hong Kong" be completely realized. Mr Deputy, in fact, under a capitalistic democratic system, democracy also has its fundamental elements. They include universal suffrage, policy-making power and power of dismissal. Ever since the establishment of the council system by the colonial government, electors or citizens have had universal suffrage only at best. Other than the limited policy-making power vested in the two Municipal Councils, most other councils do not have policy-making power, not to mention the power of dismissal. Unfortunately, in the present Bill, even universal suffrage is castrated. How can people be convinced that the SAR Government has the intention to democratize the present political system? If we do not make a strong condemnation today, it is tantamount to conniving at such a government.

Therefore, Mr Deputy, I will fully support the amendments to be moved by some Honourable colleagues later on at the Committee stage to abolish the appointed and ex officio seats. If the amendments are negatived, I will vote against the Bill at the Third Reading. I so submit. (A hubbub in the public gallery)

DEPUTY PRESIDENT (in Cantonese): Please keep quiet! Order please! Security guards, take them out. (Demonstrators continued to clamour in the public gallery)

DEPUTY PRESIDENT (in Cantonese): Security guards, take them out. Security guards, take them out.

DR YEUNG SUM (in Cantonese): Mr Deputy, Mr TUNG Chee-hwa is indeed very conservative in his administration. On one hand, he introduces or restores the appointment system in the District Councils, on the other hand, he dissolves the two elected Provisional Municipal Councils. What is most disgusting to us is that — we may talk about this later after midnight — he even asks the judges of the Court of Final Appeal to clarify their ruling, which is an unprecedented absurd demand. In fact, Mr TUNG's proposed restoration of the appointment system in the District Councils and proposal to dissolve the two Municipal Councils have widened the gap between him and the Democratic Party. Therefore, many members of the Democratic Party, including myself, did not turn up at a meeting with him recently. I do not know how long such a feeling will last, but I want to put down in record here that the Democratic Party deeply regrets and is very disappointed that Mr TUNG proposes to dissolve the two Municipal Councils and introduce the appointment system. We also do not know how long this feeling of disappointment in him will last, but I believe it will not influence our performance in council business.

Mr Deputy, the restoration of the appointment system in the District Councils is actually a great retrogression in democracy. Just now Mr Gary CHENG of the Democratic Alliance for the Betterment of Hong Kong (DAB) spoke against such a saying on various grounds, but I want to put forward my views. Basically, the restoration of the appointment system in the District Council is indeed a retrogression in democracy. Appointment means that the Chief Executive will appoint certain members who are generally more supportive of the Government or whose political views are relatively more conservative. I did not initiate this saying; it is actually a conclusion drawn by the press from the political backgrounds and views of the appointed members. I am just repeating their conclusion here. Since the Chief Executive makes these appointments, these people are responsible and accountable only to the Chief Executive. They are not elected by the people and so they do not have representativeness and they need not be accountable to or face the people. An elected member is very different from them. An elected member is returned by a geographical constituency through a one-person-one-vote direct election. He has representativeness and must be accountable to and face his electors. If he wants to be elected again, he will make a lot of pledges basing on which the electors can make a choice. However, the appointment system does not have any of these characteristics. So if someone says that the appointment system is not against the principles of democracy, I would beg to differ.

Mr CHENG also mentioned that many advisory committees were appointed rather than elected. By saying so, he is equating the District Councils, a form of district organization, with other committees such as the Social Welfare Advisory Committee, the Transport Advisory Committee or the Advisory Council on the Environment. However, I believe that the operation of the District Councils is different from that of advisory bodies. While the latter only play an advisory role in part of the policy making process, the scope of discussion of the district boards is very wide. In this connection, the district boards are different from the Transport Advisory Committee or advisory committees on the environment or social welfare. Of course, in principle, we do not object to all the 300-odd advisory committees being returned through direct elections, but even if it is the case, there will be difficutlies in implementation. I want to point out that we need not equate all advisory committees, such as committees on social welfare, transport and environmental affairs, with the District Councils, as the scope of consultation of the district boards is much wider. If all the 300-odd advisory committees are to be returned through elections, the Housing Authority as well as the various committees under the Hospital Authority will have to do so as well and there will be technical problems in practice. If someone says that, in principle, these committees also have to be returned through elections, I have no objection to that. However, technically, the public may have to face elections every single month. From this angle we can see that the appointment system can be implemented in advisory committees, but it does not mean that the same system should equally be adopted in the District Councils.

Honourable Members from the DAB always cite the fact that the democrats accepted appointment as members of the Provisional Urban Council, the Provisional Regional Council and the Provisional District Boards after the reunification on 1 July 1997. They say that the democrats should not have accepted the appointments if they were opposed to the system. However, Mr Deputy, I must stress particularly that the reason for our members to accept the appointments was that they were basically returned through direct elections. None of our members was not returned through direct elections. And I believe that the Government had appointed them because they were councillors returned through direct elections. If they were not returned through direct elections, the Democratic Party would absolutely not have accepted the appointments. Therefore, the basis of their appointments was that they were directly elected councillors. The nature of their appointments was different from that of those people or professionals randomly selected by the Government as they were not returned through direct elections. There was this historical factor at the time of reunification and that is what I want to particularly clarify here. We cannot say that because the democrats accepted the appointments, they would also accept the principles of the appointment system. By saying so, one seems to have forgotten the historical factor at that time and the fact that these councillors were actually returned through direct elections. It was on this basis that the Government gave them the appointed seats. Moreover, at that time there were not any elections. The district boards and the Municipal Councils were not elected; they were merely provisional.

Moreover, the appointed seats in the district boards were actually abolished in 1994. No wonder some members of the public say that the Special Administrative Region Government is so conservative in its administration that it makes people feel its openness is not as good as that in the last few years of the British rule. This is really a shame. Mr Deputy, Hong Kong has an international image of a society moving gradually towards openness, now this backtracking has brought Hong Kong into disrepute in the international community and I feel deeply regretted. Basing on the above points, my conclusion is that the restoration of appointed seats in the District Councils is indeed a great retrogression in democracy. If Members do not agree, they can stand up again and debate with us. While the Government proposes to reintroduce appointed seats, Mr TUNG also said in this Chamber last time that he accepted the appointment system. He said, "There is no problem with the appointment system because many professionals would also like to take part in elections but are worried that they may lose. Appointing these people can allow them to give play to their professional spirits." In fact, the appointment system encourages the professionals to take political free lunches. Everybody should undergo elections. Take a look at the Members here, many of them are professionals. I do not believe that they will not be elected if they want to do so heartily. Therefore, why do we have to especially give the professionals an opportunity so that they can become councillors without standing for elections? Why does the Government have to encourage these people to eat political free lunches? Later on, perhaps Mr SUEN can give a response to these questions.

As for balance, what is there to be balanced? A council should represent the voices from all walks of life. For example, in this Council, Members have different political inclinations and represent different social strata. Why do we have to appoint members to take up this role? Elections will do. Furthermore, a councillor is more worthy of his title if he is returned through election. I feel that it is actually a pretext if the Government says the appointment system will facilitate the professionals so that they can have a chance to contribute to society and strike a balance between different voices or influences in councils. The purpose of the pretext is to slacken the pace of democratization and bring the District Councils back to the status in 1994.

The Democratic Party also objects to ex officio seats. We do not see why, after the reunification, the indigenous residents of the New Territories still have to be treated so specially. Besides, we can all see that the majority of the 27 rural committees comprises 10-odd members, and a district board member is then elected among these 10-odd members. This is absolutely absurd indeed. I believe that the village representatives may not necessarily fail if they take part in elections. With their contacts in the community, if they really want to stand for elections in a small constituency, their chances of getting elected are actually fairly big. There is no need to adopt an election method which was especially designed for indigenous residents in the colonial era before the reunification. In fact, Mr Deputy, the election of ex officio seats is a genuine small-circle election, not much different in nature from the election of Chief Executive Mr TUNG. Therefore, after the reunification, they should stand for elections in an open and aboveboard manner. Just as I said a moment ago, with their social connections, their chances of getting elected in a small constituency is very big.

Lastly, Mr Deputy, I would like to put on the records of this Council that I raise a strong protest against the Government's attitude with respect to the consultation process of this Bill. The Government could have actually introduced the Bill much earlier in the Legislative Council. But it chose to submit it very late and asked Members to finish the scrutiny hastily within one or one and a half months. I agree to what the Honourable LEE Wing-tat said just now. As legislators, our most important task is to scrutinize bills. Though we may have different political views, as long as bills are submitted, we still have to examine them thoroughly. It is not incumbent upon us to support the Government, so much so that whenever the Government tables a bill, we have to push through with our work and finish the scrutiny within one and a half months; and no matter whether we agree or not, we have to come back to vote on it afterwards and just sit here without saying anything, letting the democrats talk wildly. We can count how many Members have actually spoken so far. When the Government has lobbied for enough votes, the Bill can be carried in an imposing way. This is in fact a blot on Hong Kong's council system and a dishonour. If our viewpoints are different, you should stand up and have an open debate with us so that on the record we know who are behind democracy and who support a retrogression in democracy. Thank you, Mr Deputy.

MR FRED LI (in Cantonese): Mr Deputy, it seems that only Members from the Democratic Party and the Frontier have spoken so far. I do not know where independent Members have gone. As for the Democratic Alliance for the Betterment of Hong Kong (DAB), only Mr Gary CHENG has spoken. Members should know it all too well that the Government has secured the necessary votes. It is futile whatever we say. The Government has completely got hold of our viewpoints and arguments. Perhaps I may say too many people are defending the Government.

The Secretary for Constitutional Affairs was asked to respond to two challenges raised by me. In fact, we did raise these two challenges before but the Secretary had evaded them. First, in the Legislative Council Panel on Constitutional Affairs, I did ask Mr SUEN, the Secretary: What is an appointment mechanism? Who will be responsible for making recommendations? Who will be responsible for nomination of candidates? Who will be responsible for making the final decision? Is there any transparency? What criteria will be adopted for appointment of candidates? I am not going to argue with him whether there should be appointed Members for the time being. The Secretary was not even willing to answer these questions. Neither has he given us an answer. On the one hand, we are not supposed to talk about these issues and, on the other, he cannot disclose by what means candidates will be appointed. It is unknown who will make the final decision. Is it going to be the Chief Executive? No one knows. Is it going to be the Secretary himself? Even I do not have any idea. The Secretary said it was inappropriate for him to disclose it. And neither has he mentioned it before. I hope the Secretary can respond to these questions formally today. How transparent will the appointment be? How can the Government justify itself for, on the one hand, it asks people to support the appointment system and, on the other, the system itself operates completely like a black-box? Of course, the Government has the majority of votes in hand, but does it mean that it can thus ignore everything, thinking there is no need to answer questions and respond to questions raised by the minority of Members? This is the first challenge.

Now it comes to the second challenge. Some colleagues had asked the Government in this Council whether it had conducted any studies on the electoral systems adopted by District Councils all over the world. I do not know whether the Deputy President still remember the question time I refer to and that was an oral question. The response given by the Secretary at that time was that they had no time to do it and the most they could do was to obtain little information from the Internet regarding the electoral systems adopted in Taiwan and New York as mentioned by Mr LAU Chin-shek earlier. Even though the Democratic Party has only done a little homework, we know more than the Secretary does. We did consult 60 foreign consulates in Hong Kong and most of them have given us a reply. According to their letters, a great majority of District Councils in their countries were constituted by election. The election they referred to is not functional constituency election. In overseas countries, all elections are geographical one-person-one-vote elections. I must make this point emphatically clear. Candidates are directly elected from each district by means of a one-man-one-vote system. In the United Kingdom, Germany, France, Southeast Asia, Japan, the Philippines and New Zealand, District Councils are conferred the functions of enacting legislation and administering district affairs. But some District Councils only play an advisory role. But they share a common point in that all these District Councils are constituted by a one-man-one-vote direct election system on a geographical basis.

Some places do have councils which play both advisory and consultative roles. But on top of that, there is another direct-elected council. In other words, the council does not represent the entire council. There is no council ─ I cannot see this point and perhaps the Secretary can enlighten me ─ which combines a directly-elected and an appointment systems. I cannot see this point either. I would be grateful if the Secretary can accept this challenge by telling me where on earth we can find a place where direct election is mixed with an appointment system just like Hong Kong, or where the appointment system is restored after a previous abolition. What countries have such an experience? Would the Secretary please not answer by explaining that Hong Kong is a unique case.

I have been working as a district board member for nine years and I have worked with appointed members before. The impression they gave me was they had little time and they were not able to take up too much work for they were all too busy. Being either businessmen or professionals, they would not show up whenever elected members spoke at length or engaged in debates. Very often, they came late and left early or even failed to show up. They only took part in small committees. To date, I am still an Urban Councillor who is going to be "scrapped". Who scored the lowest attendance rate after the addition of a few appointed members by the Government? Throughout the one-odd year since the appointment last year, it was the few appointed Urban Councillors who had scored the lowest attendance rate. I am an elected member who hold two offices at the same time, but my attendance rate is much higher than that of appointed Urban Councillors. Why? It is all because they were busy. Professionals are usually well-known people. They might hold dozens of titles at the same time and they might as well be a member of a government advisory committee. Even if they are willing to accept one more public office, they will not be able to find time to carry out their duties. Without much interests in the Urban Council, how can they work for the public? The Secretary can take a closer look. This is my personal experience from taking part in the work of the Urban Council.

Second, could the Secretary tell us how many appointed members have set up ward offices to meet with the public in their respective districts and which appointed members will do so? Please do not mention those who were defeated in elections and subsequently appointed on 1 July 1997. I am talking about those appointed district board members or Urban Councillors who have never had a chance to really take part in election. Did any of them meet with the public personally in their own names? The answer is in the negative. Why? This is because they were not elected by the people. Rather, they were appointed by the Chief Executive or some unknown people ─ could the Secretary tell us the nominators later ─ though the appointment letters were signed by the Chief Executive, I do not know who made the nomination and on what grounds the appointments were made. Anyhow, these people were appointed by the Government. Whether they can be appointed on whether they can be appointed again in the next term has nothing to do with the public. Their performance has also nothing to do with the public. It is up to the Government itself to decide how to appraise their attendance. There is no way that we can know. Neither will the Government explain why it continues to appoint a certain member and cease appointing another. It will at best give him a medal and tell him to retire.

The picture is entirely different when it comes to elected members. Voters will trust them only after they have worked very hard to solicit votes from voters and fought hard to reflect public opinion. If they do not perform well enough, they will not be elected in the next term. Because of such an appraisal system, they must maintain persistent performance in the councils as well as attending meetings because they will be monitored by the media, other members as well as other political parties. But who is going to monitor appointed members? Some colleagues said the Government will take up the monitoring role. What yardstick will the Government adopt for evaluate if a certain appointed member has performed today? God knows.

Finally, let us look back at what happened on 1 July 1997. Although many colleagues have mentioned it earlier, I want to tell Members what actually happened once again. After 1 July 1997, the Government introduced a real group of appointed members into the two Municipal Councils and district boards. However, they were not the ones elected in 1994-95 and then went through the transition to serve the Special Administrative Region. In 1997, the Government appointed 14 persons who failed in the 1994 District Board Election into 18 district boards. Of these 14 people, nine came from the DAB. If not for the Government's appointment, how could they manage to serve as members? Nine of them will definitely run for election again in November this year. The Government's appointment has given them an additional chip. Now they can formally declare themselves to be a district board member and stand for election again. If not for the Government's appointment, how could they manage to serve as district board members?

Could Mr SUEN tell me: In the former British Hong Kong colonial era, was there any political party which could have nine defeated candidates to be appointed into the same council? No matter how harsh we condemned the British Hong Kong government, the colonial government and Mr Chris PATTEN for abolishing appointed seats in 1994, did we find the Government appoint batches of people who had been defeated in elections to the district boards which came into being in 1982? The answer is in the negative. Why did such a thing happen to the Special Administrative Region Government? How could you explain it? Even the DAB finds it impossible to offer any explanation because they have a vested interest. Why do they support the appointment system? I can surely stand up to condemn them. Why do they support the appointment system? It is because they can get double insurance as long as they take part in election. It is of course perfect if they are elected. But even if they lose in the election, they can still be appointed. Some government officials asked if Members from the Democratic Party would be willing to accept the appointment if the Government decided to appoint them? I can tell them we will not accept the appointment. We are against the appointment system. We will only choose to stand for election; or else we will not take up the office. We will definitely not accept the appointment after failing in the election. Some people will fundamentally not stand for election because they fear they will lose. They would rather seek the Government's appointment. How can a political party behave like that? A political party should gain its position and reflect its political platform through election. Political parties all over the world behave exactly like this. It is for this reason that I feel extremely disappointed. The DAB has been competing fiercely with the Democratic Party at the district level and, in terms of political competition, it has imposed a great threat to the Democratic Party. I am saying this not because I want to "boost the morale of other people while discouraging ours". We have been competing very fiercely in numerous districts. It seems that we are always campaigning in elections, with elections coming one after another. Very often, we have to go to numerous places to post up posters and seek opportunities to show what we have done. Of course, voters will be happy to see the two parties trying their utmost to work for them. Such being the case, why did the DAB still choose to support the appointment system? The case is not the same for the Hong Kong Progressive Alliance. There is little surprise in its members supporting the appointment system for it has no directly-elected members. But why did the DAB choose to support the appointment system? It does not matter whether they speak or not. I am only expressing views from the bottom of my heart. I earnestly hope that the Secretary will not only read out his script. I hope that he can really respond to the two questions I have raised earlier. I am going to repeat the questions just in case he forgets. The questions are very simple: 1. Has he gathered any information regarding the framework of District Councils in other places? Can we find a mixed election and appointment system in other parts of the world? Or an re-introduction of an appointment system after direct election? Are there any such cases or examples? 2. How transparent will the appointed mechanism be? Can the Secretary enlighten us today?

Mr Deputy, I so submit. (A hubbub in the public gallery)

DEPUTY PRESIDENT (in Cantonese): Order please! Would staff members take them away.

MR RONALD ARCULLI: Mr Deputy, I did not realize I was that popular in the Gallery. (Laughter) Anyway, the Liberal Party supports the Second Reading of the District Councils Bill.

Those Members of this Council who participated in the Bills Committee have expressed many different views on the Bill and put forward many suggestions, a lot of which were actually accepted by the Administration. This, of course, as we all know, means that the prospects of their being passed are reasonably higher than the amendments put forward by Members because of our voting system a la the Basic Law.

I would like to be really quite brief, because I think that a lot of views have already been expressed by honourable colleagues today.

For ex officio members, the Liberal Party can see the rationale behind this provision. As for appointed members, even elected members of the district boards today seem to acknowledge that they, that is, the appointed members, have made their contribution. We as a party, of course, will continue to participate in the district board or District Council election, and we see no overriding reason to block this proposal of having appointed members.

Mr Deputy, whilst we respect the views of Honourable colleagues, which may not be shared by us, I suppose it might be asking too much to ask them to respect ours in return.

Thank you.

MR LEE CHEUK-YAN (in Cantonese): Mr Deputy, just now Mr Fred LI was trying to employ a prodding tactic. But I believe this is not going to work. I rise to speak today not because I want to persuade Members to change their established position with respect to the vote. I rise to speak today mainly because I want to put what I said on record for today is a day of darkness. It is not only a dark day because of the retrogression in democracy ─ perhaps Mr Gary CHENG would not like me describing it as a retrogression in democracy. In his view, it is not a retrogression; it is only a retention of appointed seats for appointment was made on 1 July 1997 already. Now it is only a retention of appointed seats. But I suggest Members not to "play on words" anymore.

Today is a day of darkness for the democratic development. Today is a day of darkness for today is a day for someone to take an about-turn. I want to point out that some people have taken an about-turn. I consider today a day of darkness for Hong Kong. I would like to put on record that the Liberal Party took the lead in taking an about-turn. Just now, Mr Ronald ARCULLI briefly explained his position in this issue. But on 23 February 1994 when the Electoral Provisions (Miscellaneous Amendments) (No. 2) Bill 1993 was debated in this Council, Mr Allen LEE, the former Chairman of the Liberal Party, clearly indicated that the Liberal Party supported the abolition of appointed seats for district boards and the two Municipal Councils. At the Committee stage, Mrs Selina CHOW, Mr Edward HO, Mr Ronald ARCULLI and Mrs Miriam LAU toed the party line by voting against the amendment proposed by Mr Eric LI for the retention of appointed seats. This is crystal clear. Today, the Liberal Party is going to tell us and later they will also tell us the position they hold by their vote, that they have taken an about-turn from their position in 1994. This is the first about-turn. I do not know how many about-turns will be made today.

The second major about-turn comes from the Government. The Government may well explain that because the old regime is now replaced by a new one and Mr TUNG Chee-hwa has taken over the reins of government, it has to make an about-turn. But it is really a shame for the Government to say something like this. This is because, after all, the colonial government has now changed into a Special Administrative Region Government. Could it be said that the existing Special Administrative Region Government is even more retrogressive than the former colonial government? Such being the case, what is the point of talking about being masters of our own house? With the retrogression, the public will find it even harder to be masters of their own house, how can we find an excuse for that? I would like to talk about the arguments put forward by government officials at the time. I wonder if Mr SUEN, the Secretary, could refute the arguments later. In 1994, the then Secretary for Constitutional Affairs remarked, "The proposals to abolish appointed district board membership aim to enable the people of Hong Kong to have more opportunities to participate in the work of the 18 district boards." Right. In other words, the Government no longer gives the people of Hong Kong an opportunity or more opportunities to participate in the work of district boards. He also added, "The abolition of appointed district board seats is not, as some Members suggest, a radical change. Rather, it represents the culmination of a gradual process of changes in the composition of these bodies over the years. The district boards were set up in the early 1980s. By any yardstick, fully elected membership for district boards in 1994 can hardly be described as a development of undue haste. Nor, therefore, should it cause any disruption to the operations of district boards." In another paragraph, the Secretary said, "There are concerns that after the appointed members have gone, their expertise cannot be readily replaced. One must recognize the need for our system of representative institutions evolving to meet the aspirations of the community. In any case, there are already legal provisions for the districts boards to co-opt experts onto their committees if such a need arises." The problem pertaining to professionals was thus resolved. Finally, the Government made it clear that, "The stand of the Administration is clear. We firmly believe that it is both timely and appropriate to abolish appointed membership in district boards." "Firmly believe" is not firm at all. I am really disappointed with the fact that the Government has always behaved like this.

Today is a day for taking an about-turn. Despite the different views we may hold, we should at least be consistent. This is very important. A frequent change of course will only confuse people. We are completely at a loss as to what other Members have in their minds. In that case, it is extremely difficult for us to hold any constructive dialogue. This is why I am very disappointed. Today is a day for taking an about-turn. I deeply regret that the Government intends to restore the former appointment system.

I would also like to respond to the speech delivered by Dr TANG Siu-tong regarding professionals. He said some professionals are not suitable for working among the masses. Their characters are not suitable for standing for election too. I think what he said is an insult to two categories of people. The first category is the professionals. I wonder if he was implying that professionals are mostly autistic and unable to stand for election? In fact, it is not impossible for professionals to stand for election. They can definitely do that. It depends on whether they are willing to do that. We cannot force them to stand for election against their will. If they wish to serve the community, just as the Government said, they can follow the co-opt experts path. Second, it is an insult to district board members. This is because, to a certain extent, district board members are also professionals for they represent the public to monitor the Government. If some people keep on saying that district board members, though representing the public to monitor the Government, lack professional expertise, the district boards will not be able to operate in a mature manner. This is actually an insult to district board members. I am deeply disappointed as such a remark is unfair to these two categories of people.

Mr Deputy, I speak in opposition to the restoration of appointed seats and ex officio seats. Thank you.

THE PRESIDENT resumed the Chair.

MR CHAN WING-CHAN (in Cantonese): Madam President, since their establishment were in the early 1980s, district boards have been providing services to the public, and their work especially in the area of public liaison and advisory role in building up a harmonious community have been widely recognized. At that time, Members of the Executive and Legislative Councils were mostly appointed by the Governor, and the Legislative Council was made up of appointed Members and representatives from functional constituencies. Elected seats in the Legislative Council were non-existent at that time. Therefore, the emergence of the district boards chiefly composed of elected seats and a number of appointed seats, were naturally a supplement to the appointed system at that time. As opposed to the their Legislative Council, the district board was more widely accepted and popular among the public.

Another reason for the popularity of the district boards comes from their focus of work being on district affairs. Though the district boards are just one of the many advisory bodies within the government structure, they are different in that they provide direct services to the public. Members of the district boards usually deal with complaints by the public and try to resolve problems in connection with livelihood issues (I am sure that Members of this Council who had served on the district board will recall that most of the complaints were relatively minor ones which dealt with the replacement of fluorescent tubes, blocked drains, noise pollution and so on). It is understandable that members of the public will be asking for more and better services.

Subsequently, elected seats were introduced into the Legislative Council, and the number of appointed seats on the district boards was gradually reduced until they were totally abolished just before the reunification. I think this is most inappropriate for when discussions on the development of representative government were held in the '80s, many members of the community thought that there should be some appointed seats in an advisory body which looked after the interests of the community and the appointed seats could also be beneficial to a district board formed by small constituencies ...... (A hubbub in the public gallery)

PRESIDENT (in Cantonese): Order! Or, you will have to leave this Chamber immediately.

Mr CHAN, please continue.

MR CHAN WING-CHAN (in Cantonese): ...... in this way, the resources in the district would be more balanced and this would also attract some so-called "interested persons" who have been working on district affairs for a long time to work for the district boards. As the representative government developed, the number of appointed seats was gradually reduced to tie in with the social development. I support this Bill for I think that it is necessary for the District Councils to have an appropriate number of appointed seats. (Another hubbub in the public gallery)

PRESIDENT (in Cantonese): Take him away!

MR CHAN WING-CHAN (in Cantonese): We believe that if there are changes in the future, or when we conduct a comprehensive review on the political development of Hong Kong, then this issue can be brought up again for discussion.

Today, when we talk about the function of the District Councils as an advisory framework and when are hear criticisms on the issue of appointed seats, I would like to remind Members that: after the reunification of Hong Kong, a large number of appointed members (including those who were already members of the two Municipal Councils and various district boards before the reunification), and those who were willing to be appointed after the reunification (especially those district board members who were elected in September 1994, and whose term of office would have expired in September 1997 if they have insisted on a "through train") have continued to serve the public regardless of their term of office and personal and political differences. I think this is very important in ensuring the stability of Hong Kong, and all the appointed members of the district boards should be commended. The appointed seats of the first District Councils can bring in members with professional expertise, and thus serve to enhance and ensure the quality of the work of the District Councils. Our views in this regard have been put forward during previous discussions. As such, the Federation of Trade Unions (FTU) and our hundred-odd affiliated unions are in support of having appointed seats in the District Councils of the Hong Kong Special Administrative Region (SAR).

Furthermore, there are also suggestions that the Chairman of a District Council should also be elected at the same time as other members so that the Chairman can be returned through direct election. However, I have reservations on this suggestion for this may not be technically feasible, especially if a person running for chairmanship is returned in the election but somehow loses in his constituency, then how can we resolve the problem? I do not think this could be easily resolved. However, Madam President, I learned from the press report today that you have already solved this problem by ruling the amendment out of order.

There should not be any resistance in the District Councils which are part of the representative government and political structure of Hong Kong over the issue of upholding the "Basic Law". As a constitutional document of the SAR, the Basic Law should be the legal basis for "one country, two systems; Hong Kong people ruling Hong Kong and a high degree of autonomy". The political system of the SAR is clearly laid down in the Basic Law, and there are also clear provisions on the Chief Executive, all ranks of government officials, and the various levels of the representative government. Therefore, I think that Members (including those of the Legislative Council, the Municipal Councils and District Councils) should uphold the provisions of the Basic Law on these issues.

Finally, on behalf of the Federation of Trade Unions, I support the District Councils Bill.

Madam President, I so submit.

MR AMBROSE CHEUNG (in Cantonese): Madam President, I wish to express in this speech my disappointment with the Government in regard to: first, the political short-sightedness of the Government; and second, the hypocrisy of the Government. Besides, I will also speak on the functions of a district board as well as the appointment system. Apart from that, I will also express my views in the light of my personal experience; by that I refer to my 17 years of experience as a district board member, from the year 1982 when I became an appointed member, to 1985 when I ran in the direct election and to date.

Why do I say the Government is in lack of political foresight or, even worse, is in fear basically? From the annual Budget recently announced by the Financial Secretary, we could see that the Government does have foresight in the field of business and commerce, since Cyberport, Disney theme park, development into high technology and so on are all far-sighted proposals. Now back to the issue of district boards as advisory bodies. Politically speaking, the district boards are but local bodies; besides, the Basic Law has also set out clearly that district boards are non-political organizations. However, from the way the Government has handled the entire matter, we could see that the Government's basic objective is to disable the district boards. But why would the Government has such political fear? The hypocrite Government has announced in public that it would review the structure of district organizations, and that it would implement a two-tier system of representative government. What is more, the Government has even said that it would expand the functions of the district boards. But what could the district boards gain in real terms? The proposals put forward in the Bill have stated very clearly that the Government will pay more respect to the views raised by the District Councils. As a matter of fact, however, the Government should have paid due respect to the district boards since the enactment of the District Boards Ordinance in 1981. During the slightly more than seven years between 1991 and 1998, the Government has basically casted the district boards aside to a very unimportant position. Now that the Government has talked about paying more respect to the District Councils, would that mean there be new gifts from the Government? Certainly not, since the Government is basically required to respect the district boards. As such, to those district boards which believe they would get their due respect from the Government after this review, my advice is that they had better stop harbouring illusory hopes.

The second point is on resources. I do believe there will be an increase in resources. However, those resources should in fact be allocated to district board members a long time ago to enable them to set up their office and recruit staff to help discharge their duties. So, that should be a required supply of resources, not an additional one.

The third point is on functions. Should the Government endow the district boards with more functions? Negative. In this connection, the Government has tried to put forward in the Bill a proposal to include food safety and environmental hygiene under the functions of the District Councils. In view of the Government's intention to disband the two Municipal Councils, I have suggested incorporating art, cultural and recreational activities into the functions of the District Councils. However, the Government has found my idea unacceptable after some thoughts and withdrawn the proposal regarding food safety and environmental hygiene. After that, the Bill was revised and the part on functions remains the same as that of the existing District Boards Ordinance. I hope my district board colleagues could understand that in making the proposals to incorporate into the Bill the responsibility for food safety and environmental hygiene, the Government was thinking of disbanding the two Municipal Councils by so doing. But then Honourable Members put forward proposals to expand the functions of District Councils by including the work related to cultural and recreational activities, and it just seemed that Honourable Members have fallen into the traps made by the Government because the Government could certainly disband the two Municipal Councils after the responsibility for cultural and recreational activities have been handed back to the Government and the District Councils. Why did the Government decide to abandon the amendment then? It is because the Government knows it very well that if the responsibilities for food safety, environmental hygiene, as well as cultural and recreational activities are set out in the Bill, should any matters related to these fields arise in future, the Government will be bound by the relevant provisions and have to submit the matters to the District Councils for discussion. Hence, the Government has finally resolved to revise the Bill after thorough consideration. Now the relevant provisions are deleted and the Bill is restored to its original form, which is the District Boards Ordinance; what is left is some vague wording and general provisions. That way, the Government could conduct consultations if it so wishes; otherwise, it would not consult the District Councils as that is not clearly set out in the terms of reference. That is why I say the Government is a hypocrite.

The district boards have been in operation for such a long time ─ since 1994 all district board members are returned through direct election ─ would it be possible that the Government is not aware of the feasibility of devolving the District Councils with the power to prioritize the public works projects within their respective districts? Besides, the Government could also devolve the District Councils with the power to appropriate funds, manage facilities such as parks, markets, community halls and so on. As a matter of fact, community halls are currently managed by the district boards, so there are indeed precedents in this respect. Both the local residents and the district board members are very familiar with the matters of their respective districts, and all those items of work are by no means political but mere localized work, yet the Government is still unwilling to take this review as the opportunity to devolve the District Councils with real power to enable them to enhance their functions on the one hand and develop towards district administration on the other. Actually, the two Municipal Councils are very much similar to a district authority, but since the Government has resolved to disband the two Municipal Councils, it should at least apply the concepts of two-tier system of representative government and district authority to the District Councils. Nevertheless, the Government just do nothing. I cannot understand why the 18 district boards would agree to such an arrangement. Should district board members really accept those arrangements and measures, I should like to remind them to take note of the following fact. I could recall that during many discussions between the district boards and the Urban Council, many Urban Councillors have reminded district board members of a couplet at the entrance of the Hong Kong Cemetery which goes: "As my body lies here in the grave, so will yours in the future". Regrettably, the direction we have now is not orderly progression but orderly retrogression.

I should like to express my disappointment with another example, and that is the appointment system. The stance of the Urban Council in this issue is very clear. I have consulted the other 49 Urban Councillors in this respect and 37 of them have expressed their view; among them, 28 are opposed to the appointment system while nine have indicated their support. So, we can see that a majority of 28 out of 49 Urban Councillors are opposed to the appointment system. In regard to the various aspects of implication of the appointment system such as causing the democratic development to retrogress, many Honourable colleagues have expressed their views and I am not going to repeat them here. However, I should like to concentrate on two points. For any system to be successful, it must at least meet two basic criteria: first, being fair; second, being open and transparent. Unfortunately, the appointment system proposed by the Government is neither fair nor open. Why is it unfair? The answer is very simple. Within the same council, there are two types of members, one of which being the elected members who have to "fight" for their seats, while the other being those who join the game through an easy channel. I have once joined the game through the easy channel and held office as an appointed member for two years. This is so unfair! Should appointed members be granted privileges?

On the other hand, why do I consider the system not open? I have pressed the Government many times for the criteria against which appointment will be made. Generally speaking, the appointees will mostly be those people who do not wish to run for offices in elections but have an interest in the work of the District Councils, or have the ability and enthusiasm to take part in the work of a representative council. These are by no means specific criteria. With such unclear criteria, basically it would be the Government which selects the candidate for appointment; and since the Government is intervening in this manner, as rightly put by an Honourable Colleague, the Government should be suspected of trying to control the District Councils. It simply beats me. If the Government is intent on enhancing the representativeness of the District Councils, then just as mentioned by some Honourable Members before, the Government could co-opt those people who wish to serve but not to run in the election, regardless of whether they are professionals, businessmen, members of the public, members of various social strata, or even experts and academics into the District Councils either by way of appointment or via the procedures determined by the relevant District Councils. No election or votes will be required in this way. Under the existing practice, such persons could be co-opted into committees under the district boards. These co-opted members could further enhance the representativeness of the committees concerned. The Government may even amend the relevant part of the legislation to enable these co-opted members to join the District Councils so long as they do not have the right to vote in the District Councils concerned. I am sure both the elected members and the government officials will have the same breadth of mind to consult and take in the views from experts and academics. As for the experts and academics, there is no need for them to win any votes, unless they wish to control the District Councils with such votes. If the objective of the Government is to collect opinions and enhance the representativeness of the District Councils, this should be one way to achieve the objective.

In addition, I have also put forward a proposal to the Government to try to find out how liberal it is. I have told the Government that it could still implement the appointment system if it so insists, provided the appointments are not to be made by the Government but by another body. In this connection, the Government could set up an independent appointment committee made up of some 10, 15 or 20 members and this committee can be given clear terms of reference to consider candidates for appointment to the District Councils. The independent committee shall formulate its own specific criteria for appointment and then hold fast to such criteria in making appointments. On the other hand, the appointed members shall be accountable to and appraised by the independent committee, while the independent committee will review the performance of the appointed members for the second term.

If the Government is really of a neutral stand and really has no intention to control the District Councils, why does it not consider this proposal? Indeed, this proposal could enable the Government to remain in an impartial position, a position which can drive away any suspicions on its motive. Madam President, it is very unfortunate that my voices have eventually become noises as well. I have no idea how loud are such noises in the ears of the Government. Yet from this issue of functions and the appointment system, I have proven that the Government could only demonstrate or start to demonstrate its foresight in the field of industry and commerce. However, on the political front, I feel that the Government is not only being retrogressive and conservative, it is suffering from a phobia of politics and administration. Perhaps I have rather good patience, after all, I have been serving as a district board member for 17 years. Despite the criticisms I have made in respect of the District Councils, they might just be the only channel through which I could keep on serving my district in the future. I must say that I am very much disappointed with the Bill, since the Government has not kept its word to provide the District Councils with the terms of reference, resources as well as other things that could enable them to develop into a district authority.

MR SIN CHUNG-KAI (in Cantonese): Madam President, objection to retrogressive democratic development; objection to restoration of appointment system.

Madam President, the speech made by the Honourable Ambrose CHEUNG just now has caused mixed feelings to well up my heart. While Mr Ambrose CHEUNG has been serving as a district board member for 17 years, I have been a district board member since 1985; however, I have never been an appointed member before, except for the transitional period in 1997 when I had no choice but accept the appointment for a short while due to a special arrangement.

The Government is in effect telling the people through this proposed system that it does not trust the electors; or perhaps I should say that the Government has no confidence in the policies it implements, since the Government sees it necessary to have someone in the lowest level of representative government to defend its policies. The day before, Mr LAM Woon-kwong, Secretary for the Civil Service, put forward a proposal to thoroughly reform the civil service system. Why should the Government not show its resolve and review the political system? In regard to the reform of the political system, the boldest move made by the Government after 1997 is the abolition of the two Municipal Councils; apart from that, the Government is not only making zero progress, but is in effect retrogressing.

It is indeed unnecessary to restore the appointment system; besides, it would even impact on the systematic and proper reflection of views from the grassroots. There have been suggestions from the Government and even from certain Honourable Members that the appointment system will serve as a channel to collect professional advice. As a matter of fact, however, professional advice could be sought through many different channels. Firstly, the Government could seek advice from consultancy firms and professionals; but frankly speaking, the advice collected this way may not necessarily be good advice. Secondly, the Government could do it at the district level. In this connection, District Officers may appoint professionals to the relevant advisory committees to have direct audience of their views regarding the districts concerned. This should not be of any problem; hence, there is no need to collect their views at the District Councils. Thirdly, over the past 17 years ─ or perhaps we should date back to the year 1979 ─ no substantial progress has ever been achieved by the Government, since the relevant administrative power has yet to be returned to the people, to the primary level of representative government. Professional advice is of course important, but insofar as local matters are concerned, it may not be that important in most cases.

Let me illustrate with a recent example. After the Tung Chung Line of the Airport Express and the Air Bus have commenced operation, the Kowloon Motor Bus (KMB) and the Transport Department spent several hundred thousand dollars to produce a report on the ways to cut and reorganize bus routes. After reading the report, my colleagues have for many times told the Transport Department that the consultancy report was flawed and incorrect; besides, we have also requested that no bus routes be cancelled within the first two to three months of operation of the Airport Express, with a view to collecting sufficient data to determine whether or not many people will ride the so-called feeder buses to take the Airport Express. Finally, we won and retained the relevant bus rotes. Three months later, the KMB did not want to cut its bus routes any more. Why? It was because the patronage of those routes had not dropped. From this incident we could see how things would turn out after professional advice has been sought. Actually, professional advice is always available in consultancy reports, and reports by Transport Officers; they have already been made by the personnel employed by the Government. Are those people not professionals? Why should the Government need to draw on other professionals? Even if the Government wants to hear a second opinion, there are still many ways to achieve the purpose. It is indeed unnecessary for the Government to appoint some persons as members just to collect their advice.

In the past when this Council debated issues regarding the so-called political system, we could always hear such terms as "orderly progress"; however, such terms have not been heard this time. Why? Perhaps this is because at least nobody would like to bring up the fact that we have not made any progress for many years. We have experienced an one-off reduction in 1994, that was acceptable. Yet this time we are retrogressing from the existing composition to one which is similar to what we had in 1991, or even earlier. We have not made any progress at all, and that is why nobody has mentioned orderly progress this time. All those "pretexts" of political reforms which we used to hear about in the past could not be raised for discussion this time; hence there is no other choice but to speak on professional opinions.

In implementing its policies, the Government should adopt an open-minded attitude to find out whether members of the grassroots sectors will accept those policies and what response would they make. In formulating policies, public officers at the Government Secretariat should give some thoughts to the acceptability of the policies when they are launched among the grassroots. However, what the Government tries to do is to create some appointed members to dilute and neutralize the views. But will the opinions collected in such a manner be the true views? Why could the Government not have more confidence in its own administration and be brave enough to directly hear from the grassroots their views on the policies? In regard to public opinion representation, the performance of the Democratic Alliance for the Betterment of Hong Kong (DAB) could sometimes be more progressive than us, the Democratic Party. Now that we have this system called election, people who are elected through this electoral system should then represent the public opinion; they should strive to genuinely reflect the views of the public, for this is the true meaning of democratic election. Instead of making so many efforts to set up an appointment system to defend its policies, the Government should seek to formulate policies that are acceptable to the public. This should be a fundamental solution to the problem.

Madam President, it is shameless enough for the Government to introduce this Bill; however, it would be an even more shameful act to enable the passage of the Bill. In this connection, it is particularly disappointing that the DAB, which has always been talking about the promotion of democracy and has experienced a struggle for democracy, has indicated their support for the appointment system. As a matter of fact, we could win support from residents of our respective districts through elections, while the electors could elect the right person to represent them; as such, the ultimate benefits will go to the electors, not the political parties. At present, we could see that many members of the public, organizations and residents' associations try to seek help from political parties. Usually they will approach different parties and factions at the same time to see which one could really help them. To members of the public, the helpful one is the best one. This is typical of the public.

The Government should bear this in mind in implementing policies. Instead of introducing the policies in a rigid manner, the Government should try to find out whether the policies would be accepted by the grassroots. The Government should have confidence in itself. There is indeed no need to appoint members to defend the government policies.

Just now I have referred to the reform of the civil service system as well as the issue of political reform. The Government must be very forward-looking in this connection; indeed, Hong Kong really needs to have some political talents badly. We should formulate a system to encourage capable persons to run in elections, so that these persons could absorb experience in politics through their contacts with electors as well as from various mechanisms and institutions, and thereby promote the democratic development and government policies of Hong Kong. The Government's restoration of the appointment system this time will not be of help to this direction. Although many new ideas have been put forward in the reform of the civil service system, new ideas are not available in this proposed political reform; worse still, the Government has even put forward many disappointing proposals. Madam President, democracy and talents are both very important. With the appointment system, the Government could certainly select the right persons it deems fit, but this is by no means a long-term system to attract capable young persons to join the public service line and take pride in serving the community.

Hong Kong is now operating under the principle of "one country, two system"; as such the colonial burden on our shoulder has disappeared. Certainly the colonial government would need to ensure support for its policies through an appointment system, but under the principles of "one country, two system" and "Hong Kong people ruling Hong Kong", I really can see no reason to support the Government's attempt to seek alternative opinions. All that the Government needs to do is to organize through its own systems bimonthly meetings with professionals from various districts, and the opinions it needs will be available then. Democracy must be upheld, views must be sought, representative councils must operate like representative councils. In this connection, a representative council must be a democratic representative council; it must perform its functions via a democratic mechanism.

I must emphasize that district boards perform a special function. If we view the whole matter with reference to the reform of the civil service system, we district board members, when performing our duties in our respective districts, could play to a fairly large extent a monitoring role. In addition, we could also impact positively and actively on services provided at the district level, thereby assisting the Government in its administration and implementation of policies; in particular, we could remind the Government of the mistakes in its policies. Bearing that in mind, the Government should indeed respond actively to the requests made by district board members instead of planting in some appointed members to defend its policies.

Apart from the reform introduced to the 1985-88 term (the ratio of elected members was raised from one third in 1985 to two thirds in 1988), I should like to ask the Government what other major reforms in terms of functions and composition have been introduced to this structure over the 17 years from around 1982 to date. After 1997, the first thing the Government did was to issue a consultation document regarding the district organizations to sell its so-called political reform, and the result of this exercise was the decision to scrap the two Municipal Councils. But regarding issues such as methods of attracting capable persons to join the public service line, as well as ways to enable these persons to serve the community via elections, the Government has so far introduced no positive measures.

In fact, should the Government invite the professionals to attend meetings on a bimonthly basis, they would be willing to comply. To many of them, if they are invited by the Government, there is no reason for them to say no, since the meetings are held on a bimonthly basis only. As for the advices offered by the professionals, the Government may not always take them on board; actually the advices would be neglected in most cases. They are just offered in vain. Under such circumstances, only those who really have the enthusiasm to represent the views and interests of the electors would pursue vigorously with perseverance to offer their advice to the Government. As for other professionals, they would just remind themselves that while it would be fine if the Government takes their advice, it is just natural if their advice has fallen on deaf ears; after all, there is nothing they could do if the Government does not take their advice. Nevertheless, the professionals would inevitably have feelings of disappointment and despair.

As regards the issue of ex officio seats, this is indeed a very undesirable measure. The Government has in effect separated the residents into two categories, one of which have two votes. While the villagers have one vote to elect their respective village representatives and a second to elect rural committee chairmen and District Council members, non-villagers have only one vote. Why does the Government need to create internal conflicts among the people at the primary level of the representative government? If the Government really have the resolve to enhance the structure of district boards, it should model on the example of the past or existing relationship between the Regional Council and the Regional Services Department, or that between the Urban Council and the Urban Services Department, to make similar arrangement between the District Councils and their relevant District Offices as well as sub-offices. While District Councils would play the role as representative councils, District Offices would be responsible for the implementation of the policies and decisions made by the relevant District Councils. It is only through a complete reform of the original structure and modus operaudi as such that the independence of District Councils and their decision-making functions could be realized. At present, instead of putting district board members' opinions into practice, the various District Offices are more often than not making every effort to influence the views of district board members. In regard to this aspect, the Government should in fact have much room for review and reform. Yet the Government has made no mention of the issue in neither the Bill nor the debate surrounding the Bill. Put simply, all that the Government wishes to do is to get rid of the things left behind by Chris PATTEN, regardless of whether they are good or bad. This is by no means proper conduct on the part of the Government; we should not carry forward the political disputes in the past to the days of the Government of the Special Administrative Region. Regardless of who brought it to Hong Kong, what is good, such as democracy, should be maintained.

I so submit, Madam President.

MR ANDREW WONG (in Cantonese): Madam President, at one time, I thought that I should not be saying anything at all today, and I thus told myself that I should do no more than expressing simple support for the Bill. If the Bill is not passed today, there will be no district board after 31 December 1999, and this will be most regrettable. I do not intend to speak in any great detail on the Bill, because I am afraid that if I really do so, I may well say something which induces you, Madam President, to have the misunderstanding that I am trying to challenge your rulings again. So, when I speak on this Bill, I will do my best to avoid touching upon your rulings, though at times I may still fail to control myself. Anyway, I hope that the President will not misunderstand my motive, thinking that I am trying to challenge her rulings. Actually, I am very tired, really very tired.

I started to teach political administration in 1970, and I have since been advocating a one-tier system of local administration for Hong Kong. When I conducted research on this issue years back, I studied two relevant reports, and I hope that Members will also have a look at them. One of these reports, the Dickinson Report, was written by the Working Party on Local Administration set up by the Government in 1966. In this report, the Working Party came up with the recommendation that the Urban Council should be reorganized by establishing some territory-wide local authorities with district bases. The report was divided into three sections; one of these sections contained the main recommendations and the rest of the two were on some minor suggestions. The recommendations of the report were generally very straightforward, and two of the three major recommendations were very similar in nature: initially, the local authorities were to be composed of nominated members in the main and supplemented by some elected members; initially again, the local authorities were to serve an advisory role, with real powers given to them over time, in due course. This was the gist of the report written by the Working Party set up by the Government at that time.

But the report written by the Urban Council itself put forward some vastly opposite recommendations. According to the report, the Urban Council was to be transformed into a "Greater Hong Kong Council", which was to be served by three District Councils under it, one for Hong Kong, one for Kowloon and one for the New Territories. And, these three District Councils were in turn to be served by some minor municipal assemblies. The structure recommended was much too complicated, not neat enough. But this was not the main reason why I did not prefer this recommendation; the main reason was that the proposed "Greater Hong Kong Council" would in effect cover the whole territory of Hong Kong, and this would mean that Hong Kong would come under two assemblies with an overlapping area of control. And, since one of these two assemblies was to be returned by elections but the other was not, serious problems might arise. I have always maintained that any democratization for Hong Kong should preferably start at the central level, instead of slipping in any democracy, secretly, through the back door as proposed. This explains why I already advocated the abolition of the Urban Council and the establishment of local authorities as early as the 1970s.

The Urban Council has a very long history; it was founded in 1883 and elected members were introduced into it for the first time in 1988, though under a severely restricted franchise. But it must be admitted that the Urban Council elections then were still a form of direct elections, which is why it can rightly be claimed that direct elections in Hong Kong actually have a very long history too. And, we must also agree that directly elected elements are still found in the current Urban Council (or, more appropriately, the Provisional Urban Council, as this body is now called). The forerunner of the Urban Council was the Sanitation Board, which was established in 1883 and renamed the Urban Council in 1935. It was a pity that in the 1970s, I was still an ordinary scholar who was not involved in actual politics. So, even though I delivered many speeches in the Lion's Club, the Rotary Club and so on, advocating my proposed system of local administration, there did not seem to be any meaningful results, probably because the Government did not buy my idea.

And, for the two reports released in 1966, the Government simply rejected both of them. Following the riots in 1966 and 1967, the Government initiated an inquiry, and a report was published in 1969. As recommended by the report, the scheme of City District Officers was introduced, and this scheme evolved over time to become the existing system of District Officers. Then, in 1971, a White Paper on the Urban Council was published, and its recommendations were put in place in 1973, thus turning the Urban Council into a local authority with financial autonomy. As mentioned by the Honourable LEUNG Yiu-chung a moment ago, a Green Paper was published in 1980, and in this Green Paper, it was recommended that the franchise should be expanded by the introduction of universal suffrage. In 1982, district boards were first established as advisory bodies, each with a maximum elected membership amounting to one third of its total membership. In 1983, the Urban Council adopted the same voting system, and the franchise was expanded to include all Hong Kong residents.

Having looked at the whole historical process of democratization, we can rightly ask, "Has there been any recent retrogression in our process of democratization?" The first point I want to raise is that the crux of the problem does not actually lie so much with the restoration or otherwise of appointed district board membership. Rather, the most important point I want to raise is that it is most nonsensical to abolish a local authority with real powers and retain a purely advisory council.

Some Honourable Colleagues argued that since district boards are supposed to serve an advisory role, and since appointed membership can better suit the operation of advisory bodies, there should be appointed members. This argument is not entirely groundless. And, I think, it can in fact be further argued that if people are elected simply to play an advisory role, the whole system may well fail to work well. The reason is that elected members can always score credits for themselves simply by speechifying, by reproving the Government. If their criticisms are justified, they can of course score credits, and even if the opposite is the case, they will still score credits. If the Government accepts their advice, they will score further credits. And, if the Government does not accept their views, they will score even more credits, because they can then repeat their criticisms over and over again. Such an argument may first sound sensible, but as soon as the issue of real powers for local authorities is also taken into consideration, its total sterility will become immediately obvious. What I am driving at is that even if local authorities are allowed to serve a purely advisory role, the Government should still accept their views and put them into practice.

So, as Members may be aware, when the White Paper was released in 1980, I immediately expressed my disapproval, because, first, I thought that there should be more elected members for district boards, and, second, I maintained that district boards should be vested with real powers. Then in 1985, the Government set up a counterpart of the Urban Council, known at that time as the Provisional Regional Council. The Provisional Regional Council was so named, not so much because of any considerations of its temporary nature, but because of the fact that it was still at the inception stage when no elections could be held in time. At that time, I also voiced my opposition, saying that we should make use of this opportunity to abolish the Urban Council (and, I must say, many good opportunities have been missed). I further advocated that local authorities should be established instead. But the Government simply ignored my advice. This time around, the Government has again ...... again ...... taken a retrogressive step. This is true not only for the restoration of the appointment system, but also for all other related aspects.

In a local authority with no real powers, even the organization of election for one single elected seat will cause considerable trouble already. What will happen then, if most of its members are returned by elections? So, is it not much better for us to make it a wholly appointed body, to continue to call it a "provisional district board"? Such a provisional district board will be very much like a district management committee. What I mean is that the Government will then be able to appoint one group of people to district boards and appoint yet another group to district management committees. And, it can then take whatever opinions it likes from these two groups of appointees. It can also appoint whoever it likes.

For many years since 1970, I have been advocating these proposals, but my efforts have been of no avail. The Government has all along refused to listen to me. And Honourable Members, due to one reason or another, have also failed to reach a commonly acceptable reform direction among themselves. I would say that even a compromise of some sort is still better than nothing (for no one can proudly say that his opinions are absolutely correct), but Honourable Members have failed even to conduct any meaningful discussions at all.

Mr Ambrose CHEUNG said that he has been a district board Member for 17 years. I did not serve as a district board member for as long as that, but I started earlier than he did. As early as 1972, when district boards had not yet come into being, I was already an appointed member of the then Area Consultative Committee, and one of my colleagues was Miss Margaret NG. That is why I really share the views of those Honourable Members who try to defend appointed district board members by saying that these members are very hardworking and have made many contributions. And, of course, there are also some Honourable Members who say that appointed district board members are very lazy and frequently absent from meetings. But is this really the case? Do these Honourable Members know that the very impressive and beautiful design of the Sha Tin Town Hall actually owes a great to the contribution of Miss Margaret NG? Do they know that the Standing Orders and the financial rules of the Sha Tin District Board were written by me? Both of us were hardworking appointed district board members, and there were many other appointed district board members who worked just as hard as we did. Following the introduction of elected membership in district boards, some appointed members may not think much of running in the elections. But if they can be retained as appointed members, and if they can thus continue to serve the public, they may as well continue to render their services. If appointed district board membership is totally abolished, however, they may simply give up altogether.

I can remember that back in the early 1990s, it was made clear that Legislative Council Members should not serve concurrently as appointed district board members. That was why Sir David WILSON, the Governor of Hong Kong at that time, asked me to give up my district board seat on the ground that concurrent membership should not be allowed. I readily obliged, and thought that this was indeed a good thing to do. Later on, when appointed district board membership was totally abolished, I naturally did not run in any subsequent district board elections, because I found that one single office would already impose a very heavy burden on me, not to mention two concurrent offices. Concurrent membership is really a very heavy burden, which is why I very pity the Honourable SIN Chung-kai, and I pity the Honourable Ambrose LAU even more, because his burden may be even heavier. I am no longer a district board member, and I thus no longer have to be burdened by the responsibilities of two or three offices all at the same time. So, I am not so tired now. But in a way, I am still very tired, because I still have to persuade Honourable Members that we should all calm down ourselves and conduct discussions on this issue. I think the Government should really conduct genuine discussions with Honourable Members and exchange its views with them. Honourable Members, too, should also discuss the whole thing among themselves and exchange their views. Slanging matches simply will not do.

Well, I really do not want to bring this up before the President, but I still have to say that I was the President of the former Legislative Council in 1995. At that time, because of my position, I was not supposed to voice my own opinions. But before 1995, I repeatedly spoke on this issue in this very Chamber, advising the Members then that they should not argue too hard against one another, because this would do no good to Hong Kong. The point I tried to make was that while it was sometimes all right to put up some sort of a show in the form of bitter arguments, Members should always be prepared to conduct serious discussions when they sat down at the negotiating table. But now, it seems once again that Honourable Members have failed to reach any agreement even at the Bills Committee. They have failed to make any genuine efforts to resolve the problem. So, I am really exhausted, very exhausted.

It may well be said that I am just mentally exhausted, but physically, I am exhausted too, because I still have to deal with the tactics of the Government. For example, the proposed provisions are written in a very, very complicated manner. So, this really gives me a very difficult task when trying to write up an amendment which can have some hope of being passed. My hand literally got numbed when I was working on my amendment. As one of its tactics, the Government claimed that the proposed amendment in question carried a "charging effect". But do Honourable Members know when the Government told me about this? Last Monday was the deadline. But the Government has known for a very long time what kind of amendment I want to move. At a meeting of the Bills Committee held in this Chamber, I once asked Mr Michael SUEN, Secretary for Constitutional Affairs, to give a tentative reply on this matter ( a tentative reply is not a final reply, I must say). I asked him, "Will this matter have any charging effect?" But he said that he could not give any reply for the time being, because if he did so, far-reaching implications would result. The point is that he should already know the contents of my amendment, because I had been working on it for such a long time. But he did not give me the view of the Government until Thursday ─ the date on the document indicated that it was actually completed on Wednesday, 3 March. And, I was required to give a quick response on Friday, so as to enable the President to make a ruling on whether or not I could move my amendment at the coming Committee stage. All this has tired me down.

I am a member of the Breakfast Group. I have to clarify that the Breakfast Group is not a political party, and Miss Margaret NG and I both belong to the Breakfast Group. The Breakfast Group also consists of members from political parties and even the Frontier. But we are not a sect, and it is wrong to call us as such. We are just a group, and our aim is to exchange views and opinions among ourselves. Since I know this subject very well, members of the Breakfast Group have asked me to write a concise interpretation of the issues involved ─ that was why I was working so busily on this just now, as Honourable Members themselves could also see. Well, anyway, I am determined to complete this task, so as to enable Honourable Members to know what they are going to vote on at the Committee stage. I have finally completed this task, though I did not go to bed until three o'clock this morning. But this is really no big deal despite my physical and mental fatigue. And, I must say that I am now more liven up than ever before, and this is evidenced by the fact that I am still trying to put forward my own convictions and opinions despite my fatigue and possible misunderstanding from Honourable Members. Members of this legislature may hold different political opinions; some may be more conservative, while others more radical. But after all, we are all Members of the same legislature, who share the common aim of serving Hong Kong. That is why they should really discuss calmly among themselves, instead of arguing bitterly against one another. And, more importantly, they should not choose to remain silent once they find continuing slanging matches meaningless, and once they know that their parties will have enough votes to win. If they do this, this legislature will become a largely useless venue of one-way speechifying, which is even worse than a mere venue of empty debates. How meaningless this is. What kind of legislature will our legislature become? I am not afraid of accusations and criticisms, nor do I fear any misunderstanding, because I am still convinced that with determination and perseverance, we will succeed one day.

Madam President, for the moment, I do not intend to raise all the issues which I have discussed with the Honourable Miss Christine LOH, because there will still be an opportunity for me to do so at the Committee stage. I simply want to point out now that some Honourable Members, including Miss Christine LOH, do have some misunderstanding. It is a pity that when it comes to amendments seeking to impose certain restrictions, conditions and quotas on appointed members, people seem to think that our support for such amendments will be tantamount to our endorsement of the appointment system. It is yet a greater pity if Honourable Members thus choose to withdraw from this Chamber or simply refuse to endorse the District Councils Bill.

I can recall that once in this Chamber, I criticized the work of the Government for being "incomplete" and "half-baked", and I even made an analogy to a "half-empty bottle of red wine". At that time, Mr Peter TSAO Kwang-yung replied, "To Mr WONG, it may well be a half-empty bottle of red wine, but to me and many others, it is a half-filled bottle of red wine." But let me now make another analogy. We now have a 30-storeyed building, and the Government wants to demolish it. We all hope that a new building with at least 30 storeys, or even 35 storeys, can be constructed in its place. But the Government proposes to build a 20-storeyed building only. Can such a proposal be accepted? No, because it is actually possible for us to construct a much taller building. I wish to illustrate my point by using this simple analogy, and I do not want to mention other analogies which I have used on other occasions, because they may sound a bit vulgar. Housing construction is a better analogy, because everybody likes this idea. I wish to call upon Honourable Members to support the passage of the District Councils Bill no matter what happens later on.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, to me, to the Democratic Party, and to many of our allies in the democratic camp, this is indeed a very sad evening. Some 10 to 20 years ago, many of the Honourable Members present here now were themselves democracy-fighters who frequently took to the streets to agitate against the colonial regime. At that time, we were bitterly against the colonial administration in Hong Kong, and at one time, we thought that following the reunification, we would have democracy. I can remember that 10 years ago, when the Honourable SZETO Wah and the Honourable Martin LEE were advocating democracy in this Chamber, Mr Albert HO, Mr SIN Chung-kai, Mr LEE Wing-tat, DR YEUNG Sum, Mr LAU Chin-shek and I all gathered outside as petitioners, chanting slogans in support of democracy. Today, very sadly, though we have become Members of the legislature, we still have to struggle so very hard for the very meagre democracy which we started to champion so many years back. Like what we did 10 years ago, some people are now also gathering outside this Chamber, fighting for democracy. The only difference is that these people may occasionally come into this Chamber to chant some slogans. But please do not criticize them, for they simply have no other alternatives. If there was any democracy now, they would not have to shout around here; they would simply head for the polling station. So, here we are, still having to stand here all night, discussing whether or not there should be appointed membership and whether it is correct to restore appointed membership. To me, and to many of my allies, what we are now doing no longer carries any of the romanticism characterizing righteous political struggles; rather, it is something very sorrowful. Time flies. The people of Hong Kong have been struggling for democracy for two decades or so. But all that struggle has ended up in such a pitiable situation; once again, they now have to start from scratch. Sometimes, I really cannot help feeling that all our efforts have become entirely futile.

I can still remember a letter, a letter written by ZHAO Ziyang (I do not know whether people will still talk about ZHAO Ziyang these days). Years back, some university students wrote him a letter, asking him whether there would be any democracy for Hong Kong when it was returned to China under the principle of "Hong Kong people ruling Hong Kong". Surprisingly, they really received a reply from ZHAO, which stated, as I can still remember clearly, that "the reunification of Hong Kong with China would of course be a democratic reunification". This naturally delighted these young people very much, who then thought that the Hong Kong people would be able to run their own affairs in a democratic manner. It is thus small wonder that they all hastened to support China's resumption of the sovereignty over Hong Kong. These students may already be working today. And, if this letter crosses their minds today, what will they think?

Some people argue that Hong Kong would not have demanded so much democracy if not because of Chris PATTEN. They are wrong, because they have ignored the efforts made by many of those who devoted themselves to anti-colonial activities and struggles for democracy. Stubborn as it was, the British Hong Kong colonial administration still yielded to the power of the people and conceded more and more democracy to them, albeit very, very slowly. But the situation today is worse than that under the British Hong Kong colonial regime. When I say that things are worse, please do not counter me by referring to the quantity of democratic elements, because I am actually talking about a mentality of retrogression, one which fears democracy and the people even more than the past colonial regime. The democratic progress in Hong Kong does not owe itself to "Fei Pang", but to the struggles of the people themselves. The reunification has already come, but so far, what it has brought about is nothing but retrogression in democracy: abolition of the two Municipal Councils and the restoration of appointed membership in district boards. So, as I have said a moment ago, the efforts made by many people in their youthful days have all become fruitless, and what little achievement they once made has also vanished. This is indeed something very sorrowful. But our sorrow can remind us that such retrogression in democracy is a disgrace to Hong Kong, a disgrace to the reunification. It can be said that the democracy road ahead for Hong Kong will still be very twisty. But I must ask the Government of the Hong Kong Special Administrative Region these questions: Why must it create so many difficulties for the democratization of Hong Kong? Why? Whose interests is the Government trying to protect, and why? Does the Government have a phobia about democracy, about openness in governance?

Let me ask the Government one more question. It refuses to accept wholly elected membership, even in the case of a tiny local body like a district board. What does it fear? Does it fear that district boards will eat it up? If not, why must it insist on maintaining appointed and ex officio membership as a means of checks and balances? District boards are after all nothing but just district boards, which, in the words of the Honourable CHAN Wing-chan, are responsible only for repairing fluorescent tubes and drains and sewers; of course, I must add that the responsibilities of district boards should not be so limited.

We must not forget that the 21st century is now already fast approaching. If we look back at the past 100 years, we will see that although those political regimes which sought to freeze the democratic aspirations of the people all looked very much like age-old icebergs, they were not unbreakable; the most obvious case was Eastern Europe, and the place which saw the bitterest struggles was South Africa. Can anyone choke off the people's persistent democratic aspirations forever? History will answer "No", an empathic "no".

This is also a lonely evening, because the Democratic Party has instructed me, "CHEUNG Man-kwong, you will speak last, to round off the debate." But there has been no debate, no debate in such a silent legislature which endorses retrogression in democracy; there has been no debate at all. I am no hero, but even if I were a hero, in the absence of any genuine debate, I would have no opportunity to display my heroism. So, what I can only do is to "pick on" the Honourable Gary CHENG. (Laughter) Having listened to the remarks of Mr Gary CHENG, I cannot help saying that the Democratic Alliance for the Betterment of Hong Kong (DAB) is really a "royalist" party, and a conservative and anti-democratic one too. Actually, at the back of their minds, DAB members may have very different opinions. I know them, and I also know their past; I also know that in the 1960s and 1970s, they and their friends were all patriotic young men and women who shared the same goals and aspirations as the young CHEUNG Man-kwong. The only thing is that while I am still standing here, very much a lone fighter, they have already become part of the ruling regime of Hong Kong. That is why they can no longer speak freely about how they wanted the world to be like they did when they were young.

According to Mr Gary CHENG, democracy and appointed membership are not related. But why? One of the cornerstones of democracy is the system of one-person-one-vote elections, under which people are elected to representative assemblies to speak for their voters. Under such a system, voters can always remove anyone they dislike from office through the ballot-box. It is just that simple. But what about appointed members? No one, except the Chief Executive himself, has elected them to office. And, no one, except the Chief Executive himself, can remove them from office. The system of appointed membership is in fact all about the political prerogative of one single man ─ the Chief Executive. This political prerogative of one single person can prevail over the votes of countless electors and serve as a check against elected members. Why should this prerogative be tolerated? Are this political prerogrative and democratic politics not two entirely different matters then? Well, democracy and appointed membership are certainly related, but only insofar as they are two entirely different matters, because appointed membership is an enemy of democracy.

The DAB is a political party which runs in elections, and the word "democratic" is found in its name. That being the case, why has it still sought to defend appointed membership by mixing up right with wrong? Why has it sought to defend a regime which seeks to prevent the people from having more opportunities to vote? It needs not do so. It needs not act as the vanguard of such a totalitarian regime or else "democracy" will only become a mere part of its name, not its soul. I sincerely hope that the DAB can have a democratic soul, and vote against the system of appointed membership later on, to the surprise of all.

Madam President, last night, I read a very thick book, a book on the significant events in the 20th century. In this book, I read a letter written by a girl living in the early 20th century. Before she wrote this letter, the girl joined her mother in a procession fighting for the extension of one-person-one-vote to women. In this letter, she wrote, "Why did I do it? I knew fully well that even if I joined this procession, only my mother, not me, would have the right to vote. But I also know that if I do so, I will also have the opportunity to vote in the future." Similarly, we can see that in the late-20th century South Africa, many black people have succeeded in getting democracy under the leadership of Nelson MANDELA.

In the 20th century, democracy has made much headway in many places all over the world such as South Africa and Eastern Europe which I have mentioned, and even our neighbouring Taiwan. But what has happened in Hong Kong? Well, we still have to spend such a sad and lonely evening on opposing the restoration of appointed membership in the primary tier of our representative government. How do Honourable Members feel about this? Are those friends sitting opposite to me really happy? Are they really happy, deep down in their hearts? Are they sure that this is really what they want Hong Kong to be? When they go home and talk to their children, as parents, not as government officials, and when they are asked a question similar to the one asked by the girl I have mentioned, how are they going to answer?

No matter how my dear colleagues are going to vote, their conscience will still knock at their doors, and so will democracy. When they toss and turn in the middle of the night, can they really sleep well? This is a question for them to answer. My dear colleagues, the democratic camp is sure to lose this battle this evening, as what happened 10 years ago. But I wish to say that the victory of the Government today will not be a genuine victory, because it is founded on the endorsement of an undemocratic legislature. Suppose all Legislative Council Members were democratically elected, what would be the results of the voting today? Today, the Government will certainly win in the voting, but it will lose the support and confidence of the people. Today, the Government will certainly succeed in pushing through the Bill, but it will leave behind many blots on our history. That reminds me of the book I read last night. In this book, many types of insane human behaviour in the past are recorded: suppression of the blacks, suppression of women and suppression of ethnic minorities and all this is recorded in the book, ready to be read by the 21st century reader. Today, at the advent of the 21st century, I wish to ask only the following questions: For how much longer can the Government resist democracy? For how much longer can it freeze the democratic aspirations of the people? And, for how much longer can it continue to prevail over the democratic elements in this legislature? Well, the longer the time, the higher will be the prices ─ plus interests too.

MR ANDREW CHENG (in Cantonese): Madam President, I had no intention of being the last one to speak on behalf of the Democratic Party; I was only slower than Mr CHEUNG Man-kwong in raising my hand. While I was struggling over whether or not I should speak, I found that people on the public gallery kept chanting slogans and our Honourable colleague, Mr SIN Chung-kai, also started his speech by chanting slogans. Besides, Mr Andrew WONG has asked us to remain calm, and the political parties not to argue. I am really worried that I will flow into a violent rage when I speak as I am highly dissatisfied with other political parties. I am afraid that this may give Members or the Government an impression that we would like to kill one another. I really hope that we can have a debate on this Bill in a rational and calm manner.

As many Honourable colleagues have said, we are basically not debating but discussing freely and eloquently about democratic system. However, other political parties — the Liberal Party, the Democratic Alliance for the Betterment of Hong Kong (DAB) and some independent Members have concealed their thoughts or views on this issue.

DAB Members have expressed their views. As an elected member of the Legislative Council and an elected district board member, I am extremely disheartened at the District Councils Bill that undermines the foundation of public opinion and violates the spirit of representative government. According to the Bill, appointed and ex officio members will make up one fourth of the total number of members. In respect of democratic development, it is really lamentable for district boards, which have been fully directly elected since 1994, to be reverted to their old incarnation during the colonial era. The Government has given an euphemism that an appointment system is a means to balance the interests of various parties and the professional background of Members. Nevertheless, it is actually crippling public opinion and intentionally making appointed members the biggest group of royalists in the District Councils. But these royalists will not help improve government policies or promote social progress.

While elected members visit electors round the clock during the campaigning period to understand the needs of electors and districts, those professionals to be appointed, the so-called leaders of the districts keen at district services can enjoy free lunches and become appointed members. There are a number of advisory committees within the government structure and most members of which are appointed. The Government might as well continue to adopt their professional views by means of this mechanism. But there are few bodies that reflect public opinion. At present, we have only the district boards, the two Municipal Councils and the Legislative Council. Under this Bill which seeks a reversion to the previous appointment system, district boards have to undergo a reform and the Government will play its trump card in respect of the two Municipal Councils. As to this Council, only 20 members are returned by one-person-one-vote election. In appointing members, the Government is actually rehearsing for the slaughter of a democratic representative structure before scrapping the Municipal Councils. As the mandate of elected members is given by the public, they must be accountable to the public. But as the mandate of appointed members is given by the Chief Executive, they will only be accountable to the Chief Executive.

Madam President, do we want an elected District Council member who is accountable to the public and who can reflect public opinion, or an appointed District Council member who is accountable to the Chief Executive and who can reflect the interests of a small group? A District Council comprising elected and appointed members is only a democratic "lame duck", using appointed members who represent the interests of small groups to exercise checks and balances on public opinion represented by elected members. Madam President, the democratic trend is irresistible as we have discussed for numerous time in this Chamber, yet, we do not know when true democracy will really come.

Our economy is developing rapidly and our status as a financial centre is steady but it is a pity that our political development is utterly slow, lagging far behind another Chinese community, Taiwan. Moreover, we are about to restore an appointment system now at the advent of the 21st century. This is an insult to the political wisdom and sense of democracy of Hong Kong people and seriously impairs our international reputation. We are ashamed that the Government is going to restore the appointment system.

The Bill also proposes that a rural committee chairman can become an ex officio member of the District Council to which the rural committee belongs. In other words, when rural committee members elect their chairmen, they are also electing ex officio members of the District Council to which the rural committee belongs. Besides, they can also elect District Council members in a District Council election in their respect district. Madam President, in a word, as rural committee members will have two votes, they will become a privileged class. As professionals will also be appointed as District Council members, they will become privileged professionals. In the future, District Councils comprising privileged professionals and privileged rural committee members will be the embodiment of privileged politics. Such a political development will have sufficient influence on the political culture of the Government of the Special Administrative Region. So long as a person knows how to mingle with small groups and shining the Chief Executive's shoes, he can be a member of the privileged structure. If things continue this way, we will no longer have a down-to-earth political culture that aims at serving the public, but only a privileged culture that manipulates power and aims at serving small groups.

Madam President, although few members have spoken in support of the point that appointed seats and ex officio membership will cultivate a privileged culture, their remarks are recorded in the official record of proceedings and will go down in history. They will certainly be cited as proof of a retrogression in democracy and a negative example for people who wish to promote democracy in future.

Madam President, I so submit.

MR JASPER TSANG (in Cantonese): Madam President, Mr Gary CHENG has expressed fairly clearly the views of the Democratic Alliance for the Betterment of Hong Kong (DAB) on the Bill, especially the part concerning appointed membership. I originally thought that we did not need to repeat our points again and again, but I have found that repetition is very important to many Honourable colleagues. That is why many Democratic Party Members have kept repeating their views when they speak. After Dr YEUNG Sum had spoken, Mr Fred LI made similar remarks, followed by Mr CHEUNG Man-kwong and Mr Andrew CHENG. In their view, if fewer Members of a certain party rise to speak, they are not saving our time but showing their weakness, and if they do not participate in a debate, they will not have thoroughly enjoyed themselves. I know that a Democratic Party Member will be the last one to speak. Let me first reply to their criticisms about the DAB. In passing, I will also touch upon the point made by Mr Gary CHENG, especially the view of the Democratic Party on appointment.

Why do they always say that an appointment system means free lunch? Do we serve as Members for free lunch only? Does it mean that we can have lunch after we have got a seat in the legislature but while some enjoy free lunch, some others have to pay? Why? Mr Andrew CHENG said that he only got this seat and enjoyed lunch after having taken pains to visit electors. He had to pay for his lunch but appointed members could just take a seat and enjoy free lunch. I thought that we ran for election because we wished to serve the public and we fought for a chance to serve in this legislature in order to serve the community. I am not mouthing high-sounding words. It is stated in the Basic Law that District Councils are district organizations. First, district organizations are not organs of political power, therefore, we should not talk about power. However, Members have talked about fighting for power, abusing power and autocratic rule. Second, district organizations serve two functions, to be consulted and to be responsible for provision of services. If we really want to serve the public and our electors, why do we not sit down calmly and take a look. Are the few appointed Members in this Council also serving electors? If so, why can we not have forbearance towards them or welcome them?

I do not think that only professionals are appointed. I agree with some Honourable colleagues that professionals can also run for election and many members so elected are professionals. However, I do not think that only appointed members are professionals who have professional knowledge or elected members do not have professional knowledge. As Democratic Party Members have said, members returned by different means have different style of work and attitudes towards it. I do not stress the importance of the source of power or whether their power comes from the people or the Chief Executive. We all know that there can be dozens of constituencies under District Councils and we will not overstep the clear-cut boundries when we visit electors. This is a feature of our electoral system. I am only responsible to my constituency or the electors in a certain housing estate or even half a housing estate. My ward office in which I listen to the views of electors every week or even everyday is also located in a housing estate. I may be concerned about the situation of an adjacent housing estate but I am responsible to the housing estate I serve first. Nevertheless, the matters discussed by District Councils concern the whole administrative district after all, not only the problems of a housing estate or a constituency. I am not saying that a member returned by a constituency will surely be short-sighted, but he has the responsibility of serving the electors in his constituency first.

Are appointed members unwilling to run for election for fear of defeat? We should look calmly at and exchange our views on our work in districts. Some people have really served in districts for a long time but they will not make speeches or stage a show. They do not expose themselves in front of electors very often but they are serving the electors. We have to obey what conscience dictates (Mr CHEUNG Man-kwong has also mentioned the question of conscience) when we discuss about our friends who have worked in districts for over a decade. If they are willing to serve the people, why can we not welcome them or be magnanimous? A Member has just said that the appointment system "dilutes public opinion and democratic voices as well as stifles democracy". I do not think that a few more appointed members in District Councils will stifle the voices of all elected members. Mr SIN Chung-kai is extremely right in saying that the public has entrusted us, elected members, and we have promised the public that we will persevere in our fight. Are we going to let our voices be stifled by those few members who are returned not by election? We often stress balance but why do we regard District Councils as a venue for power struggle between elected members and the Government? It is because we often engage in struggles, therefore, a few appointed members become so important for they upset the so-called balance. Originally, we won and the Government lost, but with the addition of a few appointed members, the Government's voice became louder. Why do we have to look at the matter this way? We should not forget that our friends from the Democratic Party often speak about the Basic Law, the functions of the District Councils, district organizations that are not organs of power, consultation and service provision. Is there any irreconcilable enmity for which we have to fight to the bitter end and keep struggling? Can these few seats stifle our voices? I do not think so. Will the electors' right to elect be crippled with the appointment system and the so-called appointed membership? In fact, there will not be a reduced number of constituencies or elected seats in each constituency. One person will still have one vote. In the District Council election to be held by the end of this year, each person can similarly cast a vote to elect a representative or member in his constituency. It is not the case that other people cannot vote or someone can have two votes after the addition of appointed seats. Why will this impede the progress towards democracy and deprive people of their rights to express their aspirations for democracy? I really cannot figure that out.

Democratic Party Members have criticized the DAB that some DAB members who were defeated in district board elections have accepted the appointment to the same district board. Excuse me, this is where our political views and concepts differ. We do not think the Provisional District Boards of the Special Administrative Region established on 1 July 1997 are the same as the District Boards established in 1994. We also do not think that people who have lost in an election lack popular support or cannot accept any other appointment. Certainly, I am very grateful to our friends from the Democratic Party for affirming the enthusiasm of the DAB in taking part in district elections. We can promise our friends from the Democratic Party that the DAB will spare no efforts to take part in the District Council election by the end of this year. I believe that our candidates will not be less than those of the Democratic Party and our results definitely depend on the efforts we will make. Yet, this precisely proves that we support the retention of a small number of appointed seats in District Councils not only because the DAB is paving the way for people who intend to participate in the work of District Councils. We are prepared to run for the election but this does not contradict the retention of a few appointed seats in the District Council. It is only friends from the Democratic Party who are contradicting themselves. Mr Gary CHENG has just asked a question but the Democratic Party has evaded it. In our view, the Provisional District Boards set up in 1997 are not the same as the District Boards set up in 1994. They may not think so for they think that the members elected in 1994 had popular support and they should continue to remain in office. If they think so, they should carry through their ideas and the popular support and mandate they won in the 1994 election. When would their term of office expire under this mandate? They should know very clearly that their term expired by September last year. The so-called mandate has basically vanished after then, why are they reluctant to leave? We can see that in each of the Provisional District Boards established after July 1997, besides district board members who are originally elected, there are members newly appointed by the Chief Executive. We should be fair. Have those members stifled our voices when we co-operate within this framework. Have they impeded us in monitoring government administration? Have they impeded us in fulfilling our pledge to electors? Have they made any contribution to the work of district boards? Why can we not show forbearance towards them or accept them?

Thank you, Madam President. (Applause and hubbub on the public gallery)

PRESIDENT (in Cantonese): Be quiet! Otherwise, I will drive you away. Take them away! Security assistants, take them away.

PRESIDENT (in Cantonese): Good, it is quiet again. Does any other Member wish to speak?

MR MARTIN LEE (in Cantonese): Madam President, this District Councils Bill is an insult to the people of Hong Kong. It is also an insult to the Chinese people!

Madam President, it is a matter of fact that democracy, the rule of law, freedom and human rights are a trend of the times. It is a direction in which the whole world is heading, though there is a difference in the pace. Some places are making a slower progress, some have not yet started. But I just cannot imagine there is a place like Hong Kong which is making a retrograde step. Some people used to say that democracy is a Western thing, for only in the West can we find democracy. But if we set our eyes on Asia, places like the Philippines, Japan, Taiwan, South Korea, Thailand, India, Pakistan, Sri Lanka and Mongolia all have elections, even Cambodia also has elections under the watchful eye of the United Nations. In the not too distant future, there will be elections in Indonesia. That goes of course for Singapore and Malaysia, though I have to put a question mark after these last two countries.

There are indeed very few places in Asia which do not have democracy. But why is that so in Hong Kong? Our Chief Executive is a good person. I have often said that he is a good person. Sad to say, he is also a dictator. A benevolent dictator, so to speak. What has he done after he has assumed office? We have a three-tier representative government. The first being the legislature. We were relieved of our duties as legislators, thrown out of the train, as it were. They set up a Provisional Legislative Council and began to operate in Shenzhen for more than a year since 20 December 1996. There they did something which needed to be done, and that is to amend the electoral laws so that they would stand a better chance in the elections which followed.

Madam President, it just breaks my heart when I think of this. In 1995 Miss CHOY So-yuk and I stood for the same election. I have a good deal of respect for Miss CHOY. It turned out that she lost and I won in the election. In 1997, I left and she assumed office, taking up my seat. I often say that she took my car park space. There were altogether 11 Members of the Provisional Legislative Council who lost in the 1995 Legislative Council elections. And they took the place of those who won in the elections. It is like what happens in a football game, 11 elected legislators played the first half and they were all replaced by appointed legislators in the second half of the game. I am sorry to say that there is no football game in any country which has rules permitting the replacement of the entire team of 11 players in a game, at least up to the present moment.

The second tier is the two Municipal Councils. As we all know, it was the Government which decided to scrap the Councils. And in the third tier, the decision was to increase the number of appointed seats. I really wish to turn my head away from all these. Why is it that when Hong Kong was under British rule, when Hong Kong was still a colony, there was a greater degree of trust on the part of the British for Hong Kong people, than that from our own motherland? It just beats me.

I can recall during the Sino-British talks, Mr HU Yao-bang once said to the Hong Kong reporters, "What are you afraid of?" Now I want to ask the Chinese leaders the same question, "Why are you so afraid of democracy?" They should take a look at Taiwan. Madam President, a decade ago, the Nationalist Party of Taiwan suppressed the Taiwanese people in a way which was no less ruthless than the Communist Party in the Mainland suppressed the people there. Dissidents were likewise put to jail or forced to go on exile. Now there is freedom and democracy in Taiwan. It may still need a little progress in the direction of the rule of law, though. Despite all these, the Nationalist Party is still the ruling party there. So what does the Communist Party have to fear? Why is there such a lack of confidence in themselves? In this regard, the Hong Kong Special Administrative Region does have a burden of history to shoulder, and that is; we must let the Chinese leaders see that if a country is to take to the path to market economy and to adopt an open economic policy, democracy must be allowed to grow and to bear fruits, such being freedom, the rule of law, equal opportunities, a clean administration and the problem of corruption being constantly held in check. These are what Hong Kong enjoys. We bear a burden of history to let the Chinese leaders follow our footsteps and walk on this path of democracy which is quite narrow and winding, but it is the way the whole world is heading. Is this not our responsibility for our fellow countrymen? Can we afford to drag the pace of democracy in Hong Kong in the name of our love for our country, and in so doing, also drag the pace of democracy in the Mainland? Can we afford to drag the pace of their enjoyment of freedom? Our dear brothers and sisters who love our country and Hong Kong. Do we not feel ashamed?

A few months ago, the Democratic Party went to Taiwan and took a look at the elections there. We saw that the people there were very involved in the elections. I remembered once we went out for a night snack (soya milk and deep-fried dough sticks being my favourites). I paid everyone a taxi ride to get there. The front seats of the taxi had a television and the candidates were making speeches. The taxi-driver was watching the television more often than watching road conditions. I felt very scared. He was very involved, and he kept on telling us who stood a better chance and why their chances were better and so on.

The Democratic Party fully supports the one China principle. We would like very much to see the two sides of the straits united. If we want this to happen, then the Mainland ─ the government of our homeland ─ must embark on this course of democracy. For it is obvious that if we ask the people of Taiwan to be united with us, they would see that democracy and freedom are denied in our homeland. Then they would not be willing to unite with the Mainland at all. And they would not be interested. When we met Mr LEE Teng-hui, he said to us, "Many people have asked me whether I am in support of reunification. My answer is that it does not matter what I think, what matters most is what the people think." That is a very democratic answer. However, our Chief Executive is leading the Government to go in the direction which is against democracy, a path of retrogression in democracy.

I wish to remind my friends from the DAB that the name of their party in full is Democratic Alliance for the Betterment of Hong Kong, lest they forget. Now I can see an alliance for appointed seats and defence of the government line. The Hong Kong Progressive Alliance, the DAB, the Liberal Party and many non-affliated Members who used to speak in motion debates are all silent today. This alliance will certainly win, but is it an honourable victory?

I appreciate the Chairman of the DAB, Mr Jasper TSANG, for being willing to speak up. I think the DAB would consider the matter over and through by having just one of its members speak. He said that appointed Members have contributed a lot. I am not saying that they have not. Mr TSANG, that is not the crux of the problem. It is a question of why certain people have the right to work in the district boards. I think many people also want to be appointed as members of district boards. Some will ask, "Why am I not appointed when others are?" This is where the problem lies. How will the voters of Hong Kong look at the problem? They will ask, "Why can I not vote for someone to work in the district board for me? Why do they have to be appointed by the Chief Secretary for Administration or Mr SUEN? Are they qualified to take my place?" This is indeed the problem. I am very disappointed to see Honourable colleagues fail to understand something as simple as that.

Mr TSANG said something which he thought we would be very happy to hear, and that was the DAB would try its best to take part in the district board elections. But sad to say, the DAB is also trying its best to accept district board appointments. And that is something not honourable at all.

Just now when Mr CHEUNG Man-kwong was speaking, I was upstairs eating and watching the television. I was moved to hear him speak. I just want to add a few points. Actually, we will lose at the vote on this Bill. The amendment to be moved by Mr LEE Wing-tat to cancel appointed seats is bound to be defeated, but we will keep on fighting for it. Democracy will surely come to Hong Kong and to our motherland, and it is only a matter of time. When democracy finally comes to China and to Hong Kong, how would you think? Would you say that you have worked your best for the communist regime and tried hard to forestall its coming? And that you can retire into the background for the mission has been accomplished? Just how would you think that democracy will not have the final victory? All the world is going in this direction, why do we have to swim against the tide and put up a staunch defence of the government line in order to drag the pace of democratization? Would this be a good thing for China? I really do not know. Now that there are elections in some villages in China. Can the pace be made faster? What is wrong with that? Will you suffer any loss because of that? Is this not an honour for every Chinese? When we are in western countries, when it occurs to you that every one in our country is given due respect and that the human rights of every person are protected by law, would you not feel the joy all the more? When we can see that our people, like the people of other countries, can enjoy freedom and elect the leaders and deputies to the National People's Congress of their own choice, would we not feel more honoured?

I have no idea when this debate will last, and when I can go home for a good sleep. However, what I will do for sure is that I will send an electronic mail to my son in Britain and tell him how did his father vote. I will also fax the results of the voting to him. He will see for yet another time how the Democratic Party has lost. But I will tell him we will keep on fighting and the final victory will be ours. I will send this electronic mail to him proudly. I urge you to do the same for your sons and daughters. Write a letter to them. Or tell your grandchildren one day how you voted today. I really hope that you will do that. For if you feel that you are doing the right thing, then you should say proudly to your sons and daughters that their father has done a great thing today, and that is, to stall the progress of democracy in Hong Kong and that you have done a great service to your motherland.

Thank you, Madam President.

MISS CHOY SO-YUK (in Cantonese): Madam President, originally I did not intend to speak here, but since Mr Martin LEE mentioned my name just now and my thoughts were aroused, I would like therefore to ask a few questions to clarify things up and to put these down on record.

Mr Martin LEE said earlier that I lost in the 1995 election. It seems that he was saying that I should not be a Member of this Council in 1997 and also in 1998. I would like to ask, do you think that democracy is equal to forcibly occupying a seat and "first come first serve"? Or if once a candidate has lost in an election, then he or she should be denied of the right to be elected for the rest of his or her life and be deprived of his or her right to participate in politics? If some candidates have lost in the district board elections, can they not go on serving the public, work hard to fulfil their ideals and do something which they have pledged to do for the voters?

Just now Mr LEE said that he would keep on fighting despite frequent losses. Can others not do the same? Or is it an exclusive right to the Democratic Party? I also want to ask, why is Mr LEE so afraid of appointed Members? Why does he have no confidence in them? Why is he so afraid?

In my opinion, the district board elections are democratic. But in Mr LEE's eyes, he may not think so. He is free to make his views known, but so are other people. I want to ask, why is he always putting a label on other people, thinking that any person who agrees to the idea of appointed seats is not for democracy but is for its retrogression?

Just now, the Democratic Party has mentioned repeatedly that even if this Bill is passed, it would not be an honourable thing. I think if the Bill is passed in this Chamber today by way of "one person, one vote" and it is considered to be dishonourable, then I wish to ask, was it an honourable thing for you to be elected by way of "one person, one vote" back in 1995? I should think that you were elected in an honourable way. And so I would also think that whatever the outcome of the vote on this Bill will be tonight, it will be an honour for the winning side.

Madam President, I so submit.

MR MICHAEL HO (in Cantonese): Madam President, tonight I can take part with peace of mind in this debate which sounds odd enough.

I have peace of mind because I know that we are bound to lose in this debate. I do not harbour any hope for its success. I know that in this debate we cannot persuade the other side through the contents of our speech and viewpoints expressed in this debate, for we all have our own stands and our decisions would not be changed after the debate is over. The oddest thing about the debate this evening is that it has been very quiet. Madam President, I used to think that we would have a very exciting debate tonight, but we cannot see any colleagues who are really taking part in it.

After listening to so many of our viewpoints, the other colleagues may not agree to these. But that does not matter. It is just a very normal thing to have a difference in opinions in this Chamber. It is precisely because it is a debate that different opinions are put forward for debate. If there are people who think that our points are flawed, then they should table the issue for a debate. But I find we are all very quiet, especially the non-affiliated Members. They have not spoken a word. Two Honourable Members from the Democratic Alliance for the Betterment of Hong Kong (DAB) have spoken. Just imagine only two Members from a party doing the talking and that was taken as the party had spoken on this issue. Likewise the Liberal Party can be said to have put forward its ideas, though Mr ARCULLI's speech is very brief.

Madam President, the issue of the appointment system is one of the key issues in this debate. Now that Hong Kong has been returned to China, and under the principle of Hong Kong people ruling Hong Kong, we can be the masters of our own house. But today the Government of the Special Administrative Region has proposed such a bill that the degree of democracy it gives to the district board elections is even less than that given by the British when they ruled over Hong Kong. Just what has happened? Have we ever thought that this kind of Hong Kong people ruling Hong Kong could ever have happened? Our voters are only able to vote for 80% of the seats in the district boards whereas the British allowed all the seats in the district boards to be elected. What special grounds does the Government have on that? When the Government is going to make a reply later, could it tell us what will go wrong when all the members of the district boards are to be returned by direct election? Please tell us frankly and explain in detail. Do not try to muddle it through.

As to the question of the professionals standing for elections, I do not know if the Government has got any information on that. Since the holding of district boards elections in the beginning of the 1980s, we can see that many professionals who ran in the district board elections did win. Many of these professionals won in the elections. As a matter of fact, these professionals did stand a better chance. How can we say that they are at a disadvantage? If we look at history and past records, if we still say that we ought to appoint some professionals onto the district boards, that is really sophistry. The reason is very simple. If we want to make a balance, then what sort of balance do we have in mind? If people who have strong popular support are elected, then the appointment of those people who are close to the way of thinking of the Government into the district boards would serve to balance the outcome of the elections.

I wish to respond to some of the remarks made by Mr Jasper TSANG. He said that if there were some people who really want to serve the public, why can we not accept these people? We are not saying that we are not going to accept these people, what we question is that why should the appointment system be employed? We all know that the working style between an appointed member and an elected member is different, because their mandate comes from different sources. The most important thing is that the elected members are accountable to the public and not to the people who appoint them. The appointed members do not have popular support and they will not be accountable to the public.

I agree that if some people have been serving and working for the community for a long time, and if they do not like standing for elections, that really does not matter. If they choose to serve the public in their respective communities and if they are not willing to stand for elections, then they should be allowed to serve the public through other channels. Why do we have to take a retrograde step in our system and open up other channels so that these people can join the district boards without standing for election? Mr TSANG asked why do we not allow these people to serve the public in the district boards. Madam President, we are not unwilling, why should we? If they are really willing to serve the public, I think we should consider how to encourage these people to stand for elections. The Government should also do something to encourage these people to stand for elections. That is the correct way. If they do not want to stand for elections, the Government then appoints them to be members of district board, so that they will not need to stand for elections. But that is not correct. What has the Government done to encourage some people who, like Mr TSANG has said, have been working in the community for a long time but are not willing to stand for elections?

District boards are consultative organs. Mr TSANG said that he failed to understand because even if there is an appointment system, the voters would not have cast more votes or less. He was right. But the fact is: There will be a reduced number of people elected by the public to influence the district boards. If the proportion of appointed members in the district boards increases, the district boards will become assemblies with only a small proportion of their members elected. That is also a fact.

The DAB accepts that some people who have lost in the district board elections can join the district boards. Mr TSANG thinks that the district boards elected in 1994 are different from those after 1997. Madam President, I think such a view lacks strong grounds. Actually, the same people are elected. The difference is: after 1 July 1997, the same ordinance was invoked to add the word "provisional" before the district boards so that they became provisional district boards. Then some appointed seats were added and the appointed members were included in the district boards together with those members who were all elected. If we say that these district boards are not the same as the previous district boards and so the appointment of members is acceptable because the nature of these two kinds of district boards is different, Madam President, this is purely sophistry, nothing but sophistry.

Mr TSANG also said that the provisional district board members are all appointed, then when their term of office expires, they should all step down. We have already said that the Democratic Party would not mind stepping down. If there were re-elections at that time, we also thought that was comfortable with us. We do not object to the idea of an re-election, that is, a new election. We do not think that there would be any problems if there were any re-elections after 1997. But no elections were held at that time and only some additional people were appointed.

Before closing, Mr TSANG posed a few questions. He asked if these appointed members had impeded the work of the district boards, and whether they had made any contribution. Madam President, my answer is very simple. If they did not make any contribution at all, they had not only let the voters down, but that they had also let the Chief Executive or the policy secretary who had appointed them. It would be even worse if they did not make any contribution at all. But the question is: We need to make comparisons. As my colleagues have talked about that just now, I do not want to repeat it here. Have we made any comparisons as to the degree of devotion, the amount of time committed and the performance of appointed and elected members? Please do not say that we have no information on that. The most important thing is: In this representative system, they are representing the wish of those who appoint them and we are representing the wish of the voters. That is the difference!

Under the system of Hong Kong people ruling Hong Kong, if we are to pass this Bill today and formulate such a system for our next generation, a system which is even worse than the system under colonial rule, then we are really doing a great disservice to our next generation.

Miss CHOY So-yuk happens to be away for the moment. I wish to respond briefly to her views. Actually, Mr Martin LEE was not saying that those who lose in elections shall be deprived of their right to stand in elections forever and that they shall not be allowed to join the assemblies. It was not what he meant at all. These people may of course join the assemblies, but they must do so through elections. I think the Provisional Legislative Council was not an assembly which has been formed by real honest-to-goodness elections. Apart from that, Miss CHOY asked why were we so afraid of appointed members. We are not afraid of them. But, do we think that this is a step forward? If it is not, what you are doing is to choose for your next generation a retrograde system. This is precisely why we do not want to see a resurrection of the appointment system.

Madam President, now we are practising the principle of Hong Kong people ruling Hong Kong, and we are being our own masters. I earnestly hope that all of us can think carefully and to make a prudent decision. We must not make a system for our next generation which is even worse than the one we used to have under British rule.

Thank you, Madam President.

DR LEONG CHE-HUNG (in Cantonese): Madam President, Mr Michael HO, Mr Martin LEE and several other colleagues have commented that independent Members seemed very quiet tonight as few of them have spoken, and Mr Martin LEE has also said that independent Members were usually very eloquent and he wondered why they did not speak tonight. Hence, I, as an independent Member, wish to respond briefly to express my heart-felt opinions. I have assumed the Chair for a short while just now, and now I hope that the President and colleagues will allow me to say a few words. Of course, since I am an independent Member, I can only speak on behalf of myself and what I say will not reflect the stand of other independent Members.

I am speaking to support the objection to the inclusion of appointed seats and ex officio members in the District Councils. Many colleagues have already talked about the negative aspects of the restoration of appointed and ex officio members and I will not repeat them them here. I just wish to raise two points. First, so far, the Government has failed to convince me, failed to offer arguments acceptable to me, why there should be appointed seats and ex officio members.

Second, I feel a more important point is that people often have a misconception, or are misled by a sophism as described by the Honourable Michael HO, that professionals do not want or have no desire to run in elections, or even if they do, they will not win. To me, this is not only a misconception but truly a sophism. I would like to demonstrate my heart-felt opinion tonight with my experience in the last district board election. In the 1994 district board election, I persuaded three doctors working in the public sector who had no election experience at all to run for the district board membership. Subsequently, two of them, though running against very experienced incumbent district board members, won by a majority. They lacked experience in election, but that does not discourage me from thinking that as long as professionals really have the aspiration to do something for the community and sincerely wish to serve the public, they will not stand a lesser chance than others in elections.

With these remarks, Madam President, I demonstrate to Members with my experience that professionals can also get elected as long as they are willing to make an effort. Thank you.

MR ALBERT HO (in Cantonese): Madam President, I believe that many colleagues from the Democratic Party have given all the reasons that they can think of to support our amendments today. Nevertheless, it seems that those who would vote against our amendments for the abolition of the appointed seats do not have much interest in participating in this debate. Of course, there are many reasons for this lack of interest in the debate. But I am very interested in knowing their reasons. Why do they not speak?

This debate has brought some memories back. I have years of experience in democratic debates and have heard all kinds of reasons against democratic elections. I first came in contact with this in 1971 when I entered the university and we were criticized by some as extremely naive. But in fact we were truly a bunch of young people who were full of ideals, having high hopes for the prosperity of our race and the progress of our nation. We always questioned why our nation could not develop towards democracy and why issues like the succession of political leaders in our nation were always resolved by power struggles. Of course, the first time that I debated this was with my senior schoolmates. All my senior schoolmates had a strong patriotic zeal in those years. That was the first time when I heard the major principles regarding why democracy should be opposed. Today, I would like to share them with Honourable colleagues.

At that time, they said that the democracy that we advocated was capitalistic democracy which was a means employed by one class to deceive another class, or to control and exploit another. Therefore, the whole democratic process was a means of deception and exploitation. They said such kind of democracy was pseudo-democracy, a trick of the rich and a tool used to fool the proletariat. There was, according to them, genuine democracy in our motherland where all classes were eliminated and the government was truly run by proletarian dictatorship, and only when there was no economic exploitation, nor oppression by one class against another would there be genuine democracy. They therefore said that voting was bogus, a sham.

Of course, when we hear these arguments now, we would consider them totally absurd. Was China really like what they said at that time, that "everyone was like Yao and Shun ─ kings compared to saints"? Were exploitation and corruption completely eradicated there? Was everyone equal and charitable in our motherland, and there were no groups of people bullying another group? Not long afterwards, there came the downfall of LIN Biao, followed by the April 5 incident in Tiananmen Square and the Gang of Four fell from power soon after MAO Zedong's death. All beautiful myths were broken.

We are certainly very clear that those people who claimed to believe in the so-called communist democracy and wanted to fight the capitalistic democracy were just fooling themselves and others. At that time, we took to the streets and we could see many injustices. We fought against corruption and demanded the price increases of public organizations be regulated. We felt that social ideals could only be attained through more democratic monitoring. I still recall that in 1972 and 1973, those schoolmates who sympathized with the communists tried to talk us out of fighting for this kind of localized pseudo-democracy as it served only to whitewash the capitalistic society. What they wanted was to have our socialist motherland implement a genuinely fair democratic system in Hong Kong in future, which was another self-deceiving kind of talk.

Madam President, by the early '80s, the question about the future of Hong Kong was laid before us. Many people were at a loss as to the way forward. Many felt that the best way out was to leave Hong Kong and find shelter in some alien countries, countries which they once condemned as imperialistic communities, capitalistic communities where there was extreme inequality. Many people who had once had many ideals also thought the same way. That really saddened me. At that time, we, who chose to remain in Hong Kong, had a sense of responsibility and a sense of mission. We felt that when the place that we lived and were brought up in was faced with such pressure and such political confusion, we had to worked hand in hand with all the others in Hong Kong to build up a Hong Kong with a bright future. We also hoped that after the changeover, we, being Chinese people in Hong Kong, could contribute to our nation. Our contribution should not be confined to maintaining the economic prosperity and helping to bring about the modernization in our motherland, but we should also make good use of our many favourable conditions to help develop a genuinely democratic community and system there so that the entire nation could go on the road of democracy and social order. That was really our ideal. Therefore, in 1982, instead of changing our money into US dollars, scrambling for rice in the supermarket or applying for foreign passports like many people did, we sat together to discuss what we should do for Hong Kong. We began to think about what kind of political system we should establish for Hong Kong and how we could build Hong Kong into a democratic and highly autonomous community and to maintain its long-term prosperity and stability after the changeover. In 1983, we drafted the first proposal on political and social factors which we thought warranted consideration. In it we also expressed our deep conviction that democracy could not be separated from the future stability and prosperity of Hong Kong and our high hopes for that.

At that time, the Central Government of our motherland very much welcomed our views. We frequently exchanged ideas with the officials of the Xinhau News Agency as we were the only ones who had the courage to stand up to voice our support for the reunification of Hong Kong with China. They said that we could take time to discuss that for Premiere ZHAO Ziyang also spoke of democracy, so we could also talk about it. Many of us were even invited to China to meet with the officials from the Chinese Academy of Social Sciences and Law Research Institute. We also met with "the Four Legal Experts", who have been quite hot on the news lately, and discussed with them legal issues including the Basic Law.

But starting from 1985, they criticized us for advocating the use of democracy to fight against communism and that we wanted democracy because we wanted to turn Hong Kong into an independent political entity. They also said that the pace of democratization could not be faster than that prescribed in the Basic Law. And then there was the industrial and commercial sector who stood up and said, "Sorry, we are not ready yet. You will ruin Hong Kong because you are trying to hand out free lunches and jeopardize our prosperity." They were followed by members of some affiliated associations of the Federation of Trade Unions who said, "We want food coupons but not votes. Everyone has to eat. Can we feed on votes?" Madam President, we continued to strive for direct elections in 1988 and the basic principles of democracy under such an environment, in which process, we had had our enough share of scorn, reviling and criticism. Why then should we insisted on pursuing this? Actually, we had a heart like that of those young people in Chater Garden right now. We all had a pure heart and an innocent conviction. We believed that this was our place, our home which was not only our home for this generation but we also wanted to build it into an orderly and well-run society so that it would also be a desirable home for our children, grandchildren, siblings and future generations. This was our conviction.

Everyone knows that in 1988 and 1989, we were already told that everything had to converge with the Basic Law, so we could not say anything. After the draft of the Basic Law was released and the Law was later finalized in 1990, those in charge asked if we wanted things to derail from the Basic Law and if we disrespect it. Therefore, we could not even utter a word about amending the Basic Law.

In the past decade or so, we have not only participated in the campaigning, lobbying and education, but we have also conducted a great deal of research on the political, economic and social environment of Hong Kong. We firmly believe that the maturity of our economic conditions, social situation, education level, transport and communications, and also the development of people's civil awareness in Hong Kong today can fully support the democratic development already. Moreover, we have a great deal of proof that a mature market economy cannot be separated from a democratic system and a community with fair competition. It is exactly due to this reason that many people feel it necessary to send their children to study in the United States, Canada or Australia and even have them stay there, no matter how patriotic these people may claim to be and how much they praise our socialist motherland. Actually, everyone knows full well that a democratic system is the only guarantee that we will have equal opportunity, equal dignity, and in the long run, that we will have a community worthy of our continuous residence.

Madam President, I have not heard any grand principles this evening, nor do I believe anyone would dare to argue about the grand principles again. The Democratic Alliance for the Betterment of Hong Kong does not argue about this either. Those tabled today are all very technical and minor issues. Some have questioned why we should be so anxious, as District Councils are not a power centre. Madam President, there is of course more to it than just the retrogression brought by this District Councils Ordinance that has made us speak so solemnly and so angrily tonight. Everyone can see the retrogression in the last 10-odd years after the formulation of the Basic Law and what kind of a legislature that we have today after the withdrawal of the colonial government, a legislature that requires us to vote in groups which in turn reduces our power to move motions. What follows is the increase, in a retrogressive manner, in the number of appointed seats in the District Councils, and then the elimination of the Urban Council and the Regional Council where a certain degree of democracy can be found, as their members were returned by direct elections. This is a three-dimensional attack, a three-dimensional blow to and deprivation of democracy. It is in such an environment, Madam President, that we have spoken so indignantly, pointing out what final destination to which will these retrogressions in the Bill bring Hong Kong gradually. Madam President, it is true that the District Councils are not a power centre, not a political framework, but they are a valuable channel that allows the people to participate in district affairs. Now the Government of the Hong Kong Special Administrative Region wants to implement the appointment system in the District Councils and appoint to them members who have been defeated in the election to balance out the forces of the elected members. Can such a government action not deserve our indignation, not deserve our screaming out loudly against it? Thank you, Madam President.

PROF NG CHING-FAI (in Cantonese): Madam President, the district boards were established and developed as a product of the representative government developed in the '80s for the return of Hong Kong's sovereignty. Now, over a decade later, Hong Kong has become a Special Administrative Region of China and it is a most opportune moment now to review our district organizations. There are only two simple provisions in the Basic Law concerning the regional organizations, namely, Articles 97 and 98. I guess that the drafters' intention at that time was to leave a wider leeway to the Hong Kong Special Administrative Region (SAR) to allow Hong Kong people to make specific decisions and formulate corresponding laws in respect of the kind of district organizations according to the practical situation and development. Article 97 provides that the district organizations established by the SAR shall not be vested with political power but they can, other than to advise the Government, provide practical services in culture, recreation and district administration.

Madam President, the District Councils Bill tabled for our Second Reading debate today, though compliant with the Basic Law, seems to lack a vision. Madam President, as Hong Kong is approaching the next century and growing into a cosmopolitan city with a population as big as 8 million to 10 million, the functions of the District Councils that we should consider now may perhaps need to be different from the original set-out. Instead of serving as a purely consultative framework, they should become an important component in the representative government of the SAR. The Legislative Council should not be the only council that discusses social issues. The functional structure of the District Councils should vary with time. District Councils should be the nursery ground for local politicians in the district and the cradle from which future politicians are trained. Hong Kong must have a new vision to tie in with the management of the development of a cosmopolitan home to 10 million people. The Government should consider dividing the work between the central and the districts, and establishing an effective mechanism to respond to people's demands, giving those participating in district work the chance to fully utilize their talents in the stage of district politics and also to build up their sense of commitment to the community. Hence, I believe that the Government should gradually devolve some of its powers to the District Councils, for example, in the fields of culture, recreation, sports, environment and sanitation. If they are to be developed into bodies of this mode, then 18 District Councils that are to be established now will be far too many. How many should be right then? This can be left to Members to study. After all, the main purpose for the development of district organizations is to make the policies as diversified as possible and to address the specific features and needs of various communities effectively. As we still have 18 district boards today, it is estimated that many problems still warrant examination. Therefore, I am basically in support of the Bill tabled by the Government today. I have heard the views of many colleagues just now and many of them have been very agitated but to me, everything seems to be directed at the issue of appointed seats. I support the retention of a suitable number of appointed seats. The main reason is that district boards are not organs of political power and appointed seats only account for a very small proportion. It will not affect the democratic development in Hong Kong. In fact, I have said just now that we should look at the direction of the entire development. From a positive point of view, I still feel that appointed members can compensate for the inadequacies of elected members in respect of certain professions or other aspects. Our goal should be to make the District Councils run better and more effectively.

Many colleagues have said that they care about the future of Hong Kong. They would not be alone in that regard. I believe that all the 60 Members in this Chamber, including the government officials, all care about the future of Hong Kong. It is only that our views may be slightly different and our approaches may not be the same. That is exactly because we would like to see Hong Kong develop into a healthy and harmonious community that I feel that we need to make a greater effort to consider the structure of the District Councils. If someone in this Council suggests re-introducing appointed seats to the Legislative Council, he will definitely be condemned by everyone. However, what we are discussing now is not the Legislative Council but a consultative organ and I do not see how it can lead to the death of democracy. Such an argument is rather overly exaggerated. I do not want to repeat or to respond to every point raised by Members earlier. In fact, the situation of getting "on the train" or "off the train" was due to many historic factors. I believe it is not the right time to look back on those matters in this debate today.

Madam President, the original idea of Mr SIN Chung-kai's amendment concerning the deletion of "a public officer" and substituting it with "any person" is good as it can avoid the secretariat of the District Councils being influenced by the Government or, more exactly, the Home Affairs Department. Nevertheless, if an appropriate candidate cannot be found for the post of the Secretary General or a conflict among the political parties should arise because of the appointment, leading to disruptions in the operation of the secretariat, it its then a problem that warrants consideration.

As regards the Honourable Miss Cyd HO's amendment concerning the addition of the provision stipulating the financial records of the councils be inspected by the Director of Audit, it is also a very good idea. At present, the financial management of some district boards has indeed aroused much criticism, but it is still a matter worth considering as regards whether the books should be inspected by the Director of Audit, or a highly transparent auditing mechanism should be established by each District Councils for this purpose.

Madam President, I so submit.

PRESIDENT (in Cantonese): Secretary for Home Affairs, do you wish to reply?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, the District Councils Bill was introduced for the First Reading in the Legislative Council on 16 December 1998. The purpose of the Bill is to establish 18 District Councils and provides for their composition, functions and the relevant electoral procedures, in order to provide the legal basis for the first election of District Councils in the Hong Kong Special Administrative Region (SAR).

This comprehensive Bill comprises 11 parts with 86 clauses and six Schedules. I would like to extend my heartfelt thanks to all relevant parties involved for their industry which has enabled the scrutiny of the Bill to be completed within two and a half months. First of all, my thanks go to the Honourable Ambrose LAU, Chairman of the Bills Committee and 28 other Honourable Members who have participated in the scrutiny of the Bill, both the Legal Adviser and the Secretariat of the Legislative Council, and my colleagues from the Department of Justice and the Constitutional Affairs Bureau.

The Bills Committee has held altogether 13 meetings during which Honourable Members expressed many useful and constructive views, many of which have been adopted by the Government. In this connection, we have proposed a total of 25 Committee stage amendments (CSAs) with a view to further improving this Bill. Due to policy or technical considerations, we are opposed to 16 of the 18 CSAs proposed by some Members. As to the other two proposed by the Honourable Ronald ARCULLI, I do not see any reason to oppose them as they will not affect the practical arrangements.

Today, the Legislative Council will deal with many amendments to the Bill proposed by some Honourable Members in accordance with the Rules of Procedure. First of all, I would like to make it clear that while the Government fully respects the Legislative Council's autonomy in making its own Rules of Procedure, it already expressed its reservations last year about the application of certain articles of the Basic Law to the operation of the Legislative Council as far as the Legislative Council Rules of Procedure are concerned. I therefore consider it necessary to put the Government's position on this matter on record today.

As the relevant provisions in the Legislative Council Rules of Procedure have yet to be amended, I must deal with the amendments proposed by Honourable Members in accordance with the existing Rules of Procedure. Without prejudice to the Government's position on this matter, we have decided to resume the Second Reading of the Bill, in order not to delay the first District Council election at and 1999 after the establishment of the SAR.

As usual, proposals concerning the development of the political system are bound to prompt different reactions from different parties in the community. The more controversial points of the Bill centre around those clauses concerning appointed and ex officio membership. This Chamber has just borne witness to this. I would like to concisely put it again here that the Government's proposal for the introduction of a small number of appointed seats is based on the following considerations:

1. during the public consultation on the Review of District Organisations, many of the submissions presented to the Government favoured the retention of an appropriate proportion of appointed seats so that some capable and experienced people who are interested to contribute to district affairs can join District Councils through such a channel. We have also heard some views in favour of retaining of a number of appointed seats at the public hearings held recently by the Bills Committee on District Councils Bill and some Provisional District Board meetings held to discuss this Bill;

2. as the new District Councils will play an enhanced role, the participation of people from a wider spectrum is necessary to upgrade their quality in deliberating business, particularly in terms of improving building management, fire prevention, and so on, and matters relating to food and environmental hygiene services and the promotion of cultural, recreational and sports activities and so on;

3. the retention of appointed seats will not affect the number of elected members. On the contrary, the number of elected seats will be increased to 390 from a pre-1997 of 346, which will enable more people to participate in the work of District Councils, and more people to join the councils through direct elections. As appointed members will account for just 20% of the total number of District Council members, I find such an arrangement reasonable and acceptable.

Having said that, I will probably have to comment on the major issue of whether or not Hong Kong has democracy which was heightened by some Honourable Members. It is my firm belief that democracy will come to Hong Kong, and I am sure that Honourable Members share my view on this matter. I believe this is our common wish. No one can prevent such a trend and its arrival. Our difference lies in the timing. But why is this goal so clear? Because Article 68 of the Basic Law has clear stipulation of this and our ultimate goal lays with the Legislative Council. For the composition, political structure as provided in the Basic Law as a whole is all about this Council. What is clear and unequivocal is that all of the 60 Honourable Members of this Council will ultimately be directly elected. Of course, the Basic Law does not specify the date when we will achieve this goal. But we should not forget the specific mechanism in the Basic Law which offers a chance to the territory in 2007. If we consider that there is such a need and everything is ready by then, we can determine our own fate. Just as some Honourable Members have said, this shall be decided by us. I therefore do not think that what we are now doing will delay the process of democratization to any extent. I believe this is very important and clear.

I would also like to concisely respond to the views of some Honourable Members. Putting the matter in a simplified presepective, then the Government and Members are perceived to be divided and put on opposing sides, with the Government being in constant disagreement with Honourable Members and there always being a huge gulf between the Government and public opinion; and Honourable Members are always sided with public opinions while the Government is always on the opposing side. Is this the truth? I believe we should also reflect on this. Of course, many people take such a view, but I believe Honourable Members and the public will be careful in arriving at their judgment on whether or not this is really the truth. I consider Honourable Members of this Council are in the best position to comment on the Government's current policy objectives. Are we more open? Have we become more accommodating? Have we brought this matter to this Council for discussion with Honourable Members through the panel system before formulating the relevant policy?

For example, before I tabled this Bill to the Legislative Council today, I already held discussions with Honourable Members a few months ago. We have taken on board many views expressed by Honourable Members. This process has lasted for a long time. The public may not be aware of the fact that we have started this process, but I do not think Honourable Members in this Chamber can say true to their conscience that we have not done so. Maybe our techniques are not good enough, maybe we have failed to provide the full contents, but Members should not underestimate our confidence and determination. Our confidence in Hong Kong's ability to achieve the goal in this respect should not be underestimated.

MISS EMILY LAU (in Cantonese): President, I should like to seek an elucidation.

PRESIDENT (in Cantonese): If you want to seek an elucidation, I have to first ask the Secretary if he is willing to give way.

SECRETARY FOR CONSTITUTIONAL AFFAIRS ( in Cantonese): No.

PRESIDENT (in Cantonese): Miss LAU, please make your request after the Secretary has finished his speech.

SECRETARY FOR CONSTITUTIONAL AFFAIRS ( in Cantonese): Thank you, Madam President. In fact, Members have been witnesses to this process. Talking about democracy, although the subject of today's debate has an element of democracy to a certain extent, I think the emphasis seems to have been placed on democratization, that is why I have to depart from my speaking notes to tell the truth and the Government's goal in this respect.

Coming back to this Bill, of course, in addition to appointed members, there will be ex officio members. Honourable Members are very clear (some Honourable Members appeared to have found the issue of ex offics members a novelty) that such an arrangement has been in existence ever since the establishment of district boards, under which the Chairman of the 27 rural committees are ex officio members, in order to ensure that the interests and views of indigenous residents in the New Territories can be fully reflected in district boards. This is one of the characteristics of district administration in the New Territories. This proven arrangement has received extensive support from Provisional District Board members from the New Territories.

I would also like to respond in passing to the assertion by some Honourable Members that our arrangement is in stark contravention of Article 25 of the International Covenant on Civil and Political Rights (ICCPR). Let me say it again that legal advice to us has confirmed that the right to vote, as referred to in Article 25 of the ICCPR, is obviously applicable only to the election of the legislature. The essence of Article 25 is that the institutions which exercise legal and real powers must be formed by means of election. As District Councils are not institutions of such a nature, the provision for appointed seats as proposed in the Bill does not contravene Article 25 of the ICCPR.

Members' proposed amendments to abolish the appointed and ex officio seats will, if passed into law, have far-reaching implications on the composition of District Councils as a whole, rendering the efforts by the Government to balance the interests of different sectors in the community futile. I therefore hope that Members will pay special attention to those amendments in relation to these two respects and show their support for the retention of appointed and ex officio members by rejecting those amendments.

Moreover, some Honourable Members have suggested adding a provision to bar political activists from being appointed as members. We consider such a provision inappropriate because the Chief Executive should be given an opportunity to choose the candidates now that he is empowered to appoint members to District Councils. I can assure Members that the Chief Executive will carefully evaluate the contribution which the candidates could make to the relevant District Council before making his decision. As for the view expressed by many Honourable Members just now to the effect that candidates defeated in District Council elections should not be appointed, I am sure the Chief Executive will show his agreement by his actions.

Some other Honourable Members have proposed amendments to expand the scope of functions of District Councils by providing that District Councils should undertake local public works and environmental improvement projects, and take over the responsibility for the provision of recreational, leisure, sports grounds and facilities in the district. I do not consider it appropriate for District Councils to take over such responsibilities as it will drastically change district boards' existing principal function as an advisory body and the operation of the Government. What is more, it will incur additional public expenditure and cause a dispersion of powers, resulting in reduced efficiency.

Some other Members have suggested that the accounts of District Councils be submitted to the Director of Audit for inspection before being forwarded to the Chief Executive by its chairman. As the controlling officer for the allocation of funds to district boards is the Director of Home Affairs and the Home Affairs Department has also issued clear guidelines on the use of funds to district boards and what is more, their expenditure and accounts are subject to examination by the Director of Audit, we therefore consider such an amendment unnecessary.

With the exception of some technical amendments, the Government has made most of its 25 amendments after taking into account Honourable Members' valuable views. Some of them stipulate that the Chief Executive in Council must seek approval from the Legislative Council before making an order to amend the number of districts, to declare the establishment of a District Council and the respective numbers of elected and appointed members as provided in Schedules 1, 2 and 3.

In addition, the Government has also proposed withdrawing the provision for the Chief Executive's discretionary power to specify a shorter term of office for appointed members while adding the provision that the Chief Executive can only give directions to District Councils in relation to matters which affect public interest and so on.

In response to some Honourable Members' request, we have added a new clause in the Bill to explain the arrangement for the chairman of rural committee to become ex officio members, and specified the number of rural committees, names and information about the host District Councils in Schedule 3.

Some Honourable Members are of the view that incumbent district board members should not use district business to canvass support during election campaigns. In response to Members' suggestion, we have added new clauses in the Bill to provide that the operation of District Councils will be suspended for a certain period in the run-up to an ordinary election. This arrangement will be implemented in the District Council election to be held at the end of 1999 if the relevant amendment is passed.

We have responded to some Honourable Members' concern about the functions of District Councils by agreeing to delete the reference to "food and environmental hygiene services". We are of the view that the current description of District Councils' functions can be interpreted as including these types of work. However, I still want to emphasize one point and that is the future District Councils must assume a greater role in matters concerning food and environmental hygiene services and the promotion of recreational and cultural activities. There is no question about this.

With regard to the disqualification of members for being absent from District Council meetings for a period of time, we will, after considering Honourable Members' views, also amend the relevant criteria and put it in greater clarity by specifying the method of calculating the absence period.

Other amendments are related to electoral procedures, such as the addition of new clauses to make the election process as smooth as possible. In addition, consequential and miscellaneous amendments are made to two definitions and Schedule 6 in the Bill. We have also proposed a few technical amendments to make the Bill more complete.

We believe that the District Councils Bill, subject to the amendments proposed by the Government, will be widely accepted by the public. This Bill is, in addition to balancing the interests of various sectors and walks of life, in line with Articles 97 and 98 of the Basic Law which provide for the nature, functions and legal status of District Councils. I hope that Honourable Members will support the Government's 25 amendments.

I will explain in detail various amendments proposed by both the Government and Honourable Members and spell out the Government's views and position at the Committee stage. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the District Councils Bill be read the Second time. 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 of the Members present. I declare the motion passed.

CLERK (in Cantonese): District Councils Bill.

Council went into Committee.