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 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 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 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.

MEMBERS ABSENT:

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

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

THE HONOURABLE CHOY SO-YUK

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

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

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

DR EDGAR CHENG WAI-KIN, J.P.
HEAD, CENTRAL POLICY UNIT

CLERKS IN ATTENDANCE:

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

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

MR RAY CHAN YUM-MOU, ASSISTANT SECRETARY GENERAL

PAPERS

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

Subsidiary Legislation

L.N. No.

Schedule of Routes (Citybus Limited) Order 1999	78/99
Schedule of Routes (North Lantau and Chek Lap Kok Airport) (Citybus Limited) Order 1999	79/99
Schedule of Routes (Kowloon Motor Bus Company) Order 1999	80/99
Schedule of Routes (Long Win Bus Company Limited) Order 1999	81/99
Schedule of Routes (New Lantao Bus Company) Order 1999	82/99
Schedule of Routes (New World First Bus Services Limited) Order 1999	83/99
Film Censorship (Amendment) Regulation 1999	84/99
Merchant Shipping (Safety) (Carriage of Cargoes) (Amendment) Regulation 1999	85/99
Securities (Dealers, Investment Advisers, Partnerships and Representatives) (Amendment) Rules 1999	86/99
Nurses Registration (Amendment) Ordinance 1997 (82 of 1997) (Commencement) Notice 1999	87/99
Animals and Plants (Protection of Endangered Species) Ordinance (Amendment of Schedules) Notice 1999 (L.N. 38 of 1999) (Commencement) Notice 1999	88/99
Rules of the High Court (Amendment) Rules 1999 (L.N. 39 of 1999) (Commencement) Notice 1999	89/99
Public Revenue Protection (Revenue) Order 1999	90/99

Sessional Papers

No. 111	─	Estimates for the year ending 31 March 2000 General Revenue Account Summaries and Revenue Analysis by Heads and Subheads
No. 112	─	Audited Statement of Accounts of the Language Fund together with the Director of Audit's Report for the year ended 31 August 1998
No. 113	─	Legal Aid Services Council Annual Report 1997-98
No. 114	─	Securities and Futures Commission Approved Estimates of Income and Expenditure for the financial year 1999/2000
No. 115	─	Report by the Commissioner of Police on the Police Children's Education Trust and the Police Education and Welfare Trust for the period 1 April 1997 to 31 March 1998
No. 116	─	Provisional Regional Council Revised Estimates of Expenditure 1998/99
No. 117	─	Revised list of works of the Provisional Regional Council for the 1998/99 financial year (during the third quarter ended 31 December 1998)

Reports

Report of the Bills Committee on Adaptation of Laws (No. 4) Bill 1998

Report of the Bills Committee on Adaptation of Laws (No. 6) Bill 1998

Report of the Bills Committee on Adaptation of Laws (No. 2) Bill 1998

Report of the Bills Committee on Adaptation of Laws (No. 3) Bill 1998

ADDRESS

PRESIDENT (in Cantonese): Addresses. Mr James TO and the Secretary for the Treasury will separately address the Council on the Tax Exemption (1997 Tax Year) Order, which was subsidiary legislation laid on the table of the Council on 10 March 1999.

Tax Exemption (1997 Tax Year) Order

MR JAMES TO (in Cantonese): With your permission, Madam President, I shall speak on the Tax Exemption (1997 Tax Year) Order (L.N. No. 62). I will try to keep my remarks brief.

Madam President, as people begin to receive the tax rebate cheques, they will indeed feel happy for a while. Personally, I do not object to the Government's tax rebate. In fact, I am in favour of it. However, I consider it legally controversial for the Government to implement the Financial Secretary's tax rebate proposal in the Budget through subsidiary legislation. The Government fails to implement the proposal in an unquestionable way. I will explain my point with two arguments.

First, the Government exercises the power given by section 17 of the Inland Revenue Ordinance to make a tax exemption by order of the Chief Executive in Council, providing for exemption in respect of the payment of 10% of property tax, salaries tax or profits tax chargeable under the Inland Revenue Ordinance for the year of assessment 1997-98. Under this order, the majority of people who have paid the taxes due for 1997-98 will receive a tax rebate, while those taxpayers who have not yet made their payments will see their liability reduced.

What does section 17 of the Inland Revenue Ordinance say? It says that the Chief Executive in Council may by order exempt any person, office or institution from payment of the whole or any portion of any tax chargeable under the Ordinance.

In the past, orders made under section 17 were meant for specific classes of persons or institutions. For instance, there have been examples where certain staff of the Hong Kong Monetary Authority were exempted from payment of income tax, or the Hospital Authority was exempted from payment of tax in respect of parts of its income. These orders were not applied generally or universally to unspecified classes of persons. This time around, the Government is "distributing money" to taxpayers who have or not yet paid their taxes. This obviously does not comply with the provision of section 17. One can hardly call it a "tax exemption". Another thing that departs from the provision is that the Government's order has retrospective effect. It provides for the refund of taxes already paid rather than exempts the public from payment of some portions of taxes next year or in a certain year in advance.

Second, the Government considers that this rebate is a one-off payment and that it will not affect previous or future taxation measures. Therefore, it will obviate the need to amend the principal legislation and table the amendment in the Legislative Council. I do not agree with the Government's view.

There is a profound difference between amending the principal legislation and enacting subsidiary legislation: through the procedures of publication in the Gazette, tabling the amendment to the principal legislation in the Legislative Council and the establishment of a bills committee by the Legislative Council to scrutinize the bill, members of the public can discuss and comment on the Government's proposal. Subsidiary legislation does not provide such an opportunity. Although the tax rebate is generally welcomed by the public, we must remember that this involves an enormous amount of government expenditure. In my view, the public should have a greater degree of participation in the discussion about whether this expenditure is necessary. Therefore, constitutionally, the Government should effect the rebate by amending the principal legislation, rather than by enacting subsidiary legislation. If the Government tables the amendment to the principal legislation in the Legislative Council, I am sure that Honourable colleagues will give priority to handling the bill in view of the importance of the tax rebate to the public, so that the process of deliberation will be completed more efficiently and that the bill will be passed as soon as possible.

I hope that the Government will consider and think about my point. Of course, I do not know whether the Government will introduce another tax rebate again. But I hope that the Government will consider this constitutional point. Thank you.

MR ANDREW WONG (in Cantonese): I should like to raise a question. Although I do have similar opinions, I do not wish to speak on the issue. Nevertheless, I wish to know whether it should be section 87 instead of section 17 of the Inland Revenue Ordinance that can be invoked?

PRESIDENT (in Cantonese): Mr Andrew WONG, do you wish to seek clarification from Mr James TO?

MR ANDREW WONG (in Cantonese): Yes, Madam President.

PRESIDENT (in Cantonese): Mr James TO ......

Mr James TO (in Cantonese): I am sorry, Madam President, it should be section 87. Thank you, the Honourable Andrew WONG.

SECRETARY FOR THE TREASURY: President, thank you for allowing me to speak on the Tax Exemption (1997 Tax Year) Order made under section 87 of the Inland Revenue Ordinance which was tabled in this Council on 10 March. The Order authorizes a rebate of 10% of the 1997-98 final assessments of salaries tax, profits tax and property tax.

Section 87 of the Inland Revenue Ordinance provides that:

"The Chief Executive in Council may by order exempt any person, office or institution from payment of the whole or any portion of any tax chargeable under the Ordinance."

The legislative intent of the section is to provide relief to taxpayers from the payment, whether in whole or in part, of the taxes chargeable under the Ordinance as and when circumstances justify. The wording of the section has neither restricted its application to specific situations, or classes of people, or organizations, nor limited the amount of tax which may be exempted. Given its scope and legislative intent, we consider there is sufficient legal basis for the issue of the Order under section 87 of the Inland Revenue Ordinance.

Since the Order is a piece of subsidiary legislation, provisions of the Interpretation and General Clauses Ordinance (Cap. 1) regarding subsidiary legislation apply. Section 28(3) of the Ordinance stipulates that subsidiary legislation comes into operation at the beginning of the day on which it is published, or if provision is made for it to commence on another day, at the beginning of that other day. As such, the Order took effect on 10 March, which was the day after the Chief Executive in Council made the Order. Under section 34 of the Interpretation and General Clauses Ordinance, there is a 28-day negative vetting period for subsidiary legislation during which Members may move a motion to amend the concerned subsidiary legislation. We welcome Members' decision not to do so.

President, in the light of what I have said, the Administration's decision to effect the tax rebate through an order by the Chief Executive in Council under section 87 of the Inland Revenue Ordinance is entirely proper. Thank you.

WRITTEN ANSWERS TO QUESTIONS

Non-tobacco Advertisements Containing Messages on Smoking

1.DR LEONG CHE-HUNG: It is learnt that advertisements of non-tobacco products often feature leading characters smoking cigarettes or cigars. In view of the impacts of such advertisements on young people, will the Government inform this Council whether it will consider stipulating that such advertisements should include health warnings against smoking?

SECRETARY FOR HEALTH AND WELFARE: Madam President, section 14 of the Smoking (Public Health) Ordinance (Cap. 371) (the Ordinance) stipulates that an advertisement is a tobacco advertisement if it:

(a)contains any express or implied inducement, suggestion or request to purchase or smoke cigarettes, cigarette tobacco, cigars or pipe tobacco;

(b)relates to smoking in terms which are calculated, expressly or impliedly, to promote or encourage the use of cigarettes, cigarette tobacco, cigars or pipe tobacco; or

(c)illustrates or mentions smoking or cigarettes, cigarette tobacco, cigars or pipe tobacco or their packages or qualities.

Advertisements falling within the meaning of section 14 of the Ordinance must carry appropriate health warnings. Whether or not advertisements of non-tobacco products featuring leading characters smoking cigarettes or cigars are tobacco advertisements within the meaning of section 14 will have to be determined on a case by case basis. The Administration will monitor the situation and take necessary enforcement action.

Vacancy Rates of Private Flatted Factories

2.DR LUI MING-WAH (in Chinese): It is learnt that at the end of 1997, the overall vacant area of private flatted factories in Hong Kong was 1.8 million sq m or about 10% of stock. In this connection, will the Government inform this Council whether:

(a)it will consider exempting vacant factory units from the payment of government rent and rates to reduce the operating costs of the business sector; if it will, and details of that; if not, the reasons for that; and

(b)it plans to rezone the land for industrial building use in the urban area to residential use; if so, the details of that; if not, the reasons for that?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Chinese): Madam President,

(a)Government rent is charged under the Basic Law and the Government does not have the discretion to grant government rent exemptions which are not specified under it. As there is no provision in the Basic Law which exempts vacant premises from the payment of government rent, we cannot consider such an exemption.

As for rates, our policy is that rates should be charged on all premises, irrespective of whether they are occupied or not. The major justifications are as follows:

(i)Rates are a general charge on properties to finance the costs of government and municipal services such as police cover, fire protection, street lighting and refuse collection. Exempting unoccupied premises from the payment of rates would mean that owners of occupied premises may have to bear a higher share of costs by paying more rates. Such an exemption may also be unfair to premises occupied by owners whereby no rental income would be generated.

(ii)Rates only form an insignificant portion of household income and business operating cost. For non-domestic premises, rates represent less than 0.1% of business operating cost. Hence, exemption of rates for vacant premises is unlikely to be an effective means for alleviating the financial burden of business operators.

(iii)It is estimated that some 5% of premises in Hong Kong are presently unoccupied and it will cost the Government $770 million in 1998-99 if rates exemption is allowed for vacant premises.

(iv)In order to provide rates exemption to all unoccupied premises, we will require the creation of some 50 posts for processing applications and inspecting premises on a random basis, at a total staff and administrative cost of about $30 million per annum.

(v)As checking of each and every property which is reported to be vacant is extremely costly, the exemption, if granted, will have to be granted largely based on the declaration of property owners. This would create opportunities for abuse whereby property owners give false declaration that their properties are vacant. As such, the revenue implications of the exemption would even be higher.

Taking into account the above, we do not consider it justifiable to exempt vacant premises as a whole, or vacant industrial premises in particular from the payment of rates.

(b)According to the "Study on the Provision of Industrial Premises and the Development of Planning Guidelines and Design Parameters of New Industrial Areas and Business Parks" completed by the Planning Department in mid-1997, there would be a surplus of about 115 hectares to 140 hectares of general industrial land up to year 2011. As recommended in the study, the Government has carried out a review of the rezoning opportunities of industrial land and initiated applications to the Town Planning Board (the Board) for rezoning industrial land.

Since mid-1997, the Board has already rezoned a total of about 65 hectares of industrial land for other uses in the urban area, of which about 49 hectares are for residential use.

Apart from rezoning, change of industrial use to other uses has also been effected through the planning permission system. Since mid-1997, the Board has granted planning permission for the development of 12 industrial sites within the urban area, with a total area of about 4 hectares, for non-industrial uses (of which about 0.22 hectares are for residential development).

Formulation of Plans to Streamline Work Procedures and Reduce Expenditures

3.DR TANG SIU-TONG (in Chinese): Will the Government inform this Council whether Policy Bureaux or departments have been asked to submit, within designated timeframes, plans on streamlining working procedures and cutting down expenses in respect of various projects; if so:

(a)of the total number of such plans prepared by Policy Bureaux and departments in the past two years;

(b)of the effectiveness of such plans and their projected expenditures; the number of completed projects which expenditures exceeded the projected amounts; and

(c)of the department responsible for conducting a value-for-money assessment for such projects, as well as an assessment on the effectiveness of those plans as a whole?

SECRETARY FOR THE TREASURY (in Chinese): Madam President, under Public Sector Reform, resource management responsibility is devolved to heads of bureaux and departments. As Controlling Officers, they have to ensure efficiency and value for money in the use of public funds. To achieve this purpose, they have to constantly review work processes in their bureaux and departments and explore alternative means of providing services. They will also respond to central initiatives on efficiency such as the Enhanced Productivity Programme (EPP) announced by the Chief Executive in his 1998 policy address.

Against the above, the Administration's response to the questions raised is as follows:

(a)Plans for streamlining working procedures and cutting down expenses in the Government are drawn up by individual heads of bureaux and departments to achieve the overall objective of cost-efficiency. They are initiated and dealt with at different levels across the Government. As such we do not have comprehensive statistics on the number and costs of all these projects.

(b)Not all such initiatives involve additional expenditure. For example, in the case of our latest drive under the short-term phase of EPP, government bureaux, departments and agencies together with government subvented organizations have pledged to deliver productivity gains amounting to $818 million in 1999-2000. Of these, $655 million will be redeployed to provide more than 300 items of new and improved services. The remaining $163 million are real cash savings which will be reflected as reduced expenditure in the 1999-2000 draft expenditure Estimates. By 2002-03 they are required to reduce their baseline operating expenditure by at least 5%. A booklet on the EPP with details of the major projects in 1999-2000 was published with the 1999-2000 Budget documents.

(c)The effectiveness of these plans or projects is assessed by the relevant authority initiating such projects, assisted by designated agencies. In general terms, the Efficiency Unit of the Chief Secretary for Administration's Office, assisted by the Management Services Agency, serves as a focal point to oversee and co-ordinate efforts across the Government on efficiency of the public service. The Finance Bureau, through its role in central resource management and resource allocation, promotes value for money, while the Audit Commission performs value for money audits.

Millennium Celebrations

4.MR SIN CHUNG-KAI (in Chinese): With regard to the millennium celebrations, will the Government inform this Council:

(a)whether it has plans to issue commemorative gold coins and stamps as well as other commemorative items; if so, the estimated income; if not, the reasons for that; and

(b)of the details of the estimated revenue and expenditure for the various festivities announced on the 12th of this month?

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

(a)The Government has no plans to issue commemorative gold coins for the new millennium because the Hong Kong Monetary Authority feels that it is very difficult to judge the likely demand for such a coin given the current state of economy and the unspectacular performance of the gold market in recent years. In addition, competition would be very keen as we understand that a number of mints are preparing to issue coins to commemorate the millennium; the coin market, both locally and internationally, is likely to be flooded with commemorative coins of all sorts by the end of this year. In all these circumstances, it would be doubtful whether a Hong Kong issue could generate any overall profit. As for commemorative items, the Government is of the view that it would be more appropriate to give out tiny items to participants of the millennium activities as souvenirs free of charge. This is the usual practice in community involvement projects and activities. The Government however plans to issue stamps for the new millennium and estimates that there will be $12 million income from the sale of stamps.

(b)The estimated government expenditure of the core millennium celebration activities announced on 12 March 1999 and those being planned will not exceed $10 million. These activities will include lead up events and those running through Year 2000 with the Millennium Extravaganza on 31 December 1999 as the highlight. There will not be income from these activities as our aim is to encourage community involvement and public participation. The majority of these activities are self-financing through sponsorship or ticket sales arranged by the organizing bodies. Details are being worked out.

Use of Duty-not-paid Fuels by Vehicles

5.MISS CHRISTINE LOH: With regard to the use of duty-not-paid fuels by vehicles, will the Government inform this Council:

(a)in respect of each type of fuel used by vehicles in 1997 and 1998 respectively,

(i)of the quantity sold;

(ii)based on the Hong Kong Energy End-use Data compiled by the Electrical and Mechanical Services Department and other relevant information, of the quantity that should have been consumed by vehicles;

(iii)how the difference in quantities in (i) and (ii) above compares to the quantity of duty-not-paid fuels seized by the authorities;

(iv)of the estimated loss in duty in view of the difference in quantities in (i) and (ii) above; and

(b)of the number of persons prosecuted for smuggling or selling duty-not-paid fuels in 1997 and 1998 respectively?

SECRETARY FOR THE TREASURY: Madam President,

(a)(i)The duty-paid quantities of petrol and light diesel oil in 1997 and 1998 are as follows:

Year	Petrol ('000 litres)			Light Diesel Oil
	Leaded	Unleaded	Total	('000 litres)
1997	75 007	392 238	467 245	697 422
1998	46 307	417 987	464 294	672 900

(ii)The quantities of petrol and light diesel oil, estimated based on the Hong Kong End-use Data compiled by the Electrical and Mechanical Services Department, consumed by all vehicles (excluding franchised buses which are authorized to use duty-exempt fuels) in 1997 and 1998 are as follows:

Year	Petrol1	Light Diesel Oil
	('000 litres)	('000 litres)
19972	503 000	1 583 000
19982	528 000	1 641 000

(iii) to (iv)

The difference between (a)(i) and (ii) is as follows:

Year	Petrol ('000 litres)			Light Diesel Oil ('000 litres)
	duty-paid quantity (a)	estimated consumption (b)	difference (a) - (b)	duty-paid quantity (c)	estimated consumption (d)	difference (c) - (d)
1997	467 245	503 000	-35 755	697 422	1 583 000	-885 578
1998	464 294	528 000	-63 706	672 900	1 641 000	-968 100

The quantities of duty not-paid fuels seized in 1997 and 1998 are as follows:

Year	Diesel Oil ('000 litres)				Petrol
	light diesel oil	marked oil	detreated marked oil	Total	('000 litres)
1997	1 636	287	281	2 204	27
1998	1 833	3 093	166	5 092	139

However, it should be noted that under the Dutiable Commodities Regulations (Cap. 109 sub. leg.), the fuel in the fuel tanks of vehicles arriving from the Mainland is exempt from duty. Based on the number of incoming cross-border vehicle trips made by diesel-driven vehicles in 1998 and assuming that the fuel tank of each vehicle is on average 80% full when arriving Hong Kong from the Mainland, we estimate that around 876 million litres of light diesel oil were brought into Hong Kong from the Mainland by those vehicles in 1998 (no statistics for 1997 are available). Details of the calculation are at the Annex. On this basis, we estimate the loss in duty from light diesel oil to have been $184 million³ for 1998. We do not have sufficient information on the quantity of petrol brought into Hong Kong in the fuel tanks of vehicles arriving from the Mainland to be able to give an estimate of the loss in duty from petrol.

(b)The number of persons prosecuted for smuggling or selling duty-not-paid fuels in 1997 and 1998 are as follows:

Year	Diesel Oil			Petrol		Others
	light diesel oil	marked oil	detreated marked oil
1997	702	307	15	61	14
1998	673	356	17	222	-

1 No breakdown for leaded and unleaded petrol is available.

2 Only energy data up to 1994 are available at this stage. The figures for 1997 and 1998 are the preliminary trend projected figures based on the data in 1994

3 It is assumed that in 1998 the duty rate for light diesel oil was $2.00 per litre.

4 The offence involved diesel oil and kerosene.

Annex

Estimated Quantities of Light Diesel Oil

brought into Hong Kong by Cross-Border Vehicles in 1998

	Estimated No. of vehicle trips1	Total volume of fuel (litre) (assuming the fuel tanks were 80% filled)
Vehicles of fuel tank size of 100 litres	169 863	13 589 040
Vehicles of fuel tank size of 200 litres	2 089 859	334 377 440
Vehicles of fuel tank size of 300 litres	2 069 160	496 598 400
Others (Passenger vehicle of fuel tank size of 224 litres2 )	175 187	31 393 510
Total	4 504 069	875 958 390

1 The number of trips for 1 January to 3 February 1998 is a projected figure as records of cross-boundary trips by diesel-driven vehicles have only been kept since 4 February 1998.

2 The average fuel tank size of diesel-driven vehicles for passengers.

Gastric Cancer

6.MR LAU KONG-WAH (in Chinese): It is reported that according to the findings of a medical study, people infected with Helicobacter pylori have higher risks of developing gastric cancer, and more than half of the population of Hong Kong are infected with this bacteria. In this connection, will the Government inform this Council whether gastric cancer is more commonly found in Hong Kong than in the western countries; if so, whether it knows the reasons for that, and how that phenomenon relates to the following living habits of Hong Kong people:

(a)using chopsticks at meals; and

(b)the fast pace of life?

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

(a)According to the information collected from different organizations in Hong Kong by the Hong Kong Cancer Registry (the Registry) of the Queen Elizabeth Hospital, the age standardized incidence rate of gastric cancer in Hong Kong is about 12.7 per 100 000 population in 1994. The Registry has compared the incidence rate of gastric cancer in Hong Kong against those in other selected places. The data shows that incidence rate of gastric cancer in Hong Kong is higher than those in the western countries, such as the United Kingdom and the United States, but lower than other places in Asia (including Japan, Singapore and the mainland China).

The relationship between dietary patterns and gastric cancer has been investigated. The long-term ingestion of high concentrations of nitrates in dried, smoked, and salted foods appears to be associated with a higher risk. Apart from dietary factors, there is also epidemiological association of Helicobacter pylori with gastric cancer. However, the mode of transmitting the bacteria is still unclear. Although there is a hypothetical risk of transmitting the bacteria through eating, there is no conclusive evidence that the use of chopsticks favours the transmission of the bacteria. A study published by the Chinese University of Hong Kong in 1997 has shown that carriage of the bacteria by chopsticks used by the infected patients is probably a rare event.

(b)There is no epidemiological evidence to link gastric cancer to Hong Kong people's fast pace of life.

Performance of Governing Bodies of Tertiary Institutions

7.MISS EMILY LAU (in Chinese): Regarding the performance of the governing bodies of the various tertiary institutions funded by the University Grants Committee in carrying out their duties, will the Executive Authorities inform this Council whether:

(a)they know the respective numbers of meetings held by the various governing bodies and the respective average attendance rates of their members last year;

(b)they know how members of the governing bodies learn of their terms of reference; and

(c)they have assessed if the governing bodies have effectively fulfilled their role in supervising the work of the management of these bodies; if so, of the results of the assessment?

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

(a)The numbers of meetings of the governing Councils of the eight University Grants Committee (UGC)-funded institutions held in the 1998, and the average attendance rates by Council members at these meetings are as follows:

Institution	Number of Council meetings	Average attendance rate
City University of Hong Kong	3	79%
Hong Kong Baptist University	4	67%
Lingnan College	4	71%
Chinese University of Hong Kong	3	66%
Hong Kong Institute of Education	3	73%
Hong Kong Polytechnic University	4	62%
Hong Kong University of Science and Technology	2	75%
University of Hong Kong	3	60%

The above statistics refer to full Council meetings only. Council members also serve on various standing or ad hoc committees established under the Councils to consider specific issues such as finance, estates, personnel and so on. The Councils also transact business by circulation of papers and postal votes between meetings.

(b)The powers, responsibilities and duties of the Councils and the Council members of the UGC-funded institutions are specified in the governing ordinances of the individual institutions.

In general, newly appointed Council members are briefed by senior members of the administration of the institutions concerned on the powers and duties of the Council and Council members, as well as the academic programmes and other activities of the institution. The institutions' administrations also provide assistance to Council members in discharging their duties as and when necessary.

(c)The Government respects the management autonomy of tertiary institutions, and does not seek to interfere with the internal governance of individual institutions. The composition of these governing bodies, which is stipulated in the respective ordinances, ensures a balanced mix of people, comprising staff and student representatives, as well as lay members from the business, professional and academic sectors. These lay members have a solid track record of public service, particularly in education-related advisory bodies. We aim at achieving an optimal composition for each governing body so that they can effectively steer the development of individual institutions to serve the needs of the community.

The Administration and the UGC maintain formal and informal dialogues with the Chairmen and members of these governing bodies, as well as the management of the institutions. In considering appointments and re-appointments, factors such as the attendance and the level of participation of existing members, the need to inject new blood, and the expertise of existing members and potential candidates and so on, will be taken into account. This is to ensure that the composition of the governing bodies and any changes to membership which happen from time to time are conducive to the overall development of individual institutions.

Government Office Automation Programme

8.DR TANG SIU-TONG (in Chinese): With regard to the Government Office Automation (GOA) Programme undertaken with funding approved by the Finance Committee of this Council, will the Government inform this Council:

(a)of the total number of projects that have been implemented for over a year under this Programme in the past two years; among them, the projects that were unable to attain the pre-set targets in cutting down expenses, and the reasons for that;

(b)if it plans to assess whether those automation projects already implemented can attain the saving targets and submit the assessment report to this Council; and

(c)whether it plans to carry out a value-for-money assessment on the automation projects already implemented; if so, the responsible department for making the assessment; if not, the reasons for that?

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

(a)As at March 1999, a total of four projects under the GOA Programme, each of which costing over $10 million, have been approved by the Finance Committee (FC) of this Council. All of them are still under development, and have not been implemented. Assessment on the attainment of pre-set saving targets of individual projects can only be made after the completion of the development work.

(b)We will submit an annual report to the FC on computer projects (including those under the GOA Programme) with funding approved by the FC. Assessment on whether pre-set saving targets of individual projects have been attained after implementation is included in the report.

(c)Currently, all departments and their Policy Bureaux must conduct a review after a computer project (including those under the GOA Programme) has been implemented in respect of the following aspects:

(i)the cost-effectiveness of the project (for example, whether the pre-set saving target has been attained);

(ii)the expenses incurred (for example, whether there is overspending); and

(iii)the implementation of various items of the project as against the scheduled implementation timetable (for example, any delay in implementation).

The review reports will be submitted to the Finance Bureau, Information Technology Services Department and Audit Commission for consideration.

Use of Industrial Buildings

9.MISS CHRISTINE LOH: In view of the court judgment on 2 March this year that a company which operated a paging service centre in an industrial building was not breaking the conditions of the relevant land lease, will the Administration inform this Council:

(a)whether it has assessed the long-term impacts of the court judgment on the use of industrial buildings in Hong Kong; if so, the details of it;

(b)of the actions it will take to encourage the redevelopment of industrial buildings for the use of the information technology industry;

(c)of the actions it will take to encourage the information technology industry to operate in industrial buildings rather than in specialized locations such as science parks; and

(d)whether it has assessed if existing vacant accommodation in industrial buildings can meet the need of the information technology industry; if there is enough accommodation, whether it will reassess the need to proceed with the proposed Cyberport project?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Madam President,

(a)We are now assessing the implications of the court judgment. The court judgment has adopted an interpretation of the conditions of existing leases regarding "industrial" use different from that of the Government. Depending on the result of the assessment, we may have to file an appeal against the court judgment in early May.

(b)To meet the changing needs of the industrial sector, the Town Planning Board (the Board) has been adopting a liberal and positive approach towards broadening the uses permitted in industrial buildings. In September 1997, the Board adopted a definition of "Industrial Uses" that covers a wide scope of activities (including training, research and development, and design work) (see Annex). The Board has also promulgated new guidelines to facilitate the development of industrial-office buildings, and to increase the permitted proportion of ancillary office in industrial buildings from 30% in the past to 50%. These measures would greatly facilitate the accommodation of technology-based industries including the information technology industry in relatively new industrial buildings. However, whether or not the older industrial buildings would eventually be redeveloped for the use of the information technology industry would be determined by market forces.

(c)The planning-related measures mentioned in (b) above will encourage more information technology industry to be accommodated in industrial buildings. On the other hand, the science park is not designed only to provide accommodation for industrial undertakings. It is to provide a high quality and low density environment for the operation of high technology-based companies with a specific focus on research and development activities.

(d)The development of the Cyberport is not simply to provide additional office space for the information technology industry. The objective is to create an international multi-media and information services centre in Hong Kong, providing sustained, long-term benefits through the development of high value-added services. The Cyberport will provide a high quality living and working environment which will attract overseas professionals and retain local talents with long-term career opportunities. This will create a centre of talents where creativity is enhanced by the "clustering" of various professional disciplines working in close proximity. Hence, the existing individual industrial buildings, whether or not in surplus, cannot meet the objectives of the Cyberport.

Annex

Town Planning Board's Definition of "Industrial Use"

"Any premises, structure, buildings or part of building or place (other than a mine or quarry), in which articles are manufactured, altered, cleansed, repaired, ornamented, finished, adapted for sale, broken up or demolished or in which materials are transformed, or where goods and cargo are stored, loaded, unloaded or handled, or where the training, research and development, design work, quality control and packaging related to the above processes are carried out."

Installation of Retro-fitting Screen Doors on Platforms of MTR Stations

10.MR LAU KONG-WAH (in Chinese): In its replies to the questions raised by this Council on 16 December 1998 and 20 January 1999, the Government said that the Mass Transit Railway (MTR) Corporation had plans to install retro-fitting platform screen doors on all platforms of underground stations, and that the Corporation was carrying out studies into the technical aspects of the installation programme for such screen doors. In this connection, will the Government inform this Council whether it knows:

(a)the findings of the above-mentioned studies carried out by the Corporation, and the technical problems inherent in the installation of retro-fitting platform screen doors;

(b)if the Corporation has drawn up a priority list for the installation of screen doors at various stations; if such a list has been drawn up, the criteria adopted in prioritizing the stations; if not, the reasons for that; and

(c)apart from installing retro-fitting platform screen doors on the platforms of MTR stations, the measures that will be adopted by the Corporation to safeguard the safety of passengers?

SECRETARY FOR TRANSPORT (in Chinese): Madam President,

(a)The MTR Corporation is actively considering the installation and retro-fitting of platform screen doors to MTR stations. The studies, which are carried out to examine the technical aspects of the installation programme are still in progress. The findings, when available, are expected to enable the Corporation to assess changes required to be made to the station and tunnel environmental control system (including ventilation system, smoke extract and relocation of ducting and conduits), and the best method of carrying out the construction and installation so that normal station operations can be maintained without any adverse impact on safety or service levels. As this is the first project of its kind where platform screen doors are to be retro-fitted on an operational railway, it is essential that the Corporation proceeds with caution and makes every effort to ensure that safety and normal operations are not to be compromised.

(b)The scope of the retro-fitting works, the timeframe for the construction and installation programme and the priority for implementation are subject to the findings of the studies. We have urged the Corporation to complete the studies as soon as possible. The studies, originally scheduled for completion in the last quarter of 1999, have been speeded up and are expected to be completed in the third quarter of 1999. The Corporation will take a decision on how to go forward on the installation programme in the light of the findings.

(c)Safety is an absolute prerequisite for railway operation. High safety standards have been built into the MTR system and are strictly followed in daily operations. CCTV cameras are installed at every station platform to facilitate effective monitoring and management of platform orders. Station Control Room and Platform Supervision Booths are equipped with sufficient communication and control facilities. Emergency Train Stop Buttons are available along platform on the pillar or wall panel. Station management programmes including crowd control measures are in place to ensure passenger safety. For example, when over crowding in platforms occurs crowd control measures will be introduced to slow down incoming passenger flow at concourse levels until passengers at platforms have been carried away by trains. The Corporation has also introduced queuing systems to maintain orderliness at platforms. Station broadcasting is also used to remind passengers to stand behind the yellow line at platforms.

Over the years, the Corporation has regularly promoted safety awareness to the public. Information about safety on the MTR is disseminated through printed publicity materials and channels such as radio and TV programmes.

Appointment of Former Education Department Staff in Aided Schools

11.MISS EMILY LAU (in Chinese): Will the Executive Authorities inform this Council of the number of former civil servants in the Education Department (ED) appointed to the post of principal or other senior posts in aided secondary and primary schools upon retirement in each of the past five years; whether it has assessed if such appointments will give rise to any potential conflict of interest, and whether they will have any effect on the ED in discharging its functions in supervising the schools concerned?

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

(a)In the past five years, the number of former civil servants in the ED appointed to the post of principal/headmaster, vice-principal/deputy headmaster or member of the school management committee of aided secondary and primary schools after retirement are as follows:

Year	1994-95	1995-96	1996-97	1997-98	1998-99	Total
Number	0	3	6	5	2	16

(b)All civil servants, including officials of the ED, who wish to accept outside appointments within two years after retirement are required to seek approval from the relevant authorities in accordance with Civil Service Regulations. The approving procedures for such applications are as follows:

-applications from non-directorate officers should be submitted to the Head/Deputy Head/Assistant Head of Department or Grade for approval; and

-applications from directorate officers, recommended by the Head of Department or Grade, should first be forwarded to the Advisory Committee on Post-Retirement Employment (the Advisory Committee) for consideration and advice. The applications will then be submitted to the Chief Secretary for Administration/Secretary or Deputy Secretary for the Civil Service for approval. The Chairman and the majority of members of the Advisory Committee are non-civil servants.

(c)In considering such applications, the following are taken into account to ensure that there is no impropriety in the proposed employment, including no conflict with public interests:

(i)whether the officer has been involved in policy formulation or decision, the effects of which could have benefitted his prospective employers;

(ii)whether the prospective employer might gain an unfair advantage over competitors because of the officer's previous knowledge and experience;

(iii)the public perception of the officer taking up the proposed employment; and

(iv)especially for senior officers, whether the proposed employment would embarrass the Government or give rise to any suggestions of impropriety.

Introduction of Electric Trolley Buses

12.DR RAYMOND HO (in Chinese): In order to alleviate the air pollution problem in Hong Kong, the replacement of diesel-powered buses by electric trolley buses has been suggested. In this connection, will the Government inform this Council whether:

(a)it has conducted a study on the feasibility of introducing electric trolley buses into Hong Kong and the effectiveness of such a measure in alleviating the air pollution problem; if so, the details of that; and

(b)it knows how the air pollution problem has been alleviated in various metropolises in the world after their introduction of electric trolley buses; if so, the details of that?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Chinese): Madam President,

(a)The Environmental Protection Department (EPD) is about to complete a fact-finding study on the status of the latest trolley bus technology and its application in overseas countries. In general, the study has found that there is wide recognition of trolley buses as a transport system that can help improve air quality. In many cities, trolley buses are found to be well received by the public, to have longer vehicle life spans, are quiet, and maintain good acceleration under load. Compared to diesel buses which emit significant amount of pollutants such as respirable suspended particulates and nitrogen oxides, trolley buses have zero emissions at street level. The overall emissions arising from the electric power generation process to provide energy for trolley buses are significantly less than those from diesel fuel, particularly if gas is used at the power stations. It should also be noted that these emissions dissipate into the ambient air through the tall stacks of power stations and away from population centres. Trolley buses are therefore considered to be a relatively clean option for reducing air pollution. The complexity of putting in new trolley bus systems in Hong Kong's congested urban environment has to be recognized, but we shall examine further the feasibility of introducing trolley buses to Hong Kong.

(b)The EPD's fact-finding study has identified about 340 cities in Asia, America and Europe which have trolley buses in operation. The study focused on the trolley bus technologies, not on the pollution problems in these cities. However, the environmental benefits of trolley buses in urban areas are recognized worldwide. Some cities are upgrading their old systems with modern equipment and are expanding their trolley bus networks for this reason. For example, Athens is developing trolley bus systems to reduce air pollution. Their estimate is that diesel buses contributed to 20% to 40% of Athens' air pollution. The city therefore plans to extend its trolley bus system aiming to replace diesel buses in phases.

Election of Village Representatives in the New Territories

13.MISS CYD HO (in Chinese): The Court of First Instance of the High Court ruled on the 12th of this month that, in accordance with the provisions of the Basic Law and the relevant international covenant on civil rights, non-indigenous inhabitants living in the Po Toi O Village in Sai Kung should have the right to vote in the election of village representatives. In this connection, will the Government inform this Council of the follow-up actions it will take or has taken in respect of the arrangements for the election of village representatives in the New Territories?

SECRETARY FOR HOME AFFAIRS (in Chinese): Madam President, the Government is carefully studying the recent court judgement relating to the village representative election of Po Toi O Village in Sai Kung as its implications are wide and the issues involved are complex and require thorough examination. The follow-up actions to be taken by the Government in respect of village representative elections will depend on the outcome of this study.

Spraying of Insecticide on the Rivers

14.DR RAYMOND HO (in Chinese): It is reported that in order to prevent the breeding of mosquitoes and insects, over the past six months the relevant authorities have been spraying insecticide on the rivers in the vicinity of the new airport and felling trees along those rivers. In this connection, will the Government inform this Council:

(a)of the details of these actions taken by the relevant authorities;

(b)whether the relevant authorities had informed the Environmental Protection Department (EPD) before they took such actions; if so, the response of the EPD; if not, the reasons for that; and

(c)whether it has assessed the ecological impact of these actions; if so, the details of that; if not, the reasons for that?

SECRETARY FOR HOME AFFAIRS (in Chinese): Madam President, based on the information provided by the Regional Services Department (RSD), the answers to the Honourable Raymond HO's questions are:

(a)Malaria mosquito vector has all along been detected in Lantau by mosquito surveys. Due to the development of North Lantau and the new airport at Chek Lap Kok, the Department of Health (DH) advised the RSD in 1995 to launch a comprehensive anti-malaria programme at Tung Chung and the area around the new airport. Hence, the RSD has launched an anti-malaria programme since 1995 to protect public health and to prevent the breeding of malaria mosquito vector in the vicinity of the Chek Lap Kok Airport.

At present, the RSD is carrying out anti-malarial work in 34 streams in Tung Chung, Sha Lo Wan and Tai Ho to eradicate the malaria vector and prevent mosquito breeding in abandoned fields and in streams. The measures taken include filling of small pools to eliminate stagnant water, trimming of marginal vegetation and embanking streams to increase the speed of water flow to help eliminate potential mosquito breeding places. Besides, RSD staff trims down overhanging branches which obstruct direct sunlight and produce shady streams in which mosquito vectors can breed.

The above anti-malarial work is conducted at each stream on a weekly rotation in order to break the seven-day mosquito breeding cycle. If mosquito larvae are still found, RSD staff will apply the larvicide "Abate 1-SG" or larvicidal oil (hydrocarbon oil) to streams to reinforce the effect.

(b)Having regard to the nature and the extent of the above anti-malaria programme in North Lantau Island, it is reckoned that they are not Designated Projects under the Environmental Impact Assessment Ordinance and do not call for environmental impact assessment. Hence the EPD has not been consulted.

(c)Control and prevention of mosquito vector breeding has been done for management of malaria. This is essential for public health. Moreover, as the new airport is located at North Lantau, inadequate precautionary measures to control mosquito vector there will have serious international health implications. As stated above, in view of the manual nature and small scale of the work, ecological impact assessment is not considered necessary.

Rules for Village Representative Elections

15.MR ANDREW CHENG (in Chinese): With regard to the rules for qualifying as voters and candidates in village representative elections adopted by various villages in the New Territories, will the Government inform this Council:

(a)of the rules currently adopted by Po Toi O Village in Sai Kung, Ho Sheung Heung Village in Sheung Shui, Tai Kei Leng in Shap Pat Heung, and Wing Lung Wai and Tai Hong Wai in Kam Tin; and

(b)of the villages adopting rules that are different from those laid down in the relevant guidelines issued by the Heung Yee Kuk at present; the details of such differences; whether it has assessed if such rules are in breach of those provisions stipulated in the Basic Law and the laws of Hong Kong which safeguard the citizens' equal opportunities and rights to participate in political affairs; where such rules are assessed to be in breach of the relevant laws, whether the Government would hence refuse or has already refused to endorse the results of such elections; if it has refused such endorsement, the details of that?

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

(a)The rules currently adopted by villages for qualifying as voters and candidates in village representative elections are as follows:

(i)Indigenous villagers aged 18 or above in Po Toi O Village in Sai Kung, Ho Sheung Heung Village in Sheung Shui, and Wing Lung Wai and Tai Hong Wai in Kam Tin are eligible to vote and stand for the respective village representative elections.

(ii)Permanent residents of Hong Kong who are aged 18 or above, have property (including property owned by grand parents and/or parents) in Tai Kei Leng in Shap Pat Heung and consider it as their primary place of residence are eligible to vote in the village representative elections. Only those who consider the village concerned as their primary place of residence and have been residing for seven years immediately prior to the election are eligible to stand for the respective village election.

(b)At present, all villages in the New Territories adopt the "Model Rules" promulgated by the Heung Yee Kuk in August 1994 as their rules for governing the conduct of village representative elections. Villagers have flexibility to make adaptations to the Rules in accordance with established traditions and practices in individual villages.

The Court of First Instance has recently held that certain rules regarding the voting rights of villagers in the village representative election of Po Toi O Village were in breach of certain provisions in the International Covenant on Civil and Political Rights, the Basic Law and the Sex Discrimination Ordinance. The Government, in view of the wide implications of the court judgement and the complexity of issues involved, is carefully studying the judgement with a view to, inter alia, determining whether an appeal against the judgement would be made. The follow-up actions to be taken by the Government in respect of village representative elections will depend on the outcome of the study.

Gambling Activities on the Internet

16.MR DAVID CHU (in Chinese): It is reported that gambling activities on the Internet have become increasingly popular recently. In this regard, will the Government inform this Council:

(a)whether it has surveyed the total number of web sites where gambling activities are available; the number of such sites that are based in Hong Kong;

(b)of the number of investigation cases undertaken by the relevant authority in respect of gambling conducted on the Internet in the past year; the number of people who have been prosecuted for participating in such gambling activities; the total amount of money involved; and

(c)the measures it will adopt to tackle the problem of Hong Kong people participating in gambling activities on foreign web sites?

SECRETARY FOR HOME AFFAIRS (in Chinese): Madam President, my replies are as follows:

(a)It is not possible at present to have accurate statistics on the total number of web sites which are involved in Internet gambling activities, for such web sites are dynamic and volatile as most of the other Internet web sites. According to police information, these gambling web sites are all located overseas, and it is difficult to trace their actual location, because most of them are virtual sites and the computer servers which run the operation can be situated anywhere in the world. None of these gambling web sites is based in Hong Kong.

(b)In the past year, the police have been investigating some of the Internet gambling activities, but owing to the lack of evidence, no proceedings have been instituted against anybody.

(c)Participation in gambling activities by the public is already regulated by the existing laws. Under the Gambling Ordinance, except for such gambling activities which are permitted by the Government and those which are allowed by section 3 of the Ordinance, all other forms of gambling activities are illegal. Therefore, Internet gambling activities are considered illegal in Hong Kong. Whether the web sites concerned are set up in Hong Kong or overseas, participants in such activities may contravene section 8 "betting with a bookmaker" of the Gambling Ordinance. Moreover, the Government has always been appealing to the public not to participate in Internet gambling activities for punters may violate the Gambling Ordinance and, since such gambling activities are not regulated by the laws of Hong Kong, the rights of the punters are not protected, so they are likely to suffer money losses.

As far as law enforcement is concerned, it is a very complicated global problem to enforce laws regarding the Internet. It is a problem law enforcement agencies throughout the world are very much concerned about, because effective investigation and prosecution of Internet-related crime involves many new concepts and complicated issues on computer technology, such as key escrow and decryption, interception of telecommunications, real-time monitoring, tracking of local and overseas electronic transactions, computer forensic examinations of local and overseas electronic evidence, and so on.

The authorities will closely monitor the development of Internet gambling and continue to study how to regulate such Internet gambling activities more effectively.

Services Provided by Private Medical Practitioners in Private Hospitals

17.MR MICHAEL HO (in Chinese): Will the Government inform this Council:

(a)whether it knows:

(i)the number of operations performed by doctors on patients in various private hospitals last year; and among them, the respective numbers of those performed by resident doctors, those performed by private medical practitioners and those jointly performed by both; as well as the respective numbers of resident doctors and private medical practitioners involved;

(ii)the relationship between private hospitals and private medical practitioners performing operations on patients in such hospitals, and whether licensees of private hospitals are required to assume responsibility for any medical incidents arising from the provision of medical services by private medical practitioners in the private hospitals; and

(iii)of the duty and responsibility of private hospitals in handling in-patients' complaints about the medical services provided by private medical practitioners in the hospitals; and

(b)how the relevant authorities regulate the medical services provided by private medical practitioners in private hospitals?

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

(a)(i)There were about 91 000 operations performed in private hospitals in 1998. The majority of them were carried out by non-resident doctors who have patient admission privilege. Specific statistics related to the workload of resident doctors and non-resident doctors are not routinely collected by the Department of Health and are not readily available.

(ii)Private medical practitioners are professionally responsible for their practice in the private hospitals. Private hospitals provide facilities and nursing support to assist them in the care and management of patients. In case of a medical incident, both the hospital and the medical practitioner concerned may be liable.

(iii)The Department of Health has required private hospitals to set up mechanisms to receive and investigate complaints. While in most cases the management of hospital will undertake to investigate the complaints received, in some instances, the hospital management may require the private practitioners concerned to provide the explanation to the complainants directly. The complainant may also lodge a complaint with the Medical Council of Hong Kong if the person is not satisfied with the explanation or when alleged professional misconduct is involved.

(b)The Department of Health requires each private hospital to put in place a mechanism to vet the professional qualifications of the private practitioners before patient admission privilege is granted and thereafter to monitor their professional standards. The management of private hospitals could terminate the admission right of a private medical practitioner whose practice is considered professionally unacceptable.

For monitoring professional standards, private hospitals adopt various quality assurance measures such as conducting patient surveys, setting up clinical review and audit groups, and analysing complaints. Some private hospitals also participate in accreditation schemes and continuing medical education programmes offered locally and overseas.

Implementation of the International Covenant on Economic, Social and Cultural Rights in Hong Kong

18.MR LEUNG YIU-CHUNG (in Chinese): In its reply to a question raised by this Council on 2 December last year, the Government said that the report on the implementation of the International Covenant on Economic, Social and Cultural Rights (the Covenant) in the Hong Kong Special Administrative Region (SAR) would be completed in early February this year. In this connection, will the Government inform this Council:

(a)whether the Administration has completed the report; if not, of its present progress and the reasons for failing to complete the report on schedule;

(b)of the total number of submissions that the Administration has received to date from the public on the implementation of the Covenant in SAR; whether it will release a summary of the public's views and indicate those parts of the report which have incorporated such views; and

(c)whether the Administration will consider submitting the draft report to this Council for scrutiny and amendment before submitting the final version to the relevant United Nations organizations; if not, the reasons for that?

SECRETARY FOR HOME AFFAIRS (in Chinese): Madam President, taking the Honourable Member's questions seriatim:

(a)We have completed the draft report and are in the final stages of vetting the draft. The process has proved to be more extensive and taxing than originally envisaged. We expect to be able to forward the completed report to the Hong Kong Office of the Ministry of Foreign Affairs ─ for onward transmission to the United Nations ─ shortly;

(b)The public consultations were conducted between 10 March and 15 April 1998. Ten submissions were received in respect of the Covenant. In accordance with established practice, the report will address all comments put forward insofar as they are relevant to the provisions of treaties. That is, we will summarize the comments and respond to them in the context of the particular provisions (articles) to which they relate; and

(c)As with other similar reports including the one on ICCPR, we will pass the report to the Hong Kong Office of the Ministry of Foreign Affairs when it is ready. They, in turn, will submit it to the United Nations through the Central People's Government's Permanent Mission in Geneva. In accordance with established practice, we consulted the public on the implementation of the Covenants in Hong Kong when we issued the outline reports in March 1998 before any drafting work was done. Also in accordance with established practice, we will publish the reports as soon as they have been handed to the United Nations. We do not intend to conduct further consultations. As we have said on several previous occasions, the human rights reports are the Government's reports, not those of any other body. As with all such reports, the public will have ample opportunity to discuss the Covenant report before the related hearings and to prepare alternative reports for the United Nations' consideration should they consider that ours is in any way deficient. Such reports are an integral part of the United Nations reporting system. Both non-government organizations and the Legislative Council have extensive experience both of submitting their own reports and attending the hearings in order to discuss the issues with Members of the treaty monitoring bodies.

Sexual Assaults on Campuses of Tertiary Institutions

19.MISS CHOY SO-YUK (in Chinese): It is reported that sexual assaults (including sexual harassment) occur from time to time on the campuses of various tertiary institutions. In this connection, will the Government inform this Council whether it knows:

(a)the number of sexual assaults in various campuses and broken down by tertiary institutions, in each of the past three years; of the number of such cases which were handed over to the police and the number of proven culprits; the number of students in the institutions concerned among the proven culprits;

(b)the standing mechanism the tertiary institutions have put in place for handling such cases; the disciplinary actions that the institutions concerned have taken against those students proven to be culprits; and

(c)how the Equal Opportunities Commission offers assistance to both the institutions and victims in relation to sexual assaults in campuses?

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

(a)The information requested is summarized as follows:

Institution	Year	No. of sexual harassment cases reported	No. of cases referred to the police*	No. of proven culprits#
City University of Hong Kong	1996-97 1997-98 1998-99	2 1 1	1 0 1	0 0 0
Hong Kong Baptist University	1996-97 1997-98 1998-99	1 2 0	0 1 0	1(1) 2(1) 0
Chinese University of Hong Kong	1996-97 1997-98 1998-99	5 3 1	0 1 0	1(0) 1(0) 0(0)
Hong Kong Institute of Education	1996-97 1997-98 1998-99	0 0 1	0 0 0	0 0 0
Hong Kong Polytechnic University	1996-97 1997-98 1998-99	7 14 4	2 3 0	5(5) 4(3) 1(1)
Hong Kong University of Science and Technology	1996-97 1997-98 1998-99	0 1 2	0 1 1	0 0 1(0)
University of Hong Kong	1996-97 1997-98 1998-99	1 0 2	0 0 2	0 0 0@
Lingnan College	No reported cases of sexual harassment in the past three years

Notes:

*Where the suspected culprits can be identified and subject to the consent of the victims, cases will be referred to the police for investigation.

#Not all of these cases were handled by the police. The number in brackets refers to the number of proven culprits who are students of the respective institutions.

is still under police investigation.

(b)All of the University Grants Committee (UGC)-funded institutions have their own established mechanisms or procedures for handling sexual harassment cases. These include, for example:

-setting up committees/working groups which will consider sexual harassment cases and promote equal opportunities within the campus;

-designating an Equal Opportunities Officer; and

-publishing policy documents, guidelines and codes for their students and staff on sexual harassment and equal opportunities in general.

The victims, if any, will be immediately sent for medical treatment if required. They will also be advised to take counselling services. All cases involving criminal acts will be immediately referred to the police for necessary action (for example, investigation and prosecution, where appropriate). Internally, these cases will be referred to the appropriate staff/student committees for consideration and action.

The offender may, on conviction, be liable to penalties imposed by the Court. Institutions also impose penalties where appropriate. If the offender is a student, he/she may be subject to suspension or dismissal from course of studies or withdrawal of academic awards. If the offender is a staff member, he/she may be subject to disciplinary actions as well as suspension or termination of employment contracts.

(c)The Equal Opportunities Commission (EOC) has been providing the following assistance to tertiary institutions in relation to sexual harassment:

-distributing newsletters, educational materials and organizing seminars to promote equal opportunities;

-helping tertiary institutions to set up sexual harassment policies and procedures; and

-advising the UGC-funded institutions on the handling of individual cases.

The EOC also provides assistance to sexual harassment victims. Upon receiving complaints of sexual harassment lodged under the Sex Discrimination Ordinance, the EOC will conduct investigations, and tries to settle the matter through conciliation where appropriate. If a settlement cannot be reached, the EOC may consider other forms of assistance, including legal assistance, upon the application of the aggrieved person.

Establishment of the Urban Renewal Authority

20.MR LEUNG YIU-CHUNG (in Chinese): Regarding the establishment of the Urban Renewal Authority (URA), will the Government inform this Council:

(a)of the timetable for preparatory work for the setting up of the Authority;

(b)whether it plans to launch a public consultation exercise on matters such as the terms of reference of the Authority, its organizational structure and the composition of its board; if not, the reason for that; and

(c)of the date it plans to introduce into this Council the bill governing the Authority's establishment and operation?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Chinese): Madam President, we aim to finalize our proposals on the terms of reference, organizational structure (including the composition of the governing body) and operational guidelines for the URA by mid-1999. Our intention is to steer away from the past approach in which urban renewal had been conducted in a somewhat piecemeal manner. Instead, we will plan urban renewal and rehabilitation more comprehensively for larger areas, with a view to more effectively restructuring land uses, speeding up urban renewal, comprehensively improving the environment, and building a modern metropolis. Since the urban renewal strategy, the responsible agency and resource requirements are issues which will directly or indirectly affect many people, we consider it appropriate to consult the public on these proposals before introducing the URA Bill into this Council around the end of 1999, and establishing the URA in 2000.

BILLS

First Reading of Bills

PRESIDENT (in Cantonese): Bills: First Reading.

PREVENTION OF BRIBERY (AMENDMENT) BILL 1999

ADMINISTRATION OF JUSTICE (MISCELLANEOUS PROVISIONS) BILL 1999

ADAPTATION OF LAWS (NO. 8) BILL 1999

ADAPTATION OF LAWS (NO. 9) BILL 1999

SECURITIES (MARGIN FINANCING) (AMENDMENT) BILL 1999

MERCHANT SHIPPING (LOCAL VESSELS) BILL

SHIPPING AND PORT CONTROL (AMENDMENT) BILL 1999

MERCHANT SHIPPING (PREVENTION AND CONTROL OF POLLUTION) (AMENDMENT) BILL 1999

CLERK (in Cantonese):

Prevention of Bribery (Amendment) Bill 1999 Administration of Justice (Miscellaneous Provisions) Bill 1999 Adaptation of Laws (No. 8) Bill 1999 Adaptation of Laws (No. 9) Bill 1999 Securities (Margin Financing) (Amendment) Bill 1999 Merchant Shipping (Local Vessels) Bill Shipping and Port Control (Amendment) Bill 1999 Merchant Shipping (Prevention and control Pollution)(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.

PREVENTION OF BRIBERY (AMENDMENT) BILL 1999

CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): Madam President, I move the Second Reading of the Prevention of Bribery (Amendment) Bill 1999.

The purpose of this Bill is to amend the definition of "public servant" in section 2(1) of the Prevention of Bribery Ordinance (Cap. 201) and make the Stock Exchange of Hong Kong Limited (SEHK), the Hong Kong Futures Exchange Limited (HKFE) and the various clearing houses (that is, the Hong Kong Securities Clearing Company Limited, the SEHK Options Clearing House Limited and the HKFE Clearing Corporation Limited) public bodies for the purposes of the Prevention of Bribery Ordinance. The Bill also proposes minor amendments to the existing Schedule to the Ordinance listing the public bodies. These amendments are mainly nomenclature changes and technical amendments. At present, the SEHK, the HKFE and the various clearing houses are not public bodies for the purposes of the Prevention of Bribery Ordinance. Due to the importance of the two exchanges and the three clearing houses to the financial markets of Hong Kong, it is in the public interest to make them public bodies. Any person vested with any responsibility for the conduct or management of the affairs of these bodies will therefore become a public servant under the Prevention of Bribery Ordinance and come under stricter supervision.

The Bill has to take into account the following two factors: First, ordinary broker members of the two exchanges and ordinary clearing members of the three clearing houses are not involved in the conduct or management of the affairs of these bodies and should therefore not be specified as public servants. Second, not all persons vested with the responsibility for the conduct or management of the affairs of the two exchanges and the three clearing houses are members of these bodies. However, these persons should be listed as public servants under the Prevention of Bribery Ordinance. Since the existing definition of "public servant" in the Prevention of Bribery Ordinance makes no provision for the above special circumstances, we propose to add a new category to that definition, specifying that all employees of the two exchanges and the three clearing houses and members of any council, board and committee of these bodies, including persons who are not members of these bodies but are vested with the responsibility of management, are public servants. According to the amendment proposed, the definition of "public servant" does not include the ordinary broker members of the two exchanges or the ordinary clearing members of the three clearing houses, since they are not involved in the management of these bodies. As the two exchanges and the three clearing houses play a very important role in the financial system of Hong Kong, making them public bodies for the purposes of the Prevention of Bribery Ordinance as soon as possible will help to boost the confidence of the public and investors in Hong Kong's financial system. Therefore, I urge Honourable Members to pass this Bill into law as soon as possible.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Prevention of Bribery (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.

ADMINISTRATION OF JUSTICE (MISCELLANEOUS PROVISIONS) BILL 1999

CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): Madam President, I move the Second Reading of the Administration of Justice (Miscellaneous Provisions) Bill 1999.

This Bill has three purposes. First, it removes the requirement that judicial proceedings shall be adjourned when the Red rainstorm warning is in force. Based on our experience, when the Red rainstorm warning is in force, the weather conditions do not necessarily prevent users of the court from appearing at it. We believe that by removing the requirement that judicial proceedings shall be adjourned when the Red rainstorm warning is in force, we can have more efficient use of court time, avoid unnecessary disruption of the operation of the court and reduce inconvenience to court users. We will also remind judges and judicial officers that if one of the parties to a case is unable to appear in court because the Red rainstorm warning is in force, they must flexibly deal with the issue of the adjournment of the proceedings and exercise their discretion.

The second purpose of the Bill is to simplify the mechanism for temporary appointments to the various courts and tribunals. The Administration makes temporary judicial appointments from time to time to meet the needs of the short term operation of the judicial bodies. At present, the Chief Justice has the statutory power to appoint deputy judges of the Court of First Instance, deputy District Judges and deputy adjudicators of the Small Claims Tribunal. We propose to make a legislative provision, authorizing the Chief Justice to appoint temporary members to the Lands Tribunal, deputy presiding officers of the Labour Tribunal, deputy magistrates and deputy coroners as well. In fact, the Chief Justice is already authorized to appoint the majority of temporary judicial officers.

Lastly, the Bill makes minor technical amendments to some provisions, such as making the wordings of various Ordinances more consistent, standardizing penalties, replacing outdated titles of posts and revising the Chinese equivalents for individual references. These amendments are however policy neutral.

Madam President, this Bill will allow us to make more efficient use of court time, standardize the mechanism for temporary judicial appointments and make the various Ordinances more consistent. I urge Honourable Members to support the early passage of the Bill into law.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Administration of Justice (Miscellaneous Provisions) 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. 8) BILL 1999

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Cantonese): Madam President, I move the Second Reading of the Adaptation of Laws (No. 8) Bill 1999.

The Bill seeks to effect necessary adaptations to 10 Ordinances relating to environment, together with their subsidiary legislation, to bring them into conformity with the Basic Law and with the status of Hong Kong as a Special Administrative Region of the People's Republic of China.

Some of the references contained in these 10 Ordinances, such as "the Governor" and "the Governor in Council", are inconsistent with the Basic Law or with the status of Hong Kong as a Special Administrative Region of the People's Republic of China, and need to be amended as appropriate.

Although the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance have already laid down how terminology inconsistent with the Basic Law or with the status of Hong Kong as a Special Administrative Region of the People's Republic of China is to be construed, it is considered unacceptable to retain such terminology in our laws. Accordingly, we now need to introduce the Bill to effect the necessary textual amendments.

The proposed amendments are mainly terminological changes. These adaptations when passed into law shall take effect retrospectively, as from the date of the establishment of the Hong Kong Special Administrative Region. The Bill obviates the need to make cross references to the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance. I hope Members can support the Bill.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 8) 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. 9) BILL 1999

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, I move the Second Reading of the Adaptation of Laws (No. 9) Bill 1999.

The purpose of this Bill is to effect necessary adaptations to 14 Ordinances relating to road traffic and tunnels, together with their subsidiary legislation, to bring them into conformity with the Basic Law and with Hong Kong's status 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 already have laid down how terminology inconsistent with the Basic Law or with Hong Kong's status as a Special Administrative Region of the People's Republic of China is to be construed, it is considered inappropriate to retain such terminology in Hong Kong laws. Therefore, we need to introduce the Bill to effect necessary textual amendments to individual Ordinances. The proposed amendments are all terminological changes, such as substituting all references to "Governor" and "立法局" with "Chief Executive" and "立法會" respectively.

As with other bills on the adaptation of laws, the adaptations in this Bill when passed into law shall take effect retrospectively, as from the date of the establishment of the Hong Kong Special Administrative Region. Once this Bill is passed into law, persons consulting the relevant Ordinances will not need to make constant cross references to the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance. I urge Members to support and pass this Bill.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 9) 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.

SECURITIES (MARGIN FINANCING) (AMENDMENT) BILL 1999

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I move the Second Reading of the Securities (Margin Financing) (Amendment) Bill 1999.

Securities margin financing activities have existed in Hong Kong for over a decade but gained popularity only over the last few years with more and more investors participating in the retail markets. This is especially evident before the financial crisis in 1997. Some securities margin financing is conducted by licensed securities dealers who are subject to regulation by the Securities and Futures Commission (SFC), so these activities are generally safe and sound without exposing the investors or the market to undue risks.

However, starting from the late '80s and early '90s, because of the stricter financial resources requirements and tighter regulatory standards imposed by the SFC on securities dealers which also cover securities margin financing activities conducted by registered dealers, the practice of offering margin financing through finance companies or money lending companies, which are not subject to this regulation, has become more popular.

Certainly, the absence of regulation over securities margin financing activities that take place outside the business scope of securities dealers allows such activities to be operated with more flexibility and substantially enhances the efficiency of their capital utilization. Particularly, some smaller local securities brokers with smaller capital can inject additional liquidity into the retail market which helps support the market growth. Moreover, the stocks margin activities have also afforded flexibility to the market and facilitated the participation of retail investors. However, during the bull market in 1997, there was a marked increase in trading in the retail market, and along with it came a rapid and substantial increase in margin dealing. Such a drastic development has brought enormous risks. Although some finance companies have taken prudent measures to limit the risks that individual investors or stocks would bring on them to ensure that all their loans are sufficiently secured and they have also adopted appropriate margin call policies, most other companies have not taken any prudent risk management measures, which has led to overlending to margin clients and other borrowers unrelated to securities business, and over-exposure to risks caused by a certain stock collateral or individual borrowers. These finance companies usually have thin capital and need to depend on the banks' financing and liquid balance of their margin clients as their main source of capital. Hence, when the market reverses, they are especially vulnerable to capital shortage.

The SFC had noticed such problems and conducted a series of investigations together with the Stock Exchange of Hong Kong on these companies in early 1997. During the financial crisis, the SFC kept close watch of the financial position of these companies and when necessary, required them and their associate securities dealers to inject more funds and reduce the total amounts of their margin loans to ensure that they had the ability to discharge their obligations towards their clients and creditors. These actions enabled most finance companies to weather the financial crisis but unfortunately, some companies and their associate securities dealers still closed down as a result of severe financial problems, incurring losses on investors.

To solve these problems once and for all, we propose to impose prudent regulation on securities margin financing. Our policy objective is to enhance the protection for investors and maintain the stability of the market through prudent regulation on securities margin financing operators, while leaving room for the operation to satisfy the needs of the market. The Bill seeks to bring the securities margin financing activities and their operators clearly into the ambit of the Securities Ordinance and establish a new class of registrants known as Securities Margin Financiers and put them under the regulation of the SFC. The existing licensed securities dealers can continue to provide securities margin financing to their clients without additional registration, but their business in this regard will have to be regulated according to the same set of standards to be imposed on the Securities Margin Financiers.

The Bill will also bring this new class of registrants under the rules now applicable to securities dealers and businesses related to securities margin financing. These include the registration of Securities Margin Financiers and their representatives, issuance of account statements, standards of accounts and audits, and proper account books and records to be kept by the registrants. The powers of the SFC to investigate and draw up rules and also to suspend and revoke a registration will also apply to Securities Margin Financiers.

In respect of the protection of clients' assets, the provisions in the Securities Ordinance concerning the disposition of securities documents and the handling of clients' assets will be amended to stipulate that securities dealers and Securities Margin Financiers must obtain the written authorization of a client before they can use the stocks deposited with them as collateral for his securities margin financing activities, and even though the authorization of a client is obtained, the use of his stocks must be confined to specified purposes.

Apart from regulation by the Securities Ordinance, Securities Margin Financiers, like other registrants with the SFC, will also be bound by the Financial Resources Rules. The SFC will later on revise the existing Rules to make them also applicable to Securities Margin Financiers and enhance the relevant Rules according to the nature of the securities margin financing activities. The SFC will take this opportunity to revise the Rules to keep them abreast of practical changes in the market, including those reviewed in 1997 in relation to these Rules. The amendments proposed will be incorporated in the Financial Resources Rules 1999 which will be tabled separately to the Legislative Council for negative vetting. In addition, the SFC will also revise the code of practice, specifying the SFC's expectation of the standards of the operations of Securities Margin Financiers, including the margin call policy, cashflow management and sufficient disclosure of the status of client accounts. The Bill and the relevant Rules and standards will form a sound and stable framework to afford greater protection to investors and reduce market risks.

The proposal on the regulation of securities margin financing activities was already discussed at the meeting of the Financial Affairs Panel on 7 January 1999. I am very glad to see that most Members support the overall supervision proposals. I have also noticed that some Members hold different views on individual measures. I wish to stress here that we think that the proposed framework must strike a suitable balance between effecting prudent regulation and protection to investors on the one hand and leaving room for market operation on the other. The regulatory framework for securities margin financing must be equipped with sufficient measures to protect investors and maintain market stability while the capital requirements must also be in line with the risks borne. However, we must also beware that the measures and capital requirements should not become a barrier to decent and well-managed companies which would stifle their room for survival. We believe that the regulatory framework proposed now has already balanced the needs of all parties concerned and also best served the interests of the Hong Kong securities market. I therefore urge Members to support this Bill.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Securities (Margin Financing) (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.

MERCHANT SHIPPING (LOCAL VESSELS) BILL

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I move the Second Reading of the Merchant Shipping (Local Vessels) Bill.

The purposes of the Bill are to improve the management of local vessels, simplify the vessel classification system and the regulatory procedures so as to enhance port and marine safety. The Bill will put existing legislation on the regulation of local vessels scattered among different Ordinances under a comprehensive body of legislation solely for local vessels.

The Bill applies to all local vessels operating in Hong Kong waters, including local licensed vessels and mainland coastal and river-trade vessels that are permitted to enter and remain in the Hong Kong waters.

To cater for the evolution of vessels types and design, the Bill proposes to simplify the present system of vessel classification that is overly complex. The present 11 classes of local vessels will be consolidated into four new classes. In addition, we shall introduce greater transparency to the setting of safety and inspection standards for local vessels. The safety standards for each of the four new classes of vessels will be published in the form of regulations and codes of practice for guidance of the industry and the public in the safety requirements.

We shall simplify the present classification of Local Certificate of Competency for Master and Engineer, to be in line with the needs of the present local fleet. In addition, we propose to set up an open and fair mechanism for the conducting of inquiries into the fitness and conduct of the holder of a Local Certificate of Competency.

To provide the shipowners and shipping companies with a choice, we propose to empower the Director of Marine to delegate inspections of vessels, other than passenger vessels and dangerous goods carriers, to authorized surveyors. We shall set up a monitoring system to ensure that inspections conducted by these authorized surveyors are up to the required standard.

To ensure the provision of proper protection to passengers and operators sustaining injuries in marine accidents, the Bill proposes to extend the requirement of compulsory third party risk insurance currently applicable to local ferries, launches and pleasure vessels to all local vessels permitted to operate in Hong Kong waters.

The Bill proposes the issue of a new certificate of ownership to provide for proof of ownership of a vessel. This new document will ensure the easy identification of responsibility for breach of the law and who is to blame in the case of civil claims.

The legislative proposals contained in the Bill were developed on the basis of a consultation document "Local Craft Review" and have been refined after extensive consultation of the local shipping industry and the public.

Madam President, the Bill will enhance efficiency in the regulation of local vessels, increase port and marine safety, and underline Hong Kong's status as a major international maritime centre. With these words, I commend this Bill to this Council for early passage into law.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Merchant Shipping (Local Vessels) Bill 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.

SHIPPING AND PORT CONTROL (AMENDMENT) BILL 1999

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I move the Second Reading of the Shipping and Port Control (Amendment) Bill.

The purposes of the Bill are to improve the safety protection of workers engaged in marine works and to extend the marine work activities covered by the Shipping and Port Control Ordinance (Cap. 313) to include "marine construction".

In recent years, the growth in marine work activities including container handling, and the adoption of practices to accelerate the container transfer process, including direct transfer of containers between barges, have given rise to potential new hazards. Accident figures indicate that the number of cargo handling accidents has increased from 1 163 during the period 1992-94 to 1 385 during 1995-97, that is, an increase of nearly 20%, with over 20 fatal cases as a result of marine industrial accidents in each of these periods. In order to keep the accident figures to a minimum, it is considered necessary to strengthen the relevant provisions in the Ordinance to further protect the safety of workers engaged in marine works.

Also, the safety of workers engaged in marine construction works, such as reclamation, dredging and cable laying, is not adequately covered by the existing legislation. The Administration considers it necessary to extend the existing legislation to include the regulation of safety in these kinds of works to provide sufficient protection to people undertaking marine works.

The main provisions of the Bill are to empower the Director of Marine to issue codes of practice to provide practical guidance on work safety and to approve qualified trainers for marine work safety, and to enable regulations to be made for control of marine works and safety protection of persons employed. In addition, penalty charges for offences will be increased. The Bill also extends the existing legislation to include "marine construction", in order to safeguard workers engaged in such activities.

In making the amendments in the Bill, we have consulted the relevant industries and interested parties and they have indicated their support for the proposed amendments. The Director of Marine will consult representatives of the relevant trades in drafting the above-mentioned codes of practice.

With these words, Madam President, I commend the Bill to this Council for early passage.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Shipping and Port Control (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.

MERCHANT SHIPPING (PREVENTION AND CONTROL OF POLLUTION) (AMENDMENT) BILL 1999

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I move the Second Reading of the Merchant Shipping (Prevention and Control of Pollution) (Amendment) Bill.

The main purpose of this Bill is to transfer the regulation-making power under the Merchant Shipping (Prevention and Control of Pollution) Ordinance from the Chief Executive in Council to the Secretary for Economic Services, so as to provide a more efficient means of implementing in Hong Kong regular amendments made by the International Maritime Organization to the International Convention for the Prevention of Pollution from Ships.

We also take the opportunity to propose some amendments to the Ordinance to enable more effective prevention and control of marine pollution from ships. These include clearly stating the power of the Director of Marine to give directions to shipowners, masters and relevant salvage persons in case of ship casualties involving a risk of pollution, in order to control and minimize possible effects on the environment and on human lives; clearly providing government officials with the power to board ships within Hong Kong waters for carrying our inspections in respect of prevention and control of marine pollution; and providing the Secretary for Economic Services with the power to make regulations to effectively implement relevant international agreements applicable to Hong Kong.

The main objectives of the Bill are to enable efficient implementation of the International Maritime Organization conventions in respect of prevention of marine pollution, and to ensure that effective action is taken to minimize the effects of marine pollution on the environment. The enforcement of the Amendment Ordinance will help to protect the environment and will reduce the risk of pollution from ships in Hong Kong waters.

With these words, Madam President, I commend the Bill to this Council for passage.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Merchant Shipping (Prevention and Control of Pollution) (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 Appropriation Bill 1999. The public officers concerned will speak first and the Financial Secretary will reply.

APPROPRIATION BILL 1999

Resumption of debate on Second Reading which was moved on 3 March 1999

CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): Madam President, the 1999-2000 Budget for the Special Administrative Region of Hong Kong is a pragmatic and progressive Budget with a broad scope of vision. It is widely supported by people from all walks of life. We are pleased to learn that most of the Honourable Members of this Council who have spoken in the Budget debate are supportive of most of the proposals in the Budget. Seven Policy Secretaries will respond later on the views put forward in the Budget debate. Then the Financial Secretary himself will make a conclusion on the Budget debate.

Madam President, over the past year, our economy has sustained great setbacks in the aftermath of the Asian financial turmoil. Many companies as well as members of the public are facing the pains brought about by the economic readjustment. Under such circumstances, the public are earnestly hoping that the Government can formulate effective measures and strategies to minimize the impact of recession and to speed up the recovery of the economy. After weighing the pros and cons, we have decided to use part of our reserves on a short-term basis, without violating our major principle of financial prudence. We will use the funds to support the growth in major public services spending, like education and social welfare. We also need to launch a number of infrastructure projects, promote the development of technology and information technology, as well as reviving the tourist industry in 1999-2000. All these are to be made in line with the policy objectives as spelt out by the Chief Executive, and to enable the territory to become the regional centre for technology and information services at the beginning of the next century. On the other hand, we will further strengthen our financial structure, sharpen our competitive edge, and at the same time, we will also endeavour to enhance the cost-effectiveness and service quality in the public sector to meet the changing needs of society. Our goal is to promote the development of Hong Kong on the basis of our present firm groundwork, in order that further progress can be made in our economy and in the quality of our living.

Hong Kong owes its success to the concerted efforts made by people from all walks of life. Our honest and effective Civil Service has also contributed to this success. Since the reunification, Hong Kong has weathered a host of storms. In these unforeseen circumstances, civil servants have responded to the challenges with full dedication and professionalism. A lot of unprecedented problems have been effectively tackled. The operation of the Government remains efficient and uninterrupted. Though we must admit that in the handling of certain matters, there are still areas we need to improve and enhance our efficiency.

The Civil Service is our vital asset. The effective governance of the territory and the improvements in the quality of life of the public all hinges on the performance and cost-effectiveness of our civil servants. We feel it incumbent on us to reform the management system of the Civil Service to keep pace with the community it serves and continue to provide the highest standards of service.

The Civil Service Reform Consultation Document released at the beginning of this month by the Civil Service Bureau made a number of proposals in the following vital areas: entry and exit mechanism, pay and fringe benefits, disciplinary procedures, performance management and training. The document also outlines a management framework which is more flexible, open and motivating. It encourages a management culture based on providing the highest standards of service to the public. After the release of the consultation document, public opinion has been very supportive of the direction and proposals of reform. Most of the civil servant groups are in agreement with the reform objectives and they are actively studying the proposals with a positive frame of mind.

In last week's debate, a few Honourable Members thought that in the course of reforming the Civil Service, there must be good communication with the staff. The Government must take their views into consideration, in order to maintain the morale and stability of the Civil Service.

The Government has always attached importance to communication with its staff. An effective consultation mechanism is in place for this particular purpose. After the publication of the consultation document, the Secretary for the Civil Service briefed the staff representatives of the four central consultative councils and the representatives of other major trade unions on the various proposals in the civil service reform. Senior officials from the Civil Service Bureau visited various departments and met the staff representatives of the consultative committees, explaining to them the reform proposals, and collected views from them. Apart from that, the Civil Service Bureau will publish newsletters on the proposed reform and will keep civil servants informed of the latest developments and reply to questions raised.

The comparison between pay and fringe benefits of civil servants and employees in the private sector has always been a subject of public concern. There are views that the starting salaries of civil servants are too high and out of keeping with the prevailing market levels. On the other hand, individual Members of this Council and people concerned about labour accused the Government of trying to pull down market wages as a whole by way of a freeze and adjustment on civil service pay and salaries. I must reiterate that the policy regarding civil service pay is based on the pay trends of the private sector. Reasonable and competitive salary levels are so determined to attract, retain and motivate staff. Since the Government only employs about 5.5% of the working population as civil servants, it will not be possible to affect pay levels in the market even if the employees of subvented organizations are included. Our decision to freeze civil service salaries for the next financial year is made out of financial considerations and the need for civil servants to ride out the storm together with the public at this difficult time. Civil servants should make reasonable sacrifice in the overall economic interest and work with the public to live through this time of adversity. The Standing Commission on Civil Service Salaries and Conditions of Service is undertaking a review of the starting salaries of civil servants to ensure that the pay and fringe benefits in the Civil Service remain broadly in line with those in the private sector. This will ensure a balance between the supply and demand of human resources in the public and private sectors.

Madam President, I note that some Honourable Members have pointed out that some of the reform proposals would affect the stability of the Civil Service and give rise to difficulties in retaining people of calibre. Those who hold this view seem to think that only through the adoption of a permanent and pensionable appointment system, and a closed internal promotion system, can the loyalty and morale of civil servants be maintained. I will not make a wholesale denial of this, because the civil service system which we have used for a long time had really helped to keep the morale in the Civil Service stable during the reunification. But I also believe that our current human resources management system would fast become out of touch with the progressing and changing community because of its relatively closed nature.

We propose to introduce the following to attract and train people with the suitable calibre: A flexible and systematic entry and exit arrangement, a meaningful and challenging public office, a working environment with positive competition, a highly transparent reward and punishment system, and a modern system of fringe benefits. What we hope to do is to make the Civil Service in keeping with the times and continue to maintain a quality service and excellent cost-effectiveness. We will study carefully the views put forward by Honourable Members of the Legislative Council, the management of various departments, the representatives of civil service groups, colleagues in the Civil Service and members of the public, and implement the various reform proposals progressively. When we reform the civil service institutions, we will also implement the Enhanced Productivity Programme (EPP) and study how to further reform the mode of delivering public services.

The objective of the EPP is to enhance efficiency in government departments and subvented organizations so that resources can be set aside to meet the increasing needs of various public services. Initial success has been achieved with the Programme. For the year 1999-2000, as much as $818 million is saved through various economizing measures in the departments and the EPP, of which $650 million will be redeployed to provide new services or improve services. The remaining $160 million or so savings can be used in contingent expenses which may arise during the financial year.

We are grateful for the Members' recognition of our work in this aspect. We also welcome Members and the public to refer to the booklet on EPP for 1999-2000 and monitor the progress which the departments are making, and how they are fulfilling the pledges made under the EPP. As some Honourable Members have suggested, we will continue to report to the Council on the progress of the EPP. When we are implementing the EPP, we also need to make a review of the role played by the various subvented organizations. Currently, the subventions provided to these organizations amount to 40% of the recurrent expenditure of the Government. This means $75 billion in 1999-2000. These subvented organizations are the main providers of various social services like health care, education and social welfare. We are pleased to know that most of these organizations are actively involved in the EPP. But in order to bring the potentials of these non-government organizations further into full play, we need to make fundamental reforms in such aspects of service requirements, mode of subvention, funding arrangements and so on. The Policy Bureaux and the Treasury will fully consult these organizations and put more efforts into this area.

Although we are fully committed to enhancing the efficiency of public organizations, we are still unable to meet the increasing demands for social services given the limited resources available. Population growth has aggravated the problem. As a responsible government and an accountable parliamentary assembly, we need to have the courage to address the problems squarely and to seriously review the policy on utilization of resources. The issue of medical services is an issue of particular urgency. We hope to get Members' support when we embark on these difficult tasks. If we can work hard together towards this goal, the problem can be overcome.

Apart from enhancing productivity, we shall seek to further improve our mode of service delivery. In this regard, we will study the corporatization of certain departments. The greatest advantage of corporatization is that the service providing units will be free from the restraints of various rules and regulations in the Government. They will be able to serve the public with a more market-oriented management approach and culture. Corporatization also enables the private sector to participate in services which used to be provided by the Government. When the right time comes, and if we are convinced that certain services will no longer need to be provided by the public sector, we can privatize more government-owned corporations. We are aware of the importance of maintaining stability in the Civil Service. We are also fully aware of the concern among staff for proposals to corporatize or privatize any public service. When reforms are look set to be undertaken, we will promptly consult the staff and seek to make the best possible arrangement. We will also study how effective monitoring mechanisms can be introduced so as to safeguard public interest. We are determined to launch these reforms and will put forward specific proposals to Honourable Members as soon as possible.

I would not hesitate to say that it is a very difficult task to implement the above proposals and achieve the policy objectives. As the head of the Civil Service, I am prepared to take on this mission and I am proud of the proactive and bold approach of the Civil Service to these reforms. In my term of office I will work with my colleagues in the Civil Service Bureau, the Treasury, the heads of departments, the civil service groups and the entire civil service team to prepare ourselves in meeting the challenges of the next century.

Another major pillar of the stability and prosperity of Hong Kong is its rule of law. To uphold the rule of law and to provide high quality legal services to the Government and various sectors, we need excellent legal professionals. Some Honourable Members have expressed concern for the quality of locally trained lawyers. They also pointed out that the Hong Kong Bar Association and the Hong Kong Law Society are running a series of courses with a view to enhancing professional training and education among private legal practitioners. The Government supports these measures and will proactively consider the funding applications made by the legal sector under the Service Sector Assistance Scheme.

The recent Court of Final Appeal ruling on the subject of the right of abode has aroused widespread concern among the public and in the Legislative Council. The Government respects the decision made by the Court of Final Appeal. To take the ruling forward immediately, we set up an ad hoc committee at the beginning of February. Together with the Policy Secretaries, we made a detailed assessment of the impact of the ruling and make every possible effort to ensure that we can effectively verify the identity of those who claim to have the right of abode. Undoubtedly, the ruling has greatly increased the number of mainlanders who are eligible to claim the right of abode in Hong Kong. It will exert tremendous pressure on our economy and the social services. The Statistics Department is making a comprehensive household survey to ascertain the number of children of Hong Kong residents in the Mainland. Initial results are expected to become available at the end of May. By then we will be able to assess the impact of the ruling on service demand and resource deployment. As most of these eligible people will not be coming to Hong Kong within this financial year, there will not be much substantial impact on this Budget. We are keeping close contact with the security authorities in the Mainland and we hope to finalize the new application procedures for the Certificate of Entitlement scheme to facilitate the orderly entry of people holding such certificates into Hong Kong.

Madam President, last year was a key moment in the development of the territory. The Budget has proposed many initiatives to relieve hardship and reduce the pains suffered by individuals and companies as a result of the economic adjustment. In many aspects the Budget is seeking to strengthen our fundamentals and is being progressive in opening up new horizons. It provides an opportunity for economic recovery and steady growth. In such a time of economic adversity, it is no small feat of the Financial Secretary in compiling a Budget which caters for the diverse needs from all areas. I hope Honourable Members can give their full support to all the proposals carried in this Budget. Thank you, Madam President.

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING (in Cantonese): Madam President, I have listened very carefully to Members during the two-day debate last week and am extremely encouraged by the number who have spoken on the Cyberport.

Clearly, the Government's initiative announced in the Financial Secretary's Budget speech to proceed with the development of a Cyberport at Telegraph Bay has raised community interest and awareness of the importance of information technology (IT) to our economic well-being to a new height. I note in particular the majority view that Hong Kong needs a Cyberport. We are grateful to Members and the community at large for their support for the project. We are especially encouraged by the fact that so many Members spoke of the wider benefit this project can bring to Hong Kong. That is why we are vigorously pursuing this project.

Although we have spared no efforts in explaining what the Cyberport is, I have to say that, judging from the views on the project which have been expressed by some Members, and indeed by certain quarters of the community as well, we need to do much more. Let me begin by stating unequivocally what the project is and what it aims to achieve. The Cyberport is an IT project. It aims to create a strategic cluster of top IT and services companies in Hong Kong in the shortest possible time. It is designed as a flagship project to put Hong Kong firmly on the map of global IT development.

While there is overwhelming support for the project, some people have questioned the process by which we have arrived at our decision and the proposed arrangements for its development. I welcome the opportunity to put the case once again before Members.

Before I address Members' concerns one by one, I wish to reiterate briefly our information technology strategy ─ Digital 21 ─ in order to put the Cyberport project in the proper context. The primary aim of Digital 21 is to achieve the vision set by the Chief Executive of "mak[ing] Hong Kong a leader, not a follower, in the information world of tomorrow". Some people have queried this IT vision and argued that we lag behind in comparison with others in the region. That may well be true in the manufacture of hardwares, such as computer chips, desktop personal computers and other computer peripherals. However, the rapid convergence of technology in IT, telecommunications and multi-media content creation and the expotential growth of the Internet have opened up an entirely new race. A race where the focus is on applications, services and content. A race where the competition is won through the rapid and effective development of applications and services to enhance the competitive edge of all our businesses and the creation and distribution of innovative global and local content to meet an ever-expanding and increasingly demanding customer base. A race where almost everyone is at the starting line and where we in Hong Kong have particular strengths to enable us to stream ahead of our competitors. What then are our strengths?

Our strengths lie in:

(1)our excellent telecommunications infrastructure. Our telecommunications infrastructure is second to none in Asia, but we are not complacent. We are progressively liberalizing our telecommunications market and improving the regulatory regime to encourage further investment and innovation.

(2)our business friendly and supportive market environment. Here, I should like to point out in particular the importance of free flow of information and freedom of expression, both of which we enjoy and which many of our competitors do not, in the race to create applications and content.

(3)our bilingual capability. For historical reasons, content on the Internet is predominantly in English. However, with the fast expansion of the Internet over the world, there is an increasing demand for content in the local language. Indeed, even global Internet content providers have indicated that they have to localize their content in order to meet their customers' demands. Our ability to communicate and create content in both English and Chinese is therefore a great asset in this respect.

(4)our unique relationship with mainland China. This has been further strengthened with our return to the motherland. And we are particularly well-placed to act as the digital intermediary for the enormous China market.

In order to fully exploit the strengths I have just outlined, our strategy is to "enhance and promote Hong Kong's information infrastructure and services so as to make Hong Kong a leading digital city in the globally connected world of the 21st century". And the proposed Cyberport will be an important infrastructure in this overall strategy. It will provide a world-class working and living environment which would attract Hong Kong leading companies in the IT and services field so as to form a cluster of like-minded, high-tech and innovative companies. Our aim is to create an environment where promising local IT and services companies can work in close proximity with leading multinational companies for the exchange of ideas, expertise and experience. People who speak of the Cyberport either as a property development or a "brick and mortar" project have failed to appreciate the importance of the clustering effect in the development of IT and services in leading IT cities or regions all over the world. They have also failed to appreciate that, to ensure the highest chance of success of the Cyberport in creating such a strategic cluster from the start, it will need to be designed to meet the requirements of the target companies and to be marketed successfully to them so as to get them interested in becoming tenants. This can only be achieved if the Cyberport is done in partnership with leading IT companies in the private sector, and with the private sector taking on the responsibility for the design, construction and marketing of the Cyberport. And in such a partnership, the Government would prefer to have the funding responsibility and the risks of development taken on by the private sector partner as well.

So why have we chosen to enter into direct negotiations with one company? The answer is, in choosing the private sector partner, we want one which is:

(1)a leading IT company which can ensure that the Cyberport's design and support services will meet the requirement of our target tenants;

(2)itself going to be an anchor tenant at the Cyberport developing leading IT applications and services. This can ensure its continued interest in making the Cyberport a success and gives credibility in its marketing of the project;

(3)able to ensure the timely completion of the Cyberport, to specifications agreed by Government;

(4)willing to take on funding responsibility for the whole project as well as risks of development.

Our approach to leading IT companies suggests that they are generally reluctant to take on such a major development spanning many years even if it means entering into partnership with the Government. We have finally decided to proceed on a direct negotiation basis with the Pacific Century Group as we believe that it is able to fulfill all the foregoing objectives. We fully appreciate the concern that other companies have not been given the opportunity to bid for the project. The Government has taken the judgment that this is an acceptable arrangement after balancing the following considerations:

(1)the idea was put forward by our chosen partner;

(2)this partner is able to meet all our objectives;

(3)a tendering process will cause delay of at least a year, because of the need to develop detailed specifications including the bidders' investments in IT and the requirements of the Cyberport, in terms of design, construction, common facilities, promotional programmes and financing to ensure that tenders can be compared on a reasonable basis. Such a delay will seriously affect the ability to stay ahead in the IT race;

(4)we would still be stipulating the same requirements which I have just outlined above even under a tender situation. Only leading IT companies, willing to become anchor tenants, willing to shoulder all the cost and the risk and willing to assure the satisfactory completion of the project in the shortest possible time will be allowed to bid. Such interest does not seem to exist in the market.

To meet the demand of those who wish to take part in the potential profits from this project, we are prepared to consider selling to them the Government's equity interest in the project. But the purchase of such interest will not entitle the purchaser to have a say on the design, construction and management of the Cyberport. This is important as we do not wish to jeopardize the timely completion of the Cyberport.

Second, I turn to the question of whether the Pacific Century Group is qualified to take on this task. It is not for me to defend a private company's credentials. But I have sought the company's agreement to disclose that it will be making $2.4 billion investment in the next six years in its information services business in Hong Kong and will employ 1 000 people in its headquarters in Hong Kong starting from this year. This underlines its commitment to Hong Kong and its interest in making the Cyberport a success.

Third, let me clarify that the Cyberport is not a mere property deal with a lot of IT cosmetics on it. Some people have used the relative proportions of gross floor area between the residential portion which is intended for sale and the Cyberport portion which is intended for the operations of IT and services tenant companies as the argument that the project is primarily a property development. Such a comparison would be like comparing apples with oranges. This is because the Cyberport portion is intended to provide a high quality working and living environment for the development and operation of IT applications and services and will therefore be developed at a much lower plot ratio than the residential portion. Indeed, the planned plot ratio for the Cyberport, which takes up about two thirds of the site, is one. The planned plot ratio of the residential portion, which takes up about a third of the site, is about 3.8. We could have altered the relative proportion of gross floor space between the Cyberport portion and the residential portion simply by building more intensively on the Cyberport. But this would defeat our objective. To simply look at the relative gross floor areas without regard to the purposes for which the development is intended is misleading to say the least.

I should also point out that the grant of residential development rights on part of a site in a major infrastructural project as a means to drive the entire project is not unique. Examples which come readily to mind include the construction of our railways. Given that the Cyberport is a major strategic information infrastructure, involving substantial investment spanning over several years, the Government accepts the need for revenues to be generated through the sales of flats built on the residential portion to assist in its financing. Unlike ordinary property projects, revenues generated from flats will first be used in the development of the Cyberport and profits will only be shared after deducting $200 million as development fund.

The question of whether there is too much ancillary residential development is closely tied to the fourth question I will address, that is, whether the Government is giving an opportunity for our private partner to reap a windfall. In other words, is the apportionment of risk and gain reasonable, and is it in the overall interest of the Government and the community at large? From the Government's point of view, our equity contribution will be the market value of the residential portion of the land at the time of grant of the development right. There is no land cost subsidy. Because of the Government's wish to give priority to the development of the Cyberport portion and because of site constraints, the Pacific Century Group will have to complete development of the Cyberport portion first, in phases from end 2001/early 2002 to 2003. The residential portion will only be completed during the latter phases of the development, from 2003 onwards. Thus Pacific Century Group must first use its resources to complete the Cyberport portion. And revenues from the sale of flats on the residential portion, when it takes place, must first be ploughed back into the Cyberport project (including the construction cost for the residential portion), before profits can be shared. Even if the property market is more prosperous than expected, the Government can still benefit from profits shared. Furthermore, the Government retains ownership of the Cyberport portion and all the development thereon without bearing the risks of any financing or construction.

I have gone into so much details about the phasing of the development as I have found that many of the reports in the media have wrongly assumed that the residential portion could be developed and sold off at an early stage, without allowing for the upfront funding requirement of the Cyberport portion or the plough-back requirement on the sales proceeds from the residential portion. Common sense tells us that the twin requirements would have led to a return lower than a normal property development. However, I do appreciate that fair judgment can only be exercised with more detailed information. I undertake to fully brief Members in the coming few weeks when we have completed the detailed negotiations with the Pacific Century Group.

Fifth, some people have questioned the chances of success of the Cyberport, given the severe competition from similar developments elsewhere. My answer is that we still have a window of opportunity to carve out our own niche in the IT and services field at this juncture. As I have said earlier, we do possess significant comparative advantages in the development of IT applications, services and content creation. In our sounding out of leading IT firms, the feedback is that they also believe Hong Kong has an edge in these fields because of our world-class information and telecommunications infrastructure, our business friendly environment, our strategic position vis-a-vis the China market, and the creativity of Hong Kong people. These are important factors affecting their decisions on where to locate their multi-media production, content creation, e-commerce, and similar activities which the Cyberport wishes to host. The Cyberport is precisely a strategic infrastructure for giving play to our advantages.

The Cyberport will provide the environment and the facilities for these companies to expand their businesses. And it is not just for big multinational corporations. Small companies, overseas or local, will also benefit because we will be providing a top class telecommunications and information backbone at the Cyberport as well as shared facilities, such as a media laboratory, multi-media creation and presentation equipment and so on to cater for their individual business needs. Support services such as marketing and commercialization support are in the planning. We will also promote the location of venture capitalists at the Cyberport. The aim is to develop a comprehensive plan to help these companies to succeed.

We strongly believe that the Cyberport is a crucial infrastructure for the IT and services sector, as well as for the whole of the economy. However, we are acutely aware that this project alone cannot propel us into the information world of tomorrow. Indeed, this is also the view expressed by many Members. An area of particular concern is people who are skilled in IT. We are pushing ahead with the implementation of our five-year strategy on "Information Technology for Learning in a New Era". We have set aside a capital cost of $3.2 billion for the five-year period. From 1999-2000, we will also spend a full-year recurrent expenditure of $570 million.

The Cyberport will be an important infrastructural component which would help IT and services companies to take advantage of the facilitating environment which we are providing. And the benefits will flow through to the whole community. Our companies will benefit from the opportunity to work in close proximity with leading IT and services companies from overseas. In addition to providing additional jobs for Hong Kong people in the IT and services field, we expect the companies in the Cyberport to provide our people with opportunities for learning new skills and for developing creative ideas which they otherwise would not have. Also, we believe that our young people will be encouraged by the building up of a professional community at the Cyberport to choose a career in the IT and services field.

Since the announcement of the Cyberport project by the Financial Secretary in the Budget, we have received many inquiries from interested leading IT companies from all over the world. The project has clearly helped our efforts in placing Hong Kong on the radar screen of these companies.

I believe I have addressed the key concerns Members have about the arrangement for the Cyberport project. I do hope that those concerns will no longer detract us from the wider economic benefits to be brought about by this special infrastructural project. I urge Members to support the project so that we can proceed with it quickly and can, as a result, place Hong Kong firmly on the IT world map. Thank you, Madam President.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, my remarks will focus on the following points: first, the policy of the Government on supporting the industries and the orientation of the Science Park; second, the protection of intellectual property rights; third, competition policy; and, fourth, government assistance to small and medium enterprises (SMEs).

The policy of the Government on supporting our industries aims to provide a good environment in which our economy can maintain its competitiveness and develop in the direction of diversification. Our positive efforts in promoting innovations and new technologies over the past two years are very good proof that we are seeking to realize this policy objective. We are currently in the process of laying down the operating mechanism, scope of subsidies and vetting criteria of the Innovation and Technology Fund. We are also working on the draft plan for the Applied Science and Technology Research Institute.

With respect to the two major infrastructure projects, that is, the Cyberport and the Science Park, some Members are concerned about the problem of how they can possibly complement each other. I wish to offer an explanation here. These two projects are actually quite different in terms of development direction and emphasis. The major target clients of the Cyberport are those services industries based on information technology (IT). And, for the Science Park, its aim is to provide a good environment and excellent infrastructure facilities to all companies engaged in technological research for commercial application. Its target clients will therefore be engaged in many different types of industries, such as precision engineering, micro electronics, bio-technology, IT and so on.

Hence, these two projects are actually complementary in nature, adding to the strengths of each other. The strong commitment of the Government to these two projects has actually started to yield results gradually; a number of famous multinational IT companies have already indicated interest in becoming tenants of the Cyberport. The technologies and huge capital investments brought to Hong Kong by the Cyberport will raise the interest of international investors in investing in IT projects in Hong Kong. Their investments will not be limited to IT, and other industries will therefore also benefit. Besides, the Cyberport will also upgrade the status of Hong Kong as a technology centre in the eyes of international investors. This will in turn increase our overall domestic demand for technological research, thus enabling the Science Park to have more tenants. All this can enhance the market potentials of the Science Park and promote its growth and development.

Many Members are deeply concerned about the violation of intellectual property rights, in particular the problem of CD ROM piracy. I can assure Members that the highest echelons of the Government, including the Chief Executive himself, are strongly determined to protect intellectual property rights. Over the past two years, we have made a lot of efforts in the areas of legislation, enforcement, education and publicity. For example, at the end of 1997, a licensing system was introduced for import/export of CD ROM manufacturing machines. What is more, the Prevention of Copyright Piracy Ordinance was also enacted last year. These efforts have drastically reduced piracy at the manufacturing level.

Unfortunately, the violation of intellectual property rights at the retail level still remains a serious problem. People's disregard for intellectual property rights has added fuel to such acts of violation. We must realize that the need to respect intellectual property rights is not simply a moral issue, but also an important factor determining the economic prospects of Hong Kong. Such acts of violation will deal direct blows to all industries and investments which are based on intellectual and creative input. The resultant negative effects will erode our economy as a whole, thus hindering our progress towards a knowledge-based economy in the new millennium of the 21st century. What is more, rampant violation of intellectual property rights will also seriously damage the international reputation of Hong Kong. If the situation is allowed to worsen any further, foreign countries may well impose economic sanctions on us. When this happens, we will have only ourselves to blame.

The Government understands fully well that it has an unshirkable duty to combat violation of intellectual property rights. We also know that we cannot always stick to the same tactics, and that we must periodically review our measures to combat violation of intellectual property rights. Since the release of the public consultation document on 24 February, we have received a lot of proposals, and many of these are not found in the consultation document itself. One example is the proposal that a piece of legislation should be enacted to require all CD ROM sales points to apply for licences, so as to increase the effectiveness of enforcement. We will study all these proposals and opinions very carefully.

Moreover, we also hear many voices calling for the expeditious implementation of some proposals which are less controversial and widely accepted by the public and the industries concerned. For this reason, I have decided to shorten the consultation period by concluding it in April instead of June as originally scheduled. I hope that this can speed up the law drafting work required. In the meantime, we have also started the necessary groundwork in advance, with a view to speeding up the implementation process later on.

In December 1997, we set up the Competition Policy Advisory Group (COMPAG) with the specific aim of demonstrating the Government's determination in encouraging competition and enhancing the competitiveness of Hong Kong. In May last year, the COMPAG promulgated the Statement on Competition Policy, urging public and private sector organizations to adopt a policy of encouraging competition. Over the past year, the COMPAG has been working with the various Policy Bureaux and government departments on the enhancement of competition in various different fields. In the recently published Report of the Competition Policy Advisory Group, the competition measures proposed specifically by Policy Bureaux and government departments for individual trades and industries are set out in detail. This shows that the COMPAG has been functioning smoothly and is also able to help promote an awareness of competition and a fair business environment for many different trades and industries.

The Government shares Members' concern about our SMEs, and in fact, we have been trying to provide assistance to these enterprises through different organizations and institutions. In order to enhance the work in this respect, the Financial Secretary has already allocated additional resources in the Budget for the purpose of setting up a Small and Medium Enterprises Office under the Industry Department. The Small and Medium Enterprises Office will be formally set up tomorrow.

I also wish to take this opportunity to report on our review of the Special Finance Scheme for SMEs. The main conclusion reached by the review covers several points. First, we have once again affirmed that this Scheme should only be implemented as a short-term measure, and that it is impossible for the Government to make any further injection of resources into the Scheme. However, we also notice that given the current economic adjustments, SMEs are still facing many financing difficulties. Hence, we have decided that this Scheme should continue to operate at this stage.

We have proposed to improve the operation of the Scheme by adopting the following three measures:

1.to increase the share of risks borne by the Government under the Scheme from 50% to 70%;

2.to extend the guarantee period from one year to two years; and

3.to abolish the requirement that participating banks should report to the Government all cases of repayment in arrears of 60 days.

We hope that these improvement measures can encourage more financial institutions to make use of the Scheme and thus benefit more SMEs. In order to implement these proposed improvements, we will submit applications to the Finance Committee as soon as possible. Thank you, Madam President.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I am most grateful to Honourable Members for their invaluable views on the work of the Economic Services Bureau. I should like to take this opportunity to respond to Members' comments on areas of great concern to them, namely, tourism industry, port development and air transport.

1998 has been a tough year for the tourism industry. Nevertheless, the various sectors of the community were not daunted by the difficulties resulting from the regional financial turmoil; instead, we and particularly the tourism industry have worked hard together to enhance the competitiveness of Hong Kong as a tourist centre. As a matter of fact, since the middle of last year we have persistently been doing better in terms of the number of visitors and the hotel occupancy rate compared to the year before. This is most welcomed, but then we should not be complacent. In the face of the increasingly keen competition from our overseas competitors, we must keep up our effort in enhancing the appeal of Hong Kong.

During the debate, many Members have spoken in support of the proposal to build a Disney theme park in Hong Kong, but then they have also pointed out the needs to ensure that the terms of the agreement are fair and reasonable to both parties. Since we are still in the process of negotiation, I should not comment on the terms under discussion due to the confidentiality rule. However, I can assure Members that in striving for the development of a Disney theme park in Hong Kong, we will not be doing so at all costs as that will not be in the interest of Hong Kong. We will consult the Legislative Council once we have reached any consensus with the Walt Disney Company.

Some Members have expressed concern about the possible impact of the Disney project on the environment and development of Lantau Island. Like any other major development project, the Disney project also needs to pass a specific environmental impact assessment before it can be implemented. The Government is now conducting a study on the overall development strategy for Lantau Island as well as the development of north-eastern Lantau. If the outcome of the negotiations is positive, the Disney project will be included in the overall planning part of the study for consideration. In addition, we will also further review the development plan for a container terminal at Lantau Island.

Apart from negotiating with the Walt Disney Company over the theme park development, we are also making efforts to actively and strategically increase as well as improve the tourism hardware and software, with a view to enhancing the appeal of Hong Kong as a tourist destination.

Speaking of the development of tourism hardware, the Financial Secretary referred to three items in his Budget speech this year, including a cruise terminal development at North Point proposed by a private sector developer, the Lowland Area Redevelopment of the Ocean Park, and a feasibility study on the construction of a "Fisherman's Wharf" in Aberdeen similar to that in San Francisco or Sydney. In this connection, the feasibility study regarding the "Fisherman's Wharf" is expected to complete towards the end of the year.

In regard to the cruise terminal development, I should like to stress that the development proposal was not initiated by the Government but put forward by the private sector developer; as such, the scale of development as well as the choice of location were all determined by the private sector developer concerned. Besides, the proposed development has also been handled in accordance with the normal planning procedure; no special arrangement has been made whatsoever. Should the proposal be implemented eventually, it would certainly help to boost our tourism industry. As a matter of fact, cruise holiday making has become a fast developing stream of the tourism industry worldwide. Moreover, since Hong Kong is one of the major port of call in Asia, the provision of advanced berthing facilities with enhance our attraction to the new generation massive ocean-going cruise liners to stop by Hong Kong and help to bring in more visitors from overseas.

In addition to the projects mentioned just now, the Government is also conducting a study on the development of a world-class state-of-the-art auditorium on the reclaimed land in West Kowloon. The report on the feasibility study has recently been completed by the Hong Kong Tourist Association and submitted to the Government for consideration.

Furthermore, we have recently announced a proposal to develop a wetland park on the fringe of Mai Po, Tin Shui Wai. The proposed park can on the one hand help to promote environmental conservation, and on the other cater to the world trend of eco-tours. That way, overseas visitors interested in ecological tours will be attracted to Hong Kong to experience the fun of visiting a multifarious city. The Tourist Association and the Agriculture and Fisheries Department are currently conducting a feasibility study on the proposal. We expect to complete the study towards the middle of the year, then we hope to seek expeditiously funding approval from this Council so as to commence the construction work by 2000.

Apart from massive scenic spots, we are also planning to create a more appealing environment at the various tourist attractions for the benefit of a more enjoyable time by our visitors. This year, the Tourist Association will launch a tourist attraction enhancement programme and the Central and Western District which tourists love to visit most has been chosen for the trial run of the programme. In this connection, rehabilitation works will be conducted at selected scenic spots, including improvement to lighting and tourist facilities. Besides, the Government will also vote funds for the improvement of tourist signs at Stanley, the purpose of this trial scheme is to make it more convenient for tourists to use the facilities at Stanley.

At the end of last year the Tourist Association has also established a Heritage Tourism Task Force which comprises not only officials of the relevant government departments but also heritage experts and members of the tourism industry. The Task Force is set up to formulate policies to promote heritage tourism, as well as to organize and give publicity to activities that help to facilitate the development of heritage tourism. It has commenced work and laid down working plans for the coming year. In this connection, the Task Force will advise the Government on measures to give more publicity to the traditional festivals celebrated in Hong Kong, improve the existing heritage trails, enhance the appeal of monumental buildings to tourists and so on.

In seeking to promote tourism, it is important that we can maintain and promote the traditions in Hong Kong on the one hand and introduce new attractions on the other. The various plans referred to just now will include the identification of more attractions for leisure tours, extravaganza tours, ecological environment tours, heritage tours and so on, so as to provide a variety of experiences to suit the needs of different tourists.

The development of tourism software is equally important. It has been referred to by Members that the provision of quality services is vital to Hong Kong as an exotic tourist destination. We could not agree more. On this front, the Tourist Association has already launched a "hospitality" promotion campaign to educate the public about the spirit of hospitality. In addition, both the Tourist Association and some tertiary institutions like the Chinese University of Hong Kong and the Hong Kong Polytechnic University, and the Vocational Training Council have also offered tourism-related courses at various levels, with a view to enhancing the standard of workers in the industry.

To further enhance the quality of the tourist services provided in Hong Kong, the Tourist Association is currently launching a "Quality Tourist Service" scheme. Under the scheme, a set of objective standards will be formulated and participating shops and outlets meeting the standards would be given a special label for the tourists' easy identification. The scheme will be introduced to the retailing as well as food and restaurant sectors first.

With respect to promotional work, Members have also suggested that we should seek to have more major conferences and expositions conducted in Hong Kong. In fact, the Tourist Association has in place a special division to take care of the promotional work on this front; besides, it will also liaise actively with the sector to collaborate in the provision of supporting services and special offers for conferences and expositions.

On the other hand, since there are plenty of scenic spots and monuments in the Mainland and Hong Kong is an unique metropolis where the East meets the West, the two places could in fact complement each other in developing their tourism industries. As such, we will continue to strengthen our co-operation with the Mainland to develop multi-stop travel itineraries and promote Hong Kong as a unique all-time favourite attraction for tourists visiting China. Over the past years, the Tourist Association has co-operated with such major tourist cities in the Mainland as Beijing, Shanghai, Xian, Guilin, Kunming and so on to conduct overseas joint promotion activities in Europe and the United States.

Moreover, we will also continue to make good use of the Pearl River Delta to develop short-distance package tours and speciality tours. In regard to the latter, the main themes would include gourmet food, monumental relics and so on.

To enhance the appeal of Hong Kong, we would need more than the efforts made by the Government and the tourism industry. Through the Tourism Task Force, we will continue to collaborate with the Tourist Association and the sector to develop Hong Kong's tourism industry. In addition, the Tourist Association will also step up its liaison with the 18 district boards, with a view to identifying major tourist spots for further promotion and enhancement. After consulting the Tourist Association, the Home Affairs Department also expects to publish a new edition of the tourist guide on the 18 districts towards the end of the year.

Apart from the tourism industry, we will also keep up our efforts in sharpening the competitive edge of Hong Kong's shipping industry, with particular emphasis on ways to cut down on operating costs. The proposal to reduce merchant shipping registration and related fees put forward in the Financial Secretary's Budget will enable an eight tonnes vessel to save some $600,000 in five years. Moreover, the Marine Department has also streamlined the procedure for shipping registration and inspection of ships. All these improvement measures are welcomed and supported by shipowners and shipping companies. The initial responses are very encouraging, for several shipping companies have indicated that they would consider having a dozen of their vessels of a total tonnage of 800 000 tons switched to the Hong Kong registry. I should like to stress that we are aiming at not only increasing the total tonnage of ships registered in Hong Kong but also encouraging shipping companies to use Hong Kong as a base for post-registration shipping management, with a view to enhancing the status of Hong Kong as an international shipping hub and thereby boosting the development of other industries like banking, insurance, communications, legal services and so on. As such, reducing the merchant shipping registration and related fees create more employment opportunities in not only the shipping-related sectors but also other trades and industries. Our policy is welcomed by the local shipping companies and endorsed by the international shipping community. In this connection, a Japanese shipping company has recently set up its headquarters in Hong Kong to take care of its container shipping business in Asia; besides, a renowned British marine insurance company has also set up an office in Hong Kong. In the coming few months we will be stepping up our promotional efforts in both Hong Kong and overseas, including the United States and European countries, in order to attract more companies to invest in Hong Kong.

In addition, the Government is very much concerned with the issue of container terminal handling fees. In this connection, we conducted meetings with consignors, shipping companies and container terminal operators in February, and the shipping companies promised to freeze the container terminal handling fees for one year provided the circumstances remain unchanged. Moreover, they have also promised to consider the proposal put forward by consignors for more consultation and improved transparency in setting the container terminal handling fee rates. We will follow up the relevant issues with the parties concerned.

We also understand that the operating costs of both our container terminals and the land transportation operators are rather expensive. Hence, we are now discussing with the container terminal operators to see if more backup space could be provided for them to enhance both their handling capacity and efficiency for the benefit of reduced costs. We are also strengthening our contact with the mainland authorities, with a view to improving the boundary-crossing situation for container trucks, helping to cut down land transportation costs, resolving for the long term the problem of expensive container terminal handling fees in Hong Kong, as well as enhancing the competitiveness of the container terminals in Hong Kong.

As for air transport, we will keep up our efforts in maintaining the status of Hong Kong as an international and regional air transport hub.

The new airport is now operating smoothly, nevertheless, the Airport Authority will continue to work hard with the various franchised operators and business partners to provide quality services.

In regard to the airport charges, some Members are of the view that the charges should be adjusted downwards. As a matter of fact, the Airport Authority has all along been reviewing periodically the mechanism for determining airport charges. It will take into consideration relevant factors such as the competitiveness of the airport, the financial position of the Airport Authority and so on in reviewing the charge rates. It is important that we compare the competitiveness of our airport with that of our neighbours and ensure that our airport charges are maintained at a reasonable level to enable Hong Kong to maintain or even enhance its status as an international and regional air transport hub.

In addition, we will continue to negotiate and sign aviation agreements with more new partners; we will also review and revise from time to time the transport arrangement made with our aviation partners. Our objective is to continuously extend our contacts with other countries and regions on the air transport front, thereby contributing to the development of both the economy and the tourism industry of Hong Kong.

Last but not least, I should like to thank Honourable Members once again for their invaluable views. We will continue to work hard to enhance the status of Hong Kong as a major tourist attraction as well as an international shipping and air transport hub.

Thank you, Madam President.

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

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Mr Deputy, I am grateful for the interest and valuable views expressed by Members on education and employment.

I would like to talk about education first. The Chief Executive has pledged, at the inception of the Hong Kong Special Administrative Region (SAR), to improve the quality of education in Hong Kong. We have been firmly upholding this principle. Huge resources have been invested and various measures introduced to this end. Even during this difficult period of economic downturn, there will still be a significant increase in our spending on education in the coming financial year. Let me cite some figures to illustrate my point: total expenditure on education will grow by 7.9% in real terms to $55.2 billion, representing 19% of the total public expenditure while the increase in expenditure on basic education will be even more significant, recording a real growth of 11.1%.

In the last two years, recurrent expenditure on basic education has not only grown in real terms, but its proportion to total recurrent expenditure on education has also shown a marked increase. In 1997-98, the recurrent expenditure on basic education accounted for 64.6% of the total recurrent expenditure on education. This percentage will rise to 66.8% in 1999-2000. On the other hand, the share of recurrent expenditure on tertiary education in the total expenditure on education will drop from 35.4% in 1997-98, to 33.2% in 1999-2000.

Some Members have questioned why the amount now spent on primary education by the Government constitutes a smaller percentage of the total provision than that of eight years ago. This is a superficial comparison. In fact, the Government has injected substantial resources over the past years into improving primary education. For example, the ratio of pupils to teachers in primary schools has gradually dropped from 27.1:1 in 1998 to 21.8:1 in 1999. Moreover, the number of graduate primary posts has increased by a substantial margin, from 174 in 1994 to 2 300 in 1998. The Government also plans to build 68 primary schools in the next four years to enable 60% of pupils to study in whole-day schools by September 2002. The above figures fully reflect the importance the Government attaches to basic education, in particular, primary education.

Enhancing the overall quality of education in Hong Kong is the key policy objective of the SAR Government. As the next millennium is drawing near and Hong Kong is facing unprecedented challenges, the need for education reform has become an increasingly pressing issue. In 1998, we conducted a review on the education-related executive and advisory bodies and rationalized their relationship with each other. We also reviewed the organization and management of the Education Department, and will start to implement the reform measures in the Department this year. Along with the Education Department's reorganization, school-based management will be implemented in all schools. With more autonomy in management and teaching and an increased level of accountability, schools will be able to operate flexibly in providing quality education according to actual needs. In order to encourage further diversity in school operation and to provide parents with more choices, starting from 1999-2000, we will increase the level of subsidy for Direct Subsidy Scheme (DSS) schools and will, on a pilot basis, allocate government-built school premises to non-profit-making sponsoring bodies for the operation of DSS secondary schools. We will also assist sponsoring bodies, by way of land grant and capital grant, to build non-profit-making private independent schools which will not receive any form of recurrent subsidy from the Government.

Moreover, the Education Commission (EC) is conducting a comprehensive review of the entire education system, from pre-school to tertiary education. The EC has just completed the first stage of consultation on the aims of education. The response is overwhelming. Over 14 000 submissions have been received within a short period of two months. This, I think, is a clear indication of the profound interest in education of every sector of the community. The results of this consultation will form a good basis for the subsequent stages of the review. I hope those who have enthusiastically expressed their opinions during the consultation will join hands to give continued support to the education reforms that will follow later. In fact, every member of the public in or outside the education system has a role to play. Every one of us should carry out our responsibilities and support one another in our united effort to create a favourable environment for the development of quality education.

Improving the quality of education is a matter for everyone. The Government has the responsibility to ensure that resources are effectively used and that schools are given maximum flexibility and autonomy in their effort to enhance students' performance in different aspects. Schools and parents should co-operate to ensure that students are well looked after within and outside school. Social service organizations should provide professional support to assist the healthy development of our young people. Universities, when admitting students, should consider their potential and achievements in different fields. The business sector should play a more active role in education. I would like particularly to stress the very important role that the media plays in educating our younger generation. Every word, every headline and every photo used by the media would influence the mind-set and values of our young people. Thus, the media has an unshirkable social responsibility to foster the healthy development of our young people.

Apart from formal education, the Government also pays much attention to the development of continuing education. In this day and age when changes are occurring swiftly, the knowledge that one has learned from schools and even university could become outdated at any time. Therefore, everyone has to keep on learning, and the entire community be full of learning opportunities. At present, more than 320 000 people in Hong Kong are taking various kinds of continuing education.

Over the past decade, we have injected over $600 million into the Open University of Hong Kong (OUHK) for the development of adult and continuing education. To provide proper financial assistance to needy students, we have extended the Non-means-tested Loan Scheme (NLS) to OUHK students and part-time students enrolled in government-funded higher education programmes. Since the implementation of the scheme in September 1998, over 1 600 such students have received NLS loans. The average loan amount is $22,000. We have also provided a one-off grant of $50 million to top up OUHK's Student Loan Fund. We expect to benefit an additional 2 000 students a year. We hope to formulate long-term aims and strategies for continuing education which will encourage life-long learning, upgrade the quality of our manpower resources and develop Hong Kong into a learning society.

One of the main aims of education is to provide Hong Kong with a pool of quality human resources. Therefore, the key feature of our manpower policy is to ensure an adequate supply of appropriately qualified workers to meet the needs of the economy over the long, medium and short term.

To help us meet the long-term manpower needs, we are about to commission a consultancy to carry out a comprehensive, in-depth qualitative analysis of the overseas manpower forecasting models that are currently used by economies which are at a similar or more advanced level of economic development to Hong Kong. Among other things, the consultancy will examine the suitability of the different models for use in Hong Kong. Based on the outcome of this consultancy study, and our in-house analysis of existing manpower forecasting models used by the Government, we hope to be able to develop a manpower forecasting model that will best meet the needs of Hong Kong for the next 10 years.

Turning to the medium-term manpower needs, we shall focus on individual sectors of the economy. We have recently completed a consultancy study on the manpower and training needs of the travel and tourism industry, and are now examining the consultant's recommendations. A second study is now underway on the manpower and training needs of the information technology (IT) sector. This will focus in particular on the manpower needs arising from the development of the Cyberport.

As to the short-term manpower needs, we shall do everything we can to ensure there are adequate manpower resources to cater for the needs of our economy. Our first and foremost task is to train up local talents, in particular, to strengthen their language ability and enhance their IT knowledge and skills.

We need our employees to be proficient in English in order to live up to Hong Kong's reputation as an international business centre and maintain our competitiveness. To this end, I will look into ways of enhancing the standard of English of our working population, including those who have newly joined the workforce, in conjunction with academic and training institutions, the Language Fund as well as business organizations and professional bodies.

As IT is advancing at a staggering pace, we must strengthen our training in this area. We have put substantial resources of as much as billion dollars into the basic education sector for the purpose of implementing the five-year strategy for the promotion of IT in education. This would equip our teachers and students and enable them to meet the challenges of this IT era.

The Hong Kong Institute of Vocational Education under the Vocational Training Council (VTC) offers full-time courses in such areas as Computer Systems Administration, Information System Development, Network Applications and Software Engineering. Some of these courses are also available on a part-time basis. In 1998-99, the VTC has a training capacity of over 2 400 training places in IT. Where necessary, we shall provide additional places on these courses to meet the demand.

About 16 000 students in our universities are studying "computer science and information technology" and "engineering and technology" courses. Moreover, all tertiary institutes provide students with IT training in the form of either compulsory or elective subjects. Some are even considering exit tests to ensure that graduates have attained a certain level of IT knowledge and ability. All universities have computer facilities for use by students and one of them works with a private company to provide notebook computers for freshmen at affordable prices. Alongside with the development of applied technology industries, including the construction of the Cyberport, I believe various tertiary institutions and training organizations will co-ordinate accordingly. The Education and Manpower Bureau will also work closely with the Information Technology and Broadcasting Bureau and the Trade and Industry Bureau to train talents required locally.

To achieve our target of developing IT and innovative high technology in Hong Kong, we must, apart from training local talents, do our best to draw in the best technology talents' from all over the world, including those from the Mainland. The Government has set up an ad hoc committee to review the existing immigration policy. The aim of the review is to enable Hong Kong to take in research scientists and technology talents, which Hong Kong lacks, from other places, including the Mainland, to boost the development of the technology-based industries and to increase the competitiveness of Hong Kong. The committee will review the existing immigration policy, whereby applications by mainland professionals to come to work in Hong Kong are not considered, and put forward proposals for improvement. The committee has already held its first meeting and will finish the review and submit a specific implementation plan within six months.

Lastly, let me turn to the subject of unemployment which is the biggest concern of the community at present. The Government has all along been very concerned about this subject. We understand the worries of the community and are deeply sympathetic towards those facing employment difficulties. Tackling unemployment will remain our priority issue in the coming year.

We will continue to participate actively in the work of the Task Force on Employment under the chairmanship of the Financial Secretary to identify practical ways to create employment opportunities and to ease unemployment. Following the announcement of the Budget by the Financial Secretary, the Task Force has analysed and discussed the impact of the various measures proposed by the Budget on the employment market. The Cyberport development and the reduction of merchant shipping registration fees, the two major proposals, will create some 32 000 posts over the near to medium term. The Disney theme park project under negotiation, the proposals to revive tourism, the series of tax concessions and major investment and public expenditure programmes will all help stimulate our economy, lessen the burden of the public and the business sector, revitalize and strengthen the competitiveness of our industry. These will in turn speed up economic recovery and bring about substantial employment opportunities. The Task Force and the Education and Manpower Bureau will seek to ensure, through efforts in manpower forecasting, training and retraining, that local workers stand to benefit from the plentiful employment opportunities that will arise from the Budget proposals. We are confident that the measures proposed in the Budget will play a "leading" role in bringing about economic recovery in quicker time and easing unemployment.

In the Draft Estimates for 1999-2000, we have earmarked additional resources for the provision of employment services and training and retraining programmes. We will continue to introduce new measures to further enhance the efficiency of employment services provided to the public.

I give Honourable Members my pledge that the Education and Manpower Bureau, the Labour Department and training service providers will remain as committed as before, to equip the unemployed with the necessary new skills, and to help them re-enter the labour market and hold down their jobs.

I would like to take this opportunity to appeal to the unemployed not to lose heart. If you are willing to receive training and determined to find new jobs, I can tell you there are still quite a number of vacancies available in the market. Last year, on average 4 000 people each month managed to find employment through the help of the Labour Department. In addition, under the Labour Department's Supplementary Labour Scheme, there are presently 176 vacancies of care workers in private homes for the elderly, with a monthly wage of about $7,000, and more than 40 farm worker vacancies with a monthly wage of about $9,000. According to Mr WONG Yung-kan, the fisheries industry has a lot of unfilled vacancies as well and welcomes new blood. I have taken the trouble to quote you these examples because I want to explain clearly that at this moment, there are still many elementary work for which there are not enough local workers. As a matter of fact, vacancies which employers find difficulty to fill include five barbecue chefs offering an attractive monthly wage of $14,000. Job seekers may find information about these vacancies at the Labour Department. I hope to bring home the message that unemployed workers should not be unduly pessimistic because of the high unemployment rate. There are always opportunities if they are willing to try out new work.

I believe my foregoing presentation on education and manpower has adequately explained the Government's latest policies and initiatives. We are committed to training up our people in tandem with Hong Kong's economic and social developments. At the same time, we hope all sectors of society, employers and employees included, will face any potentially controversial issues which may arise in future in a pragmatic, accommodating and understanding manner. Thank you, Mr Deputy.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Mr Deputy, in last week's debate on the Budget, several Honourable Members expressed concern about the expenditure on health care and social welfare services in the light of the present economic climate.

I would like to assure Honourable Members that we will continue to improve our health care and social welfare services. Our recurrent expenditure on health care has been increasing in recent years. I have proposed a total expenditure on health care at $30.2 billion for the next financial year, which represents a 3.5% growth in real terms and accounts for 14.6% of the total recurrent public expenditure, comparable with that of this financial year.

On social welfare services, several Members have reminded us that the demands for certain welfare services will increase at a time of economic downturn. I have therefore proposed a $29 billion recurrent social welfare expenditure for the next financial year, representing a 13.6% growth in real terms. This expenditure will account for 14.1% of the total recurrent public expenditure, the highest ever.

I would like to respond as follows to the views and concerns expressed by Honourable Members:

Firstly, on hygiene and health care services, the SAR Government has all along attached great importance to both the prevention of communicable diseases and food safety. The Department of Health will widen the channel for collecting information about communicable diseases next year by enhancing contact with disease control centres overseas, speeding up pathological laboratory tests in order to shorten the time for tracing sources of diseases, and to enable the public to expeditiously take preventive measures if such a need arises. On food safety, we will also step up the monitoring work and promote a prevention-oriented working process in the food industry to ensure food safety. We hope to minimize incidence of diseases associated with dirty food through the adoption of various measures.

We will also see growth in real terms in hospital services next year. An additional 973 beds will come into service in hospitals under the Hospital Authority (HA) throughout Hong Kong Island, Kowloon and the New Territories, including those for accident and emergency service, convalescence and psychiatric service. In addition, the HA will provide 40 additional day places each for geriatric and psychiatric services during next year. With the successive completion of various hospital facilities in the next few years, the total number of beds under HA will increase to 30 000 within five years from the present over 27 500.

While we must continuously improve our health care services in response to the demand and expectations of the community, this has brought about a heavy burden at the same time insofar as public expenditure is concerned. In view of this, we commissioned the School of Public Health of the Harvard University in November 1997 to review the financing and service structure of Hong Kong's health care system, project the costs of health care in the future, assess whether the current financing arrangement will be able to meet future needs, and recommend feasible reform options.

According to the consultant's estimate, health care expenditure will continue to grow as a result of several factors, including an ageing population, an increasing medical cost in line with the development of new technology and rising public expectations for service quality, with the public health care system bearing the brunt of the burden. The proportion of health care expenditure in overall public expenditure will jump to between 20% and 23% by 2016 from 14% in 1996-97, representing an increase of more than 50%. The rising public health care expenditure will, if unchecked, directly affect the allocation of funds for other public programmes, such as education, welfare, security and so on.

We will publicize the consultant's report next month and will also widely consult both the medical profession and the public on the recommendations in the report. The Government is open-minded about what reform options should be adopted. For many years, the basis of our health care system and policy has been to ensure that no one is denied adequate medical treatment because of a lack of means, which we will continue to uphold. We look forward to having in-depth and constructive discussions on this precondition during the consultation exercise, in order to enable the community as a whole to have a better grasp of both the achievements and the weaknesses of the existing system and potential problems, and to explore together the way forward.

During last week's debate, some Members questioned the Government's determination in implementing the anti-smoking policy. I would like to take this opportunity to reiterate that the SAR Government is unswerving in its position and is very determined to implement its long-standing anti-smoking policy. The Health and Welfare Bureau has strengthened liaison with the Hong Kong Council on Smoking and Health on how to strengthen study and survey to formulate new anti-smoking initiatives; and on how to enhance the public's anti-smoking awareness through publicity and education. In addition, as Members may remember, under the Smoking (Public Health) (Amendment) Bill which was passed into law in mid-1997, starting from the end of June this year, all tobacco advertisements for the purpose of display will be banned across the board, and from the end of this year, no person will be allowed to publish tobacco advertisements in a printed publication. We will continue to monitor the latest international trend for the purpose of introducing new anti-smoking initiatives and measures.

The provision of various care and attention services for the elderly has been one of the main tasks of the SAR Government. The supply of places in residential care homes for the elderly has long been of concern to the community. We are on schedule on the provision of additional places as pledged for 1998-99 and are arranging elderly persons to occupy these places. I am pleased to report that the average waiting time has shortened by three months to 24 months by the fourth quarter of 1998, a cut of three months compared with the corresponding period in 1997. We will provide 2 400 new places in 1999-2000 in the hope of maintaining the waiting time at a relatively short period.

Other major proposals on services for the elderly include: the provision of additional community care service; the rationalization of the current community care service and the enhancement of competition through the introduction of contract out service so as to improve the quality and cost effectiveness of the existing services.

The expenditure on Comprehensive Social Security Assistance (CSSA) for the 1999-2000 financial year amounts to $15.5 billion, with an increase of $2.4 billion over that in 1998-99 which stood at $13.1 billion.

In 1993-94, CSSA expenditure was only $2.4 billion, but the figure will jump to $15.5 billion in the next financial year, representing a six-fold increase over a period of six years. The share of CSSA expenditure in the overall recurrent government expenditure has also increased from 2.6% in 1993-94 to 8.6% next year. Over the past few months, we have repeatedly pointed out that one of the main contributing factors for the significant increase in CSSA expenditure has been a huge increase in the number of CSSA applicants who have working ability. I very much hope that the situation will improve after the implementation of a number of new measures aimed at helping those who can work to find jobs.

Over the past five years, the speed at which CSSA expenditure has been increasing is worrying. I believe we all agree that the purpose of CSSA is to provide basic financial support to poor families which have no one to depend on. As an economic entity with low taxation, we must ensure that only those families which are in genuine need are eligible to apply for CSSA so that scarce resources are used effectively.

I would also like to respond to the problems mentioned by some Honourable Members concerning services for family and child welfare. We are fully appreciative of the importance of maintaining the integrity of family, especially in view of the high pressure on both individuals and families as a result of a downturn in the economy in recent years. In the face of these challenges, we will recruit more social workers to meet the great demand.

Finally, I would like to turn to rehabilitation. We will continue to provide additional residential care places for disabled persons. In the next few years, more than 4 000 extra day and residential places will be made available for disabled persons, 560 of which will be provided in the next financial year alone. In addition to providing various facilities, we will continue our co-operation with rehabilitation institutions in order to realize the objective of "equal opportunities and full participation" for disabled persons.

Thank you, Mr Deputy.

SECRETARY FOR TRANSPORT (in Cantonese): Mr Deputy, Honourable Members have expressed their views on a number of transport-related issues in the 1999-2000 Budget debate. Today I will respond to Members' views regarding the increase in transport-related fees, the transport infrastructure programme, the monitoring of public transport services and the of the Mass Transit Railway Corporation (MTRC).

In regard to the increase of transport-related fees, it is the Administration's assessment that the additional revenue arising from the Financial Secretary's proposal to increase tunnel tolls, the charges for on-street parking meters and transport-related fixed penalty is about $510 million. As Members are aware, under the current economic climate, the Financial Secretary has proposed a Budget deficit of $36.5 billion for the 1999-2000 financial year. In comparison to the anticipated Budget deficit, the additional revenue to be generated by the transport-related revenue proposals is only a small amount. Given the need to increase new revenues for income and to achieve savings, we have to carefully consider acceptable ways to increase government revenue. It should also be noted that the additional revenue only makes up a small sum compared with the Government's expenditure on the transport front. The total transport-related expenditure earmarked for 1999-2000 is about $7.3 billion, representing an increase of about 8%, over that of last year. This is much higher than the 3.5% increase of the Government's total spending.

As regards spending on transport infrastructure, I should like to briefly outline the spending on transport infrastructure. We are implementing a number of major road projects according to the planned transport programme. These include Route 9 (section between Tsing Yi and Cheung Sha Wan, and section from Sha Tin to West Kowloon), Route 7 (section between Kennedy Town and Aberdeen), and Route 10 (section between North Lantau and Yuen Long). The spending on these projects will not reach peak level in the 1999-2000 financial year. Expenditure will increase significantly in coming years when the construction of these projects commences.

I wish to point out that the Government's budgeted expenditure does not include the massive investment made by the two railway corporations in expanding the rail network. Five new projects (West Rail Phase I, MTR Tseung Kwan O Extension, Ma On Shan Rail Link, KCR Tsim Sha Tsui Extension and Sheung Shui to Lok Ma Chau Spur Line) will be completed in the coming five years, with a total investment amounting to over $120 billion. The construction works of West Rail Phase I and MTR Tseung Kwan O Extension have already started at the end of 1998. The Ma On Shan Rail Link, KCR Tsim Sha Tsui Extension and the Sheung Shui to Lok Ma Chau Spur Line are at the final stage of planning.

It is therefore clear that both the Government and the two railway corporations are committed to continuous investment in transport infrastructure. This fully reflects the importance attached by the Government to the transport network. In fact, transport infrastructure is a kind of long-term investment which will contribute to the future economic development of Hong Kong on the one hand, and generate numerous employment opportunities on the other.

With respect to the revenue proposals, there is indeed a need for us to give careful consideration to possible ways to increase government revenue in view of the Budget deficit. This is consistent with the cardinal principle of prudent fiscal practices. In view of the current economic situation, the proposal to increase any tax item is a painful but unavoidable decision to make. The Financial Secretary has made careful consideration after detailed analysis before formulating these revenue proposals. It is the Government's intention to minimize the impact of these proposals on the public and the business community. As for the new measures on the transport front, we fully understand and are concerned about the difficulties and pressure faced by the transport trade. The Government has therefore proposed to extend the relief measure of reducing diesel duty by one year. In addition, the increase in the tolls of the Cross Harbour Tunnel is restricted to private vehicles and motorcycles, so as to minimize the impact on the transport trade.

To increase the tolls of the Cross Harbour Tunnel is a practical measure to increase government revenue in the current tight budgetary situation. The proposal can also facilitate the streaming of cross-harbour traffic to other cross-harbour tunnels, so as to reduce the traffic congestion at the Cross Harbour Tunnel. As we all know, the traffic volume at the Cross Harbour Tunnel has reached its full capacity. The tunnel is catering for some 120 000 vehicle trips every day. This is partly attributable to the low toll levels. Since its opening in 1972, tolls have not been increased, except for the $5 passage tax introduced in 1984. If we take into account the inflation over the years, the current proposal is not an unreasonable one. This adjustment is justified on both budgetary and transport grounds.

As for the Lion Rock Tunnel, the Government's proposal is to introduce a small increase in the flat toll from $6 to $8 (an increase of $2). With growing development in the New Territories, it is essential that all the tunnels connecting Sha Tin and urban Kowloon should perform an effective streaming function to meet the increasing transport needs. The toll level of the Lion Rock Tunnel has not been adjusted in nine years. The proposed slight increase will facilitate vehicle streaming and increase government revenue.

The proposal to increase on-street parking meter charges is also a reasonable one. Most of these parking meters are located conveniently in the urban area. Their charges have not been adjusted since 1994. The proposed increase (from $2 for 15 minutes of parking to $4) is the maximum level to be charged, charges of meters located in less busy areas will be increased by a smaller amount.

I would now like to turn to the proposed increase in fixed penalties for transport-related offences. First, I wish to point out that these proposals would only affect those drivers who have violated the traffic law. The level of these penalties has not been adjusted since 1994. To discourage traffic offences, we need to adjust the penalty level to maintain the deterrent effect. It has been referred to by some Members that the number of fixed penalty cases is dropping in the recent years. But I would like to point out that 1.7 million cases a year is still a considerably high figure, since traffic offences may result in traffic congestion or even serious traffic accidents, particularly in congested areas with heavy pedestrian and vehicular flows.

I should like to draw Members' attention to the fact that the Government constantly reviews traffic law to ensure that legislative provisions are reasonable and are kept up-to date vis-a-vis the current traffic situation. This is important to ensuring fairness in the prosecution of traffic offences. The recent announcement of the Government's decision to increase the speed limits of a number of major roads is one example. We are reviewing the speed limits of other roads and will consider increasing the speed limits of other road sections if appropriate. Apart from speed limits, we will also review and amend other aspects of the legislation as and when necessary.

Specific concerns have been raised by some Members of this Council and the public light bus and taxi trade regarding the shortage of parking spaces and the proposed increase in fixed penalties. To further assist the trade to improve the operational environment, the Transport Department will continue to maintain close liaison with operators, with a view to implementing a number of proposals to lighten the burden of professional drivers. Measures being examined include the provision of more half-hour parking meters; allowing taxis to be parked at the end of taxi stands for short duration when drivers are having lunch; providing more over-night parking facilities; further opening up certain restricted zones and so on.

I would like to assure Members that the purpose of the proposed increase in fixed penalties is to deter traffic offences. The worries expressed by some Members of this Council and the trade about possible abuse of power in issuing penalty tickets in order to increase government revenue are totally unfounded. As I have explained, the Government will review the legislation from time to time to ensure that they are reasonable and up-to-date with the current traffic situation. The Government will act strictly according to the law when prosecuting traffic offences, and where appropriate, we will exercise suitable discretionary power. Although an estimate is included in the Budget on the revenue to be generated by fixed penalties, I can assure Members that this is purely an estimate and no more. The Government has never set a target or quota on the number of traffic offence tickets to be issued by the police. I hope Members' worry can be dispelled by this clarification.

On public transport, some Members expressed the view during the debate that the Government should tighten the monitoring over public transport services. Although public transport services in Hong Kong are provided by the private sector, the Government has always assumed a monitoring role. We closely monitor the safety standards and operation of public transport services, the quantity and quality of services, and the fare level. Although the two railway corporations have autonomy over railway fare, it is the prevailing practice for public views to be taken into account in the fare setting process. The competition from other public transport modes is also another important factor.

On service standards, market competition is the best incentive for improvement. The Government has introduced competition in the markets for the provision of ferry and bus services; this is a good example. The views expressed by this Council and the public are also very important. For example, owing to the recent public concern over the apparent over-provision of bus services on Hong Kong Island, the Transport Department, as the regulatory authority, has immediately held discussion with the bus companies and implemented a number of measures to rationalize bus routes and bus stops. On the whole, the current framework ─ under which the Government is the lead regulatory authority, joined by the public and the Legislative Council, together with the forces of market competition ─ works well. The public transport system in Hong Kong operates smoothly. We will of course continue our monitoring work to ensure that there is adequate provision of public transport to meet community needs.

In regard to the privatization of the MTRC, the MTR is an important and integral part of the public transport system in Hong Kong. Since its establishment in 1979, the MTRC has built up an excellent international reputation both in the operation of its services and the financing of railway projects. The Financial Secretary proposed in the Budget to privatize a minority share of the MTRC. This will provide the people of Hong Kong the opportunity to participate in the ownership of a successful and profitable public corporation. So far, the general reaction from the public is encouraging. The purposes of the privatization proposal, to diversify the MTRC's access to funds, to strengthen the local stock market to benefit the Government's financial position over the medium term and so on, are generally recognized and shared by the community.

Since the announcement of the proposal, the Transport Bureau, Finance Bureau and MTRC are proceeding in full speed on the preparation work. The Government is considering the legal issues relating to the privatization proposal and the future regulatory framework for monitoring the MTRC's operation and service provision. We will of course take into account the need to ensure efficient operations by the MTRC and to maintain the current sound financial status of the Corporation. To achieve this, the MTRC and the Government will separately appoint financial consultants through tendering exercises. The appointment is expected to be made by the end of May 1999.

As the privatization of the MTRC is a new and unprecedented measure, the Government will widely consult the view of the public, investors, MTRC staff and passengers, so as to secure their support for the privatization proposal.

As the Policy Bureau responsible for monitoring the provision of public transport services, the primary task of the Transport Bureau is to ensure that privatization will not adversely affect the safety, service standard and operational efficiency of the Corporation. The relevant new legislation and the future operating agreement to be entered with the MTRC will contain provisions covering these three important aspects. The legislation is expected to be introduced to this Council in the next financial year.

Thank you, Mr Deputy.

THE PRESIDENT resumed the Chair.

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Cantonese): Madam President, the resources that are given to environmental protection were a matter raised by many Honourable Members during the Budget debate. The Government shares the concern of this Council and the community that more needs to be done to improve the environmental performance of Hong Kong. But the adequacy of resources is not the main issue we have to address. I would like to discuss two more issues, namely, the price and responsibility for environmental protection work.

What matters is how well we make use of all our resources, and how each and every one of us, being Hong Kong citizens, take responsibility for upgrading the environment in which we live. Hong Kong already has extensive environmental improvement programmes. Over the last decade, there has been a massive upgrading of waste disposal facilities. Vehicle emission and fuel standards have been raised. Industrial emission, chemical waste and livestock waste control schemes have been put in place. Together with upgrading of the sewerage infrastructure, these have brought about continuing improvement in river water quality. The investments in the strategic sewage treatment system will be repaid in improving sea water quality in the next decade.

But more needs to be done. As population and economic activities in Hong Kong and across southern China increase, the pressures on our environment grow, even if individual factory runners, vehicle owners or households are becoming more environmentally conscious. Much effort has been put into raising awareness of that pressure, and it is encouraging to see that understanding being translated into calls for action. Yet, some calls seem to remain at demanding the Government to do more or asking the Legislative Council for more funds. The concept of "a clean environment starts with me" does not seem to have been driven home to all people. To improve our environment, it takes far more than just the effort of the Government, the Legislative Council or any individual bodies or persons. Whether our environment can be improved hinges on how much the whole community are willing to pay and whether they act accordingly. There is always a price to pay for environmental performance. The question is, who pays?

Take air pollution as an example. If a driver does not pay to maintain his engine properly, other people, children and old people in particular, pay through poor health, and the taxpayers pay for medical treatment. Already Hong Kong pays an estimated $4 billion a year in medical costs and productivity lost because of air pollution related illness. It only makes sense for the community to expect vehicle owners to pay to maintain their engines, and to pay a fine if they fail to do so.

Take another example. When we go to the supermarket, if we do not take a bag, the supermarket pays for one for us, and then through rates or taxes we pay for it to be thrown away in a landfill. And the way we are producing and managing waste at the moment, we will need a valley the size of Sha Tin to hold it all by the middle of the next century.

And what about our sea and our harbour? If we want to be able to swim in water that is clean and safe ─ if perhaps one day, when the harbour waterfront has been improved, if we want to be able to start the annual swim across the harbour again ─ every citizen must pay the charges needed to operate and maintain the sewerage infrastructure that is now being built. We have committed about $8 billion on sewerage infrastructure, and tens of billion more over the next decade. That capital investment cannot be maintained unless this Council is prepared to accept a few dollars being added to everyone's water bill.

The costs of a bad environment fall not just on individuals or at the local level. They affect the whole society. Bad air quality, polluted seas and litter on the streets are damaging our reputation as a world-class city. If that damage continues, it will hurt everyone in Hong Kong as business potential is reduced and the costs of cleaning up rise.

If we want sustained change for the better, then giving the right message to people about the benefits and costs of certain behaviour and practices is essential. Without those signals in prices, fines or charges, one of the strongest and most cost-effective influences on human behaviour will be absent.

Within the Administration, we recognize that we cannot ask other people to pay a price or make changes that we are not prepared to meet ourselves. The Government recognizes that it has to set a good example through its own environmental performance.

Every department is now examining the environmental impact of its programmes and performance, all to be preparing environmental reports on the department in the coming year. We will be reviewing our energy use, the waste we produce, the way we use vehicles and the way we encourage our staff to try to achieve the best possible environmental performance rather than the minimum acceptable standard.

We are also developing new partnerships with the industrial and business sector, with transport operators, with professional institutes and with non-government organizations. We must continue to search for new approaches to improve our environment. As far as possible we will try to find means that do not involve increased economic costs, whether by improving our own efficiency in delivery of services, by updating legislation, or by identifying economic gains that will offset particular costs.

Substantial resources have been given directly for environmental protection purposes in the 1999 Budget. To those resources they are added all those that we gain through integration of approach within the Administration, and through partnership between the Government, the industrial and business sector, and the community. For example, all that my colleague, the Secretary for Transport, will be putting towards railway development does not just help mobility, it contributes to more energy-efficient, less polluting transport patterns for the future, and opens up an opportunity for new forms of urban design.

There is another very important aspect of environmental improvement. Throughout the older parts of the urban area, dilapidated buildings, traffic congestion, people and cars scrambling for space, and poor environmental conditions pervade. Such conditions do not meet the demand and expectation of today's society. We must increase the scale and speed of urban renewal in order to tackle the problem of these ageing urban areas. Urban renewal is not just about demolishing dilapidated buildings and replacing them with new ones; an important objective is to plan more comprehensively and improve the overall environment of the old urban areas.

To meet this objective, we may have to steer away from the past approach in which urban renewal had been conducted in a piecemeal manner. Instead, we will plan urban renewal and rehabilitation more comprehensively for larger areas, with a view to more effectively restructuring and re-planning the old urban areas, re-designing a more effective and environmentally friendly transport and road network, replacing incompatible land uses, adding open space, and designing buildings which meet the demands of modern living. We are now formulating an urban renewal strategy which takes us in that direction. We plan to consult the public on these proposals in the near future and introduce the Urban Renewal Authority Bill into the Legislative Council within this year.

So far I have spoken about actions to be taken within Hong Kong. While those actions are important, they do not address all the issues. Let me illustrate that point with regard to air pollution.

We face three problems with air pollution. The first is at street level. There, 90% of the problem is with emissions from our vehicle fleet. The second is with ambient air. Again, emissions from vehicles are a large and growing contributor to this problem, but power stations, industry and construction sites all add to the cocktail. The third is a regional problem with air quality because of economic development across southern China.

For the moment, our actions are being focused on the problem of street level pollution in Hong Kong, since this is where the most acute threat lies. But while these actions will make our streets more pleasant, that will not have a visible effect on our ambient air pollution. Our efforts to clear the air will be much more effective if Guangdong is addressing the problem in concert with us.

So, while we do more to put our own house in order, we must also work closely with our neighbours in Shenzhen and Guangdong to tackle the pollution problems that we both share. We are trying to develop a regional approach to sustainable development. We aim to ensure that, as the various administrations work to provide for the economic and social needs of the population of this region, individually we do not carry out development in ways that undermine our common environment or damage the prospects for our children.

Madam President and Honourable Members, improving the quality of our city and our local environment is vital to the health of the community and the prospects for the economy. I hope that in the coming year, this Council will also help us to find the right ways to engage every citizen to play their part in making this city of ours a better home. We have a great deal to do, and we need to do it together. Substantial resources have been promised in the 1999 Budget for this work. In the months ahead in this financial year, I will not hesitate to seek Members' support should needs arise for new facilities, amendments to legislation or additional allocation of resources. Thank you, Madam President.

PRESIDENT (in Cantonese): I now invite the Financial Secretary to give his reply.

FINANCIAL SECRETARY (in Cantonese): Madam President, the 1999-2000 Budget has been the subject of wide and intensive community discussion since its announcement. The views expressed by members of the public, academics and representatives of various industries have received extensive media coverage. During the Budget debate in this Council on 24 and 25 March, all 59 Members offered their own candid and thoughtful views. I wish to thank them and the community for their genuine care and concern about our economic prospects, and for their active and earnest participation in the Budget discussion. The majority of Hong Kong people and Members of this Council support the principle of a deficit budget in 1999-2000 and the proposals I put forward to restore our finances to health over the medium term. The major initiatives announced in the Budget speech have also been well-received.

The community has responded warmly and positively to the Budget. In the typical Hong Kong way, our people have not reacted with despondency to the challenges posed by the economic downswing. Instead, they are prepared to confront and overcome these challenges with all their energy and determination. I am deeply moved and encouraged by this Hong Kong spirit. It has fortified my confidence in the future of Hong Kong. But this does not necessarily mean that each and every one of my proposals has received unanimous support. Nor do I expect this to be the case. In Hong Kong, we have no difficulty accepting that each individual may look at the Budget from his or her own perspective and come to different conclusions. We believe it is natural and healthy for a mature community like ours to have and to express a wide range of opinions. This underlines the diversity and freedom which are so cherished in Hong Kong.

During the Budget debate in this Council last week, some Members said that they could not support the Budget because their fiscal principles were very different from those practised by the Government. These differences stem from diametrically opposite beliefs in the wisdom of Article 107 of the Basic Law and its binding effect. I must make it clear that, legally, the Government should not and will not depart from the constitutional provisions of the Basic Law. Neither will we compromise our well-established principle of fiscal prudence.

Some people believe that this year's Budget has aroused widespread interest because I have tried to cover in my speech not only the Government's revenue and expenditure proposals but also a number of important new initiatives. They have suggested that I have extended the boundaries of the Budget speech this year. This is not true. When I delivered my first Budget speech in 1996, I said, "A Budget is not simply an accounting exercise. It is not just the routine report on the territory's economic and financial well-being." I have always believed that, in this annual set-piece, the Government should account for its stewardship of Hong Kong's economic and social affairs, address community concerns, and provide leadership by offering a clear vision of what the future holds for Hong Kong. That explains why I have not only outlined in this year's Budget speech key initiatives and programmes which will impinge on the public finances in 1999-2000 and over the medium range, but have also put forward a number of major developments affecting our economy in the longer term. If the 1999 Budget is unique, it is because it is drawn up when Hong Kong is in the depths of the worst recession for decades. Like all Hong Kong people, I am anxious that the Budget will help relieve our economic plight, tap into the opportunities presented by the recession, stimulate new ideas, create new strengths and ─ ultimately ─ sharpen our competitive edge. Hence the larger-than-normal menu of initiatives. The Government will spare no effort in taking forward these initiatives.

The Chief Secretary for Administration has fully covered the proposed reforms of the Civil Service. This will be one of the Government's top priorities in the coming year. But our work on enhancing efficiency will not stop there. In parallel with reforming the Civil Service, we will also explore various means to maximize private sector participation in the delivery of public services.

The Secretary for Transport has spoken on the proposed sale to the public of a minority share in the Mass Transit Railway Corporation (MTRC). I wish only to re-emphasize one point. The main driving force of this proposal stems from our intentions to maximize the efficiency of the MTRC, to encourage greater public ownership and market supervision of this Corporation, and to supervise the development of the local securities market. Obtaining income from the sale will be an added benefit, a useful boost to our finances over the medium term, but it is not the prime motive. Let me also reassure Members that in pursuing this privatization plan, the public interest will be overriding.

The Secretary for Information Technology and Broadcasting and the Secretary for Economic Services have discussed the Cyberport and Disney projects at length. I will not dwell on them. But I do wish to reassure Members that if we conclude the current negotiations on these projects successfully, we will immediately present our proposals for Members' scrutiny, with total transparency and full justification. We will demonstrate that we have been fair and circumspect, and have maintained a level playing field under the rule of law. We cannot proceed without Members' support.

Our involvement in these projects does not imply the Government has departed from its established policy of "minimum intervention and maximum support". The development strategy for the Cyberport and Disney projects follows essentially the same principles as for our industrial estates, container terminals and Ocean Park, with the main public contribution being to make available land and supporting infrastructure. The challenges of globalized competition and the current recession demand a decisive response on the part of the Government. We must be prepared to pursue innovative projects in a timely manner. There is no reason why we should not pursue such projects in partnership with the private sector, provided always that such a partnership arrangement is fair, cost-effective and in the overall interests of Hong Kong. In the process, we pledge to remain forever vigilant in guarding what has made Hong Kong successful in the past.

Members of this Council and the community at large have given strong and clear support to the series of reforms that I announced for the securities and futures markets. The enhanced competitiveness and synergy to be derived from the reform are the key to Hong Kong's continued success as an international financial centre in the new millennium. We have commenced work on all three fronts of the reform since 3 March. First, the Steering Committee on the Enhancement of Financial Infrastructure has already met three times and is making steady progress. Second, we are preparing drafting proposals for the composite Securities and Futures Bill, some of which will be ready for market consultation shortly. Third, the two exchanges have appointed financial advisors to advise on the demutualization and merger exercise with a view to reaching agreement by the end of September. The Government also expects to appoint its own financial adviser soon. The Secretary for Financial Services has maintained close liaison with the leadership of the exchanges and Hong Kong Clearing and will soon establish a co-ordinating committee involving these leaders and other industry representatives to oversee the demutualization and merger exercise. In parallel, the Securities and Futures Commission (SFC) and the market bodies are taking actions to rationalize the various market regulatory functions between the SFC and the future body to be set up after the merger. These include market surveillance, listing, regulation of intermediaries and investor compensation arrangements.

We have made a promising start. To bring the reform to its successful conclusion, we will listen to the views of the community and address carefully and swiftly the concerns of the industry and this Council. With the heartening support demonstrated by the market over the last few weeks, I am confident that the target we set for ourselves can be achieved in a timely manner. We must proceed resolutely with the reform, adhering to our published target dates. On the banking side, we have just completed a public consultation exercise on the various findings and recommendations of the banking sector review. The Hong Kong Monetary Authority will analyse the views received and proceed prudently with implementing the outcome.

Let me now deal with the question of our economic forecasts. We have forecast growth of 0.5% for 1999 and a trend growth rate of 3.5% over the medium term. This medium term forecast represents a significant reduction from the trend growth rate of 5% which we have been following for much of the present decade. The negative growth of 5.1% last year has also reduced the entire base of the forecast. These forecasts imply that our Gross Domestic Product will not return to its 1997 level until 2001. Even so, we have been criticized for being over-optimistic. Economic forecasting is not an exact science. Nobody can claim precision in such an exercise. Our open economy means that our economic growth is substantially influenced by events outside Hong Kong, and uncertainties remain. But I must emphasize that our forecast is the outcome of a conscientious and professional assessment and computation based on the available information. Over the years, our track record shows our forecast have been more accurate than most others. I am particularly disconcerted by the suggestion that we have inflated the forecast in order to boost public spending in the coming years. This is not the case. Indeed, we are determined to control the growth of government spending at a rate lower than the 3.5% trend growth forecast for the medium term. Some Members have expressed concerns about a few of my revenue-raising proposals. I fully understand their views. In a recent letter to Members, I explained the need for us to put forward these proposals. As this is a matter of concern to the entire community, let me recapitulate the Government's considerations.

Despite the significant reduction in revenue from various sources as a result of the economic downswing, we will increase, instead of reduce, expenditure for the coming financial year, focusing on important social areas such as housing, health care and social welfare. We have continued to expand our investments in education and the physical infrastructure. I firmly believe that this approach is in the best interests of Hong Kong, and has the full support of the general public. By allowing expenditure to increase while our revenues decline, we will again record a fiscal deficit in 1999-2000. The Government is obliged under the Basic Law to minimize the fiscal deficit and to return to a balanced budget as soon as possible. Persistent fiscal deficits will damage our reputation for upholding fiscal prudence, erode investors' confidence and put pressure on our international credit ratings. A lower credit rating would increase the cost of borrowing for every business in Hong Kong that may seek to raise new capital. This would not bode well for our economic recovery.

To avoid these dire consequences, we have proposed the strategy of increasing taxes on a highly selective basis. Indeed, if we were not to choose direct taxes, given our decision to extend the freeze on government fees and charges, there are only be a handful of revenue items left for possible adjustments. We have proposed moderate increases in stamp duty on property transactions, betting duty, tunnel tolls, on-street parking meter charges and the inflation-linked adjustment of fixed penalties for traffic-related offences. None of these measures is targeted at individual industries. Given the need to raise additional revenue, whatever choices we make must necessarily mean that some people will have to bear a heavier burden. This is a price we have to pay. We cannot avoid it. The other option of raising revenue by widening the tax base would affect more people more severely. When we met with representatives of the transport industry to explain the revenue raising proposals which affect them, they expressed particular concern over the proposed adjustment of fixed penalties for traffic-related offences. In view of these concerns, which have also been voiced by some Members, we have decided to defer the implementation of the new fixed penalties until after the passage of the Revenue Bill.

I appeal to Members once again to consider the revenue and expenditure proposals in the Budget in their entirety, to evaluate their fiscal effects in overall terms and, in particular, to have regard to the relevant provisions of the Basic Law covering the enactment of the annual Budget. Raising the level of taxes or government charges is never an easy decision, but I hope Members will agree that overcoming fiscal deficits is a collective responsibility and a common objective of both the Administration and this Council. I urge Members to support all the proposed revenue-raising measures, in the overall interests of Hong Kong.

We shall deal separately with the proposal to levy a land and sea departure tax. We will proceed carefully and take account of the views put forward by Members and other sectors of the community. But I must say that nothing we have heard so far has diminished the justifications we have advanced in pursuing this tax. We need to raise our revenue base. As Dicken's famous syllogism goes: "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery". This echoes the traditional wisdom which my mother shared with me when I was eight. Income from possible sale of assets can only provide temporary relief. We cannot rely on this to meet recurrent deficits. Nor should we employ debt financing for the same purpose. Whilst the Government has not absolutely ruled out borrowing as a source of revenue, seeking to raise debt in the present circumstances is likely to provoke an unfavourable market reaction and to create added worries in our community about the state of Hong Kong's economy. And the fact is that we do not need debt financing at this time. In conclusion, let me say that 1999 is a critical year for Hong Kong. It will be a year full of challenges. It will also be a year of opportunities. We should now all work hard together and concentrate on helping our community to recover from the recession. We must overcome the difficulties ahead. We must explore new avenues of activity. We must go on creating more jobs. Let us set aside our differences and strive together to give of our very best to the community. Together, let us set Hong Kong on the course to recovery.

It will soon be the Easter holidays. I am glad to report that as of today the Commissioner of Inland Revenue has issued all the 1.5 million tax rebate cheques, and many families and businesses can now look forward to the holidays in a much happier mood. If those Members who have reservations over the Budget could be persuaded to change their mind, that would be the best Easter gift of all for me. Thank you, Madam President.

MR MARTIN LEE: Madam President, may I ask for a short adjournment of about 15 minutes to enable Members of the Democratic Party to discuss how we would vote on the Second Reading of the Appropriation Bill 1999?

PRESIDENT(in Cantonese): Mr Martin LEE has asked for a short adjournment of about 15 minutes to enable Members of the Democratic Party to discuss how they would vote on the Second Reading of the Appropriation Bill 1999. I accept Mr Martin LEE's request. Council will now suspend for 15 minutes.

5.25 pm

Meeting suspended.

5.42 pm

Council then resumed.

PRESIDENT(in Cantonese): I now put the question to you and that is: That the Appropriation Bill 1999 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.

(Members raised their hands)

PRESIDENT(in Cantonese): Does any Member wish to claim a division?

(No Member responded)

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

CLERK (in Cantonese): Appropriation Bill 1999.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Committee stage. Council is now in Committee.

APPROPRIATION BILL 1999

CHAIRMAN (in Cantonese): We are to consider the Schedule first in accordance with Rule 68 of the Rules of Procedure. I now propose the question to you and that is: That the sums for the following heads stand part of the Schedule.

CLERK (in Cantonese): Heads 21 to 31, 35, 37, 39, 40, 42 to 48, 50, 51, 53, 55, 56, 58, 60, 62, 63, 70, 72, 73, 74, 76, 78, 80, 82, 90, 91, 92, 94, 96, 98, 100, 106, 110, 112, 114, 115, 116, 118, 120, 121, 130, 136, 142 to 153, 160, 162, 163, 166, 168, 170, 173 to 177, 180, 181, 184, 186, 188, 190 and 194.

CHAIRMAN (in Cantonese): Does any Member wish to speak? Please raise your hand 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 sums for the heads stated stand part of the Schedule. Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

Miss Cyd HO rose to claim a division.

CHAIRMAN (in Cantonese): Miss Cyd HO has claimed a division. The division bell will ring for three minutes.

CHAIRMAN (in Cantonese): Will Members please proceed to vote. (Nothing was shown on the computer monitor)

CHAIRMAN (in Cantonese): What happened? I believe computers also love to play games. (Laughter) Now it works. Will Members please register their presence by pressing the "present" button and then proceed to vote.

CHAIRMAN (in Cantonese): Before I declare that the voting shall stop, are there any queries? Voting shall now stop and the result will be displayed.

CHAIRMAN (in Cantonese): Among the Members returned by functional constituencies, 26 are present and 26 are in favour of the motion; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 28 are present, 22 are in favour of the motion and five against it. Since ......

DR YEUNG SUM (in Cantonese): Point of order, Madam Chairman. This is a government motion, why should we count the votes separately?

CHAIRMAN (in Cantonese): Yes, Dr YEUNG Sum, you are absolutely right. Why has such a thing happened? I am sorry, I think we should make some corrections. Will Members please accept my apologies?

CHAIRMAN (in Cantonese): I think we could count the votes by hand. The result will now be displayed.

Mr Kenneth TING, Mr David CHU, Mr HO Sai-chu, Mr Edward HO, Mr Albert HO, Mr Michael HO, Dr Raymond HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Eric LI, Mr LEE Kai-ming, Dr David LI, Mr Fred LI, Dr LUI Ming-wah, Mr NG Leung-sing, Prof NG Ching-fai, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr MA Fung-kwok, Mr James TO, Mr CHEUNG Man-kwong, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Miss Christine LOH, Mr CHAN Kwok-keung, Miss CHAN Yuen-han, Mr Bernard CHAN, Mr CHAN Wing-chan, Mr CHAN Kam-lam, Mr Gary CHENG, Mr SIN Chung-kai, Mr Andrew WONG, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Dr YEUNG Sum, Mr YEUNG Yiu-chung, Mr LAU Kong-wah, Mr LAU Wong-fat, Mrs Miriam LAU, Mr Ambrose LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr Timothy FOK, Mr LAW Chi-kwong, Mr TAM Yiu-chung, Mr FUNG Chi-kin and Dr TANG Siu-tong voted for the motion.

Miss Cyd HO, Mr LEE Cheuk-yan, Mr LEUNG Yiu-chung, Mr LAU Chin-shek and Miss Emily LAU voted against the motion.

THE CHAIRMAN, Mrs Rita FAN, did not cast any vote.

THE CHAIRMAN announced that there were 54 Members present, 48 were in favour of the motion and five against it. Since the question was agreed by a majority of the Members present, she therefore declared that the motion was carried.

DR YEUNG SUM (in Cantonese): In accordance with Rule 49(4) of the Rules of Procedure, I move that in the event of further divisions being claimed in respect of the Appropriation Bill 1999, the Committee of the whole Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That in the event of further divisions being claimed in respect of the Appropriation Bill 1999, the Committee of the whole Council do proceed to each of such divisions immediately after the division bell has been rung for one minute. 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 two groups of Members present. I declare the motion passed.

CLERK (in Cantonese): Head 122.

MR JAMES TO (in Cantonese): Madam Chairman, I move that head 122 be reduced by $106,152,000 in respect of subhead 103, as set out in the paper circularized to Members.

Perhaps I need to explain what subhead 103 is. Head 122 refers to the Police Force, while subhead 103 refers to rewards and special services. It is very difficult for me to explain what it is. But why did I propose to reduce and delete this item? It is precisely because I do not know what this item is all about. It is not until I raised doubt recently that the Government expressed its willingness to write to Members to explain and I quote: "Expenditure under this item, including rewards and payments for informers and charges for procuring and maintaining some equipment, is confidential."

I can tell Members that I have been investigating this item for the past five years. The answers they gave me each year in response to my question were even shorter and simpler than the one I have this time around. They would only say: "This is a confidential item." But this time, they added: "...... rewards and payments for informers and charges for procuring and maintaining some equipment."

Honourable Members, I have been following up this item for numerous years. Why did I do something like that? Some colleagues of mine asked: Why do you need to resort to such a measure? I can tell Members that expenditure under this item has actually been maintaining at a $100 million-level over the past few years. In the olden days when the former Special Branch was still in place, the amount even reached $300 million to $400 million or an even higher figure. But since 1995, after the dissolution of the Special Branch, the relevant work was handed to the Security Wing, which needs to incur other expenses as well. I will come back to that later.

In today's Budget, the "rewards and special services " expenditure item has asked for more than $106 million, the sum I mentioned earlier. As far as the use of public funds is concerned, the Executive Council should account for and explain the use of expenses. Constitution-wise, the Legislative Council has, according to Article 73 of the Basic Law, the right as well as the responsibility to "examine and approve budgets" and "approve ...... public expenditure". Therefore, the Executive Council needs to be accountable to the Legislative Council by providing adequate information to satisfy Members that a certain item of expenditure is used meaningfully. This principle is most obvious and clear-cut.

Since a few years ago, I have, in examining the annual Budgets each year, asked the Government to provide basic information on manpower and expenditure on the rewards and special services item, as well as asking the Government whether it can provide Members with an outline of certain breakdowns. But there has been no development so far. What we have got are just some simple answers like it is confidential, it is inappropriate to publish the information and so on.

I believe Members will also agree that if we blindly vote in support of the Government not on a fully informed basis, we will fail to carry out the responsibilities that we, as Members of the Legislative Council, should fulfill in accordance with the Basic Law.

In previous Budget debates, I have described, more than once, this expenditure item as a black hole or a bottomless pit. Even Members in this Council find it impossible to understand what the item is all about. Over the past years, the Government has been turning a deaf ear to my requests for more basic information. It has never, in response to this issue, disclosed any information on a restricted basis or give any explanation in closed-door meetings. We are prepared even to sign Declarations of Secrecy before giving audience to explanation, but still it was unwilling to do so. As I have been keeping watch on security matters for many years, I fully understand that there is a need to keep the information confidential. I also understand what informer payments are and know very well that it is not possible to disclose and describe such subheads in detail with respect to how they were spent in a specific manner. But what I want to know is not an individual piece of information, information on an individual informer or some detailed confidential information. What I want to know is only the contents of some major breakdowns such as spending on manpower, equipment and so on. But the Government has refused to answer all these questions.

The $100 million requested by the Government is not a small sum of money. The Security Wing, for instance, which is responsible for collecting politically sensitive information, was allocated more than $120 million last year to support its establishment of 424 staff. The Technical Services Division, mainly responsible for monitoring telephone calls, spent more than $40 million last year. It has an establishment of 109 staff. But the amount of more than $160 million I mentioned just now is not included in the rewards and special services subhead. In other words, even an item employing more than 500 people for carrying out some extremely sensitive and confidential work and spending more than $160 million is not included in the amount of $100 million.

This is why I need to find out where this sum of money has been spent. Let me quote what the Secretary for Security said earlier: may be for buying some stuff or equipment or for fixing some installation. Subsequently, I made a thorough search and referred back to the information on spending made by such departments as the Police Force and the Independent Commission Against Corruption in procuring equipment. I can tell Members that some confidential spending, which is very important and sensitive to the Police Force, such as the expenditure subhead for the computer systems and security systems of the Witness Protection Unit and Security Wing as well as some radio systems are included in subhead 708 instead of subhead 103. Of course, Members might not understand what I mean when I mentioned such figures as 103 and 708. Actually, what I mean is equipment used for confidential purposes is not included in the $100 million item either. It is actually accounted as other expenses, with the amount involved ranging from a few million dollars to tens of millions of dollars. It was the situation from 1990 to 1997. I just cannot help asking why as much as $100 million was required. We might as well look at how a total of $100 million was used. In the era of the British Hong Kong Government, this subhead was actually expenditure by the Special Branch. Before 1995, even the Audit Department (now known as the Audit Commission) had absolutely no power to audit this sum of money.

Starting from 1 April 1999, the Police Force will implement a one-line vote as proposed by the Treasury and approved by us at Second Reading just now. According to the new measure, the Police Force will receive funding in one go for one year and it can decide how this provision will be used. After the allocation, the chances for this Council to scrutinize the Police Force's expenditure will be lessened and the transparency of how the money is spent will also be reduced.

I have no alternative but to decide to propose an amendment to remove the expenditure under subhead 103. I really find it very embarrassing for we, as Legislative Council Members, have been unable to secure basic information that can help us in vetting. I also find it impossible to fulfill our constitutional responsibilities. Perhaps some colleagues are worried whether my amendment, should it be passed, will affect the Police Force's ability to investigate and combat crime. I believe the reply given by the Government later will focus on this point. But I hope Members will understand that the Government can, at any time, apply to the Finance Committee for funding. As long as the Government takes note of Members' concerns and is willing to adopt an open and accountable attitude, I believe there is every possibility for us to hold discussions. After the proposal of this amendment, the Secretary for Security has at least written to Members stating that she hope to give closed-door explanation in a confidential manner ─ but please remember this ─ the Secretary is going to explain how she examines and monitors the expenses only. She is not going to explain the expenditure. I hope Members can understand that this is not the same as explaining the expenditure. The public might have such worries: Will the funding be used for political surveillance, be it at present or in future? Even if the funding is used for paying informers, will the informers be responsible for detecting crimes or used as political undercover agents? Will the funding be used for paying informers for doing some political surveillance work or for expenses related to this area? If this sum of money is to be paid for spying work, the Director of Audit can only ask such questions as: Have the spies performed satisfactorily in collecting information? Were the fees used in an appropriate manner? Has any political information been collected? But he will not consider whether this sum of money was used in an appropriate manner and whether what had been done was in line with public interests. He will only consider whether the money has been used in accordance with the Government's original target in a suitable manner. Even if he is to play a monitoring role, he will only monitor whether the money was used for achieving the target originally set by the Government, no matter how proper, ugly or dirty the target is.

Governments in other regions where democracy or the rule of law is respected will, in closed-door meetings, explain even budgets involving national defence and security to special teams made up by members of parliamentary assemblies who have signed secret acts. I just cannot help doubting is certain expenditure of the Police Force more confidential than confidential information on national defence and national security so that even explanations in closed-door meetings are not allowed? Are the authorities concerned inhibited from disclosing such information to Members even they have signed Declarations of Secrecy? As far as I can recall, the Government was willing to hold a closed-door briefing session for Members in the police headquarters to brief them on the work of such a confidential organ as the Security Wing a few years ago. There are in fact numerous ways for the Government to strike a balance between confidentiality and accountability. While holding closed-door meetings is one way of doing it, signing secret acts is another. The Government can even set up some committees with the involvement of Members. But the Government has been ignoring such requests completely.

A Member made some interesting remarks when I lobbied Members recently. He said: "James TO, even you will not believe this if someone says the Hong Kong Government is not doing any spying work or doing anything to safeguard territorial safety at the moment. The Government was only trying to make you sense the answer. Do you not think it is needless to do anything to safeguard territorial safety?" My answer is very simple. It is essential to safeguard territorial safety. But the Government has made no indication that it is going to do so. If the Government really has to do so, it should discuss with us in an open manner.

Under a regime where there is democracy and freedom, every country needs to safeguard its own national safety and has its intelligence organs. Both Hong Kong and China are no exceptions. But now the Secretary stated in her speech that no such work has been done. It is really surprising that she was even unable to answer such a basic question of whether there is any spending on manpower under this subhead. Why did she take this matter so seriously? Just now, I told Members that the Security Wing had more than 400 people and the Technical Services Division, which was responsible for eavesdropping, had more than 100 people. The Secretary also agreed that manpower in this area would incur spending of more than $160 million. But is there any manpower spending as far as the sum of $100 million is concerned? Of course, if her answer is "yes", Members will ask her what these people are doing. Will it be more confidential than the eavesdropping conducted by the Security Wing? If her answer is "no" and then she has to say "yes" in future, what is she supposed to do? I believe the consideration made by the Government must be very complicated. But in any case, if we approve funding in the absence of sufficient information, we will surely let the people of Hong Kong down because we have not had any idea of how the funds are going to be used in future. I hope Members can support my amendment. Even if they cannot do so, I hope they can express their concerns to the Government when they speak later. In doing so, it will prevent the Government from thinking that it has absolute power to make use of the funding no matter how dirty or extreme the purpose is, while Members have absolutely no idea as to how this sum of money is going to be used. I really hope that Members can express their concerns to let the Government know that it needs to, no matter whether the amendment is passed or not, discuss with Members so as to assure the public that this sum of money will be properly monitored as far as its use is concerned.

Mr James TO moved the following amendment:

"That head 122 be reduced by $106,152,000 in respect of subhead 103."

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

MRS SELINA CHOW (in Cantonese): Madam Chairman, I would like to express the views of the Liberal Party on the amendment moved by Mr James TO.

We think that security forces of the Government including the Police Force must have the right to maintain confidentiality or take confidential actions of a certain degree. We agree with Mr James TO that we, as Legislative Council Members, need to monitor the Government's utilization of funds and are responsible for finding out if the funds are appropriately and properly used.

Mr James TO has just said that Members will fail to fulfil the responsibilities conferred by the Basic Law on Legislative Council Members if they blindly vote in support of the Government without adequate information. However, this expression may also be true when put the other way around. If we blindly oppose or turn down any request for provision without adequate information, we will not know clearly how this will affect the operation of the Police Force. Certainly, we cannot be satisfied so easily. In fact, I am aware that the Secretary for Security has promised to brief us at a closed-door meeting. Therefore, we can surely perform our monitoring responsibilities fully at the said meeting.

Nevertheless, if we disapprove this appropriation merely because we do not have a chance to get the information we want through such a meeting so far, we may be being somewhat irresponsible. This may also give rise to some consequences which we may not wish to see, and the public may not accept the way we handle this.

But I agree that, at the closed-door meeting, we are duty-bound to ask the Government questions about the subheads as pointed out by Mr James TO so that we can know from these subheads how the provision is distributed and used. Although we understand that as the Director of Audit will audit the appropriation lest there is abuse or other situations to which Mr James TO has referred, we are indeed responsible for effecting adequate monitoring and asking the questions we should ask.

Therefore, we agree that a closed-door meeting should be called as soon as possible and we also hope that the Government will not place all sorts of obstacles at the meeting so that we can fully grasp the uses of the appropriation under various subheads. However, we will not support Mr James TO's amendment.

MR ERIC LI (in Cantonese): Madam Chairman, I would also like to express my views on this issue and I will focus on the general vetting or auditing criteria.

To a certain extent, I understand the worries expressed by Mr James TO just now. In respect of auditing in particular, if the Government gives us a universally applicable explanation concerning these expenditures, for instance, informer's fees and maintenance fees which are almost universally applicable, we will not know if the funds are used to prevent tax evasion, corruption or to catch "loafers".

What problems will be caused? In general auditing, we mainly consider three factors. First, the nature of expenditures. After we have understood the essence and nature of expenditures, we can then judge whether the expenditure amounts are reasonable and if it is reasonable for the expenditures to come under the public account. If we do not know the nature of expenditures, neither the Director of Audit, the Public Accounts Committee nor Legislative Council Members can judge if an expenditure of more than $100 million is too much or too little or if it is reasonable. We can only know that some people receive funds upon presentation of receipts but we do not know how they will use the funds. From the perspective of financial surveillance, this situation is really not satisfactory and the Government has not given us a satisfactory explanation.

However, I agree that some of the Government's work must be kept confidential. Therefore, provided that the Government can point out more clearly the difference between the nature of this expenditure and other items, and the reasons why it thinks that the amount is more or less reasonable, I think that Members should accept an explanation of such a general nature.

When making the final judgment, I find it acceptable for the Security Bureau to give us an explanation at a closed-door meeting and I absolutely welcome this arrangement. I also hope that the Financial Secretary's Budget can be approved as a whole. On the whole, some $100 million is not a large sum out of over $200 billion expenditures. To maintain the integrity of the Budget, I am inclined to support the approval of the Budget as a whole. Nevertheless, even if this expenditure item is approved with little ado this time, it does not mean that we will always handle it this way. I hope that it is a non-recurrent and one-off expenditure but I cannot guarantee this for I am not very sure. Or, if it is a recurrent expenditure, it still has to be submitted to the Legislative Council for approval next year.

MR CHEUNG MAN-KWONG (in Cantonese): Madam Chairman, I entirely understand the views expressed by Mr James TO and I support his request. I have worked with James in the legislature for many years and we joined the former Legislative Council at the same time, therefore, I know that he has been asking the same question for long but he fails to get an answer. A secret expenditure of $100 million is involved here.

Mr James TO has expressed his views very clearly. He does not oppose disclosing information on this $100 million to Members on a confidential basis. He does not oppose disclosing information on this $100 million secret expenditure to Members behind closed doors. He does not oppose disclosing information on this $100 million secret expenditure to Members after we have signed Declarations of Secrecy. He even does not oppose limited disclosure of information on this $100 million secret expenditure to Members. He even says that the Government only needs to disclose the breakdown and rounded-up amounts in respect of this $100 million secret expenditure. In the final analysis, he knows that these rounded-up amounts include the crucial informer's fees which is a recurrent expenditure and that it is necessary to purchase and maintain equipment. According to Mr James TO, as a team is tapping telephone calls, it will surely incur expenditures for a telephone should at least be purchased. In fact, he has been pursuing the question as to whether the Government will employ additional staff to conduct political surveillance on some bodies or people with this $100 million secret expenditure; but his question has not been answered. If these additional staff are really employed, Mr James TO is willing to accept the fact but he wants the Government to tell him that some money has been used for such a purpose. If he is told so, he will accept that it is an inevitable government activity regardless of whether it is called an activity to protect security or espionage.

Honourable colleagues, in this case, Mr James TO's request can actually boil down to this: As a Legislative Council Member asked to approve a budget, he requests the Government to tell him the basic information he should have before he can approve the Budget involving a $100 million secret expenditure. What is his fault? What fault do Members think he has?

We have good wishes and fancy misunderstandings on this matter. Mrs Selina CHOW and Mr Eric LI have good wishes and they ask the Government to tell us in at a closed-door meeting the breakdown and the rounded-up amount under each item. Mr James TO has the same wish. I hope that the Secretary for Security will later make changes to her remark. But so far, the requested closed-door meeting is meant to disclose how this amount is monitored but not the breakdown and rounded-up amounts. This is a perpetual confrontation between Mr James TO and the Security Bureau, and a knot at that. If the remarks to be made by the Secretary for Security later on will bring Mr James TO good news, he may consider otherwise and discuss with the Democratic Party again after consideration. But we do not want to have the fancy misunderstanding that we can get the kind of information which Mrs Selina CHOW and Mr Eric LI said they would like to have at the closed-door meeting. Or, after listening to my remarks, Members will agree that we should know the rounded-up amounts and breakdown and someone is performing some special duties. Therefore, in respect of this problem, the Secretary for Security should seek to dispel our doubts when she speaks, otherwise, it is wrong for the Government to urge Members to cast affirmative votes in a misunderstanding manner, to hold a closed-door meeting in a understanding manner and then step out of this door in a disappointing manner. Besides, it will increase Members' doubts.

On this matter, Members including Mr James TO doubt why the Government is not willing to discuss the question which has been asked for so many years. Today when information such as telephone tapping and informer activity has been disclosed, the Government is still not willing to answer if additional staff are employed to perform special duties. In this case, we can only think that there is a concealed void and black hole. It is very hard for the Government to ask the Democratic Party to approve or support this appropriation. How can we do so? Therefore, we are worried that the appropriation may be ambiguous and abused. We would rather clarify our position on this matter than fish in troubled waters in a confused manner. After we have clarified our position, we may approve this Bill but passing this Bill in a confused manner will only have an influence on our hands and the buttons we press. This should not happen.

We certainly understand that our duties as Members are to monitor public finance, therefore, Members should understand why I support Mr James TO's views, and I still hope that this argument can be offered in a fair manner. If we agree that this is the reason why Mr James TO wants to know the breakdown and rounded-up amounts, I call upon Members to support his amendment. If someone says that it will obstruct the work of the Police Force in protecting security if we access the information at a closed-door meeting after signing Declarations of Secrecy, I think we will agree that this remark is inappropriate. If Members agree that this is an inappropriate remark, we should then support Mr James TO's amendment. Thank you, Madam Chairman.

MISS EMILY LAU (in Cantonese): Madam Chairman, I speak in support of Mr James TO. Madam Chairman, I actually do not want to speak now for I would like to listen to the views of the Secretary for Security first. She has passed us something but I do not know what she will say in the end. Madam Chairman, you also know that we want to change the rules of the game so that after the mover of a motion has spoken, the Secretary concerned will speak before other Honourable Members. However, I will abide by the rules and act according to the rules of the game and I will not raise my hands to indicate a wish to speak after the Secretary has spoken. In fact, I know that if I do so, the Chairman will let me speak.

In any case, Madam Chairman, I support Mr James TO. As Legislative Council Members, we should be fully aware of the uses of funds before indicating our support or opposition. This is an unambiguous rationale. I regret that I have worked with Mr Eric LI in the Public Accounts Committee for many years but I do not quite understand the views he just expressed. He said that he would be satisfied so long as the Government could tell Members the difference between the nature of expenditures. His remarks have puzzled me. If we are satisfied so long as the Government can tell us the difference between the nature of expenditures, we may not really know how the Government spends the money. It is very important that we should have the highest degree of transparency.

I hope that the Secretary for Security will tell us when she responds if the parliamentary assemblies in other more civilized countries are like ours and do not let members know how the Government spends certain funds. If she can give us some examples, we will know that this is the practice in other countries and other democratic places that Members do not have the right to verify information that is so sensitive and we will be more convinced. The impression we have is that other similar assemblies allow their members to get such information although there may be some special measures or arrangements, but members will only verify the information after receiving it. If the Secretary knows that many countries deal with such sensitive information in a "black hole" manner, I would like to ask her to tell us so.

Madam Chairman, I do not accept the logic offered by Mrs Selina CHOW just now. According to Mr James TO, if we are not clear about the situation, we should not grant approval, otherwise, we will be irresponsible. I am really puzzled, Madam Chairman, and I really do not understand why Mrs Selina CHOW and Mr Eric LI said so.

Madam Chairman, we have actually been arguing over this issue for many years. In the past, I could understand why the former Government thought that the information was so sensitive for some funds might be used to keep watch on the Chinese Communist Party because Hong Kong was a British colony. Today, I do not know whom the Government is keeping watch on. In any case, as Members of this Council, we have our duties and we certainly need to know certain matters.

Madam Chairman, the Secretary for Security gave us a letter yesterday telling us that a briefing session behind closed doors would be held to give us more information. Members have mentioned various versions but I am not sure what information she is going to give. However, no matter what information she will give, we certainly can only vote after we have got the information. It is impossible for me to vote now. Can the meeting be adjourned now so that the briefing session can be held? If this is not possible, it is then also impossible for us to show our support now just because the Secretary has promised to hold a briefing session. It is not logical. I would like the Secretary to explain many issues to us. Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Mrs Selina CHOW, do you wish to elucidate on the part of your speech that has been misunderstood?

MRS SELINA CHOW (in Cantonese): I think just now Miss Emily LAU has oversimplified the logic in my speech. As a result, the logic in my speech is gone although it used to be there.

I believe I have made myself very clear when I spoke just now. That is to say, you are accusing us of giving our support blindly, but you are also blindly asking for cuts. You do not know what will happen after cuts are made. The point is not that we do not know how the sum of money will be spent, but that we do not know what will happen once the sum is reduced. This is what I want to say.

CHAIRMAN (in Cantonese): Secretary for Security, do you wish to speak?

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, the Government strongly opposes the amendment moved by Mr James TO, that is, head 122, the expenditure of the Hong Kong Police Force, be reduced by $106,152,000 in order to cut the expenditure on rewards and special services under subhead 103. The reason behind Mr TO's amendment is that he wants to obtain more information about the expenditure on rewards and special services. I would like to first state the Government's stance on the Rules of Procedure of the Legislative Council. With regard to those rules in the Rules of Procedure which are related to the application of certain Basic Law provisions to the operation of the Legislative Council, the Government does have reservations. Without prejudice to the Government's stance in this regard, I would like to expound our reasons for opposing the amendment.

First of all, as pointed out by Mr Eric LI just now, the Budget was compiled in its entirety and strived to cautiously strike a balance among all requests and interests. If, in pursuit of certain requests or interests, we damage that balance and delete a certain subhead of expenditure, it is a wrong way of doing things. I would also like to emphasize that rewards and special services are very important to the investigation and detection work of the police, and it is at the same time essential to the maintenance of law and order. By reducing that subhead of expenditure, the police's ability to fight crimes will be seriously undermined. To obtain more information by means of such an approach is tantamount to ignoring public interests.

In fact, the performance of the Police Force is widely recognized. In 1998, although the overall crime rate slightly rose, it was still on the low side and actually the lowest in 25 years except 1997. From the excellent performance of the Police Force in the past and its efforts to promote a service culture in recent years, we can well see that our Police Force is a professional law enforcement team which strictly abides by the rule of law and endeavours to combat crime in order to make Hong Kong a city safe and happy to live and work in. While we should be proud that we have such a superb Police Force, the Police Force also need the support and trust of the community for their work. As the mouthpiece of the people, Legislative Council Members should encourage and build up this kind of trust relationship between the police and the community. But, unfortunately, Mr TO's amendment just runs counter to this aspiration.

Mr TO insists that the Government should be accountable to the Legislative Council for the use of public money. We absolutely agree to that. In fact, the Public Finance Ordinance and the Audit Ordinance have already fully guaranteed our doing so. However, because the activities involved under rewards and special services are of a confidential nature, so, before disclosing such information, we must strike a reasonable balance between the principles of accountability and confidentiality. The expenditures on rewards and special services are subject to a set of very stringent controlling procedures. It is definitely not spent in a "blackhole" mode of operation as alleged by Mr TO. However, in order to avoid affecting the police's work of crime investigation, we are unable to disclose the details of the expenditures. Trying to obtain such information by means of an amendment is, as we see it, coercing us into doing the impossible.

We have repeatedly pointed out that the expenditures under the subhead of rewards and special services is of a confidential nature which include cash reward, informer's fees and money for purchasing and maintaining certain equipment. The use, amount and approval of such funds have to adhere closely to an established set of procedures specified and authorized by the Finance Bureau. Before payment, the funds must be vetted by a designated senior officer. In vetting the payment, the designated officer has to be convinced that the spending is appropriate and the funds have to be classified under rewards and special services which are confidential and of which the usage cannot be made public. The designated officer is allowed to approve funds only within a certain limit. Other than being monitored by a stringent set of internal vetting procedures, the funds for rewards and special services must also be audited by the Director of Audit every year. Therefore, Members can well rest assured that the expenditures under this subhead is definitely spent by the Police Force on maintaining law and order.

Neither do I agree that, under the one-line vote system, the transparency of the Police Force will decrease. In the Finance Committee meeting on 4 December, the Government already stated clearly that, under this new scheme, the transparency and accountability of using public money will not be hampered. The Government has also accepted Members' views to add two extra safeguards to the one-line vote system. First of all, as in the past, we will provide the same information in the Budget under subheads; secondly, the Government also undertakes to submit quarterly financial reports to the Finance Committee stating all the actual expenditures and fund adjustments in the form of subheads.

Besides, Mr TO pointed out in his letter to Members that, earlier on, the Legislative Council had voted provisional funds and therefore the amendment will not put the Police Force in instant crisis. This is not true. On 10 March, the Legislative Council passed the resolution under the Public Finance Ordinance for expenditure on the services of the Government in the interim period between 1 April 1999 when the new financial year commences and before the day the Appropriation Bill 1999 is approved. In moving the resolution for passage, the Secretary for the Treasury already pointed out clearly that the effect of the resolution will be pre-empted by the Appropriation Bill 1999 once it is approved. In other words, if the amended and approved Appropriation Bill 1999 deletes the funds allocated to the Police Force under the subhead of rewards and special services, the police will immediately lose the entitlement to the funds. As a consequence, the normal maintenance of law and order by the police will be seriously affected. I hope Honourable Members will think twice about that.

However, in view of Mr TO's concern with the funds, we are willing to hold a closed-door meeting to brief Members on the monitoring mechanism of the funds and provide Members with more information. Just now I also noted certain Members' point that this proposal of ours might merely be a "fancy" misunderstanding because some Members might still find it inadequate if we only explain the monitoring mechanism of the funds under this subhead. I would like to clarify a few points here. Firstly, when Mr TO spoke earlier, I was pleased to hear he had noticed that the information provided by us this year is actually more than those of the last few years. In other words, there has been improvement. In fact, I think this is very meaningful because any government in the world has the responsibility to protect information of a more sensitive nature.

Just now both Mr TO and Miss Emily LAU said that they hoped I could explain how certain overseas governments deal with such matters. Mr TO always cites the practice of the United States Government, saying that the congressmen there have the responsibility and power of monitoring the use of public money after signing a secrecy order. In fact, we have made many studies on the arrangements of enhancing transparency and accountability in various democratic countries. In the United States, for example, although the members of some congressional committees have certain monitoring powers, they are actually subject to a lot of safeguards. These safeguards do not only include the signing of secrecy orders as mentioned by Mr TO (of course, a person has to undertake the criminal liability if he discloses confidential information after signing the secrecy order), but there are also other safeguards as far as I know. For example, the congressmen concerned must undergo an in-depth integrity check. In other words, when a government is to make public certain sensitive information, it must consider detailedly, prudently and thoroughly what safeguards should be put in place, as well as what ways should be adopted to enhance transparency and accountability.

I have recently discussed this issue with a parliament member of a democratic country who visited Hong Kong. The work of this parliament member is similar to that of the Chairman of the Legislative Council's Panel on Security, which is responsible for monitoring security, intelligence and national defence. He told me that, in his country, the information obtainable by the parliament is in fact very limited because of two reasons: firstly, every government is duty-bound to protect the government, including the protection of certain confidential information; secondly, both parliament members and the public ought to have a certain degree of trust in the government unless serious misconduct on the part of the government is exposed, but this is not the case in Hong Kong. As I said a moment ago, the good performance of the Hong Kong Police Force is widely recognized.

I can also assure Mr TO that the police has not placed the political activities he mentioned earlier under surveillance or suppressed such activities. The funds will not be used in this way. As for how transparency can be enhanced in the future, I can only say now we will definitely hold dialogues with Members in future. As certain Members said just now, this is not a one-off expenditure but a recurrent one. We will still be discussing this in the Legislative Council next year and we will still be facing the same problem. I can assure Members that there will be dialogues and I hope that we can study the issue together in order to find out how to enhance the accountability of such confidential work in the long run.

Lastly, I would like to reiterate that it is indeed tantamount to casting a vote of no confidence in the Police Force if Mr TO's amendment is carried. This will not only deal a blow at the morale of the police, but will also cripple the police's ability to fight crime and maintain Hong Kong's law and order. The consequence will definitely be grave. In their speeches, many Members also saw that the enhancement of transparency and the approval of the funds are two different issues. The enhancement of transparency is more long-term and sensitive which we have to spend more time to study and discuss with Members. However, if Members do not approve the funds, this important task of the police will soon be paralysed. Therefore, I hope Members will take the interests of the whole into account and vote against Mr TO's amendment, so that the Police Force can continue to employ the funds under rewards and special services to maintain public order and stability in Hong Kong. Thank you.

CHAIRMAN (in Cantonese): Mr James TO, please make your reply after Dr LEONG Che-hung has spoken.

DR LEONG CHE-HUNG (in Cantonese): Madam Chairman, first of all, actually I do not want to speak on this issue very much, for I think we need to discuss many issues in detail as well. The Secretary for Security said that there was a chance where she could explain to us in detail at a closed-door meeting. I think that is a possible thing to do.

The Secretary for Security said that a balance should be struck between security and confidentiality. That is acceptable to me. But as the Chairman of the House Committee of the Legislative Council, there is one thing which is to me, totally unacceptable. That is, the Secretary said that we would be contravening the Basic Law if we were to do it that way. I think the argument stands on quite shaky grounds. For the amendment proposed by Mr James TO has been approved by your Honour, Madam Chairman. As to whether the Rules of Procedure of the Legislative Council is really in contravention of the Basic Law, it is still an inconclusive issue at this stage. If this is used as a reason to determine whether or not it is proper for Mr James TO to propose this amendment, then I would think that it is open to question. Thank you.

MR JAMES TO (in Cantonese): Madam Chairman, that is really a label which is too accusing. The Secretary said that I was coercing others to do something that they cannot, that I was negligent of public interest, and that I should take the overall situation into account. But then what is the overall situation? It is if Members cannot discharge their duties as prescribed by the Basic Law, they would be compelled to vote against it, they will be compelled to cancel this unknown item of expenditure, and that is the major principle they must adhere to. On the other hand, if the Secretary says, "Please trust me, please trust our Police Force," and if we are asked to put our trust blindly in something like this, then it is really coercing us to do something that we cannot do. And it is making the Members unable to discharge their duties under the Basic Law.

The Secretary proposes to hold a closed-door meeting. I am very surprised to hear that. If a closed-door meeting is held, some Members must be very happy. Why? For at last they can find a graceful way to back down. Quite a few Members have said to me that it would be useless to try to persuade them, for they have to support the Government. But they could not find any reasons to oppose me. Finally, they got a reason to do so when they received a letter a few days ago. I am not talking about Mr Eric LI or Mrs Selina CHOW. I am talking about another Honourable colleague. I raised the question last week but the Government was not listening. A few months ago when I returned to the Legislative Council, I had asked the Police Force to give me some specific figures on that. And on that occasion officials of the Treasury were also present. The request was not made all of a sudden so that they did not have the time to make a survey on that. This is far from the truth. The Government knows it perfectly well that I have been following up the issue for a few years and I am not posing a difficult question to them only today. I am not saying suddenly today that I have no confidence in the police. This is not what I mean at all. But please remember, before the handover, things were very confusing at that time. In addition to doing its own work, the Special Branch had to do the work of the Criminal Intelligence Department as well and vice versa. Some people would say, if this item of appropriation is not approved, will police efforts in combating crime be affected? Looking at the matter from another angle, do we not find that there is no clear-cut demarcation between the duties of these departments in the Police Force? Criminal investigation departments have informers and so do departments dealing with politics. The chairman, vice-chairman or the secretary general of a political party can be given say, $100,000 a month, and you will be given information. You can also make a subversion of the party if you want. As a matter of fact, intelligence organizations all over the world are doing this as well. So if you want me to draw a line between these, you should have done so in the first place.

Another point is the striking of a balance between confidentiality and accountability. I am pleased to hear that the Secretary herself has made some studies also. I hope that she will make more. For the time being, I shall not talk about what kind of personality checks have been made. Let me give an example. The Canadian intelligence department has released its latest report. That can be downloaded from the Internet and Honourable Members can have access to it. The report says that staffing expenses for this year are more than Canadian $99 million, the other expenses amount to more than Canadian $65 million. There are no expenses on equipment for this year. Financial situations like in 1992, 1993 and so on are also reported. Mind you, all these are obtained from the Internet and I do not have to sign any undertaking not to divulge the information. And that is how I can get specific figures on other countries. The report also lists out the number of bugging warrants issued. In 1994-95, 85 such warrants were issued and 130 renewed. Figures for 1995-96, 1996-97 and so on are also listed. They can all be obtained from the Internet.

I can also have access to the annual report of the British intelligence organization MI5. There is information on the resources used in 1990-91. 50% of the resources was used in counter-intelligence activities, 12.5% in dealing with subversive activities in the country, and 17.5% in activities against the IRA or other terrorist groups in the country. There is a chart showing the situation for 1995-96. And I can have access to all of these without having to sign any undertaking of confidentiality.

The Government has not changed its views on confidentiality and how to strike a balance between the needs of the former and those of accountability. In the past, since Hong Kong was a colony, the colonial government was always guarding itself against people not of their own race. But times have changed. Now the Hong Kong people are ruling Hong Kong. I have mentioned that I am not saying that we do not need any spending on national defence or security; every place needs to spend money in these areas. Because there must be places which other countries want to encroach upon and spies must be caught as well. But the question now is that our police are not doing anything like that and should our expenses in national defence or security enjoy a greater confidentiality than expenses in other areas?

Further, I would certainly hope that Article 23 of the Basic Law had not been enacted. It would even be better if this provision were repealed. But if this provision is really to be enforced, then there would be a similar $100 million appropriation every year. I wish to continue with this lobbying in future so that Members would come to know that the situation is not a great issue and so they will be able to know what to do next year. If Article 23 of the Basic Law is enforced, the people of Hong Kong and the international community will ask whether a balance of all relevant considerations has been struck in the interest of confidentiality. If it is said that our Police Force do not engage in this kind of work, I hope that the authorities will try to boost confidence in the public and let them have sufficient access to information despite the need to safeguard confidentiality or as required under other special conditions. I wish I could tell you in an upright manner that our police have not done such a dirty thing, but to date, I have not been able to say such a thing.

Honourable Members are of course free to vote for or against my amendment, but I really hope that more Members will become concerned about this issue, for over the past few years, I have been working very much alone in this cause. I am willing to share with Members information on this, though some Members may say that they do not want to know that much. They even ask me not to tell them about this. May I point out here that we must discharge our constitutional duties. Please give more thoughts on this. As for the Government, I earnestly hope that beginning with today, it will pay greater attention to issues related to this appropriation request, the legislation on bugging, and the question of who is going to enforce Article 23 of the Basic Law. And I would like to see a more proper balance of all considerations involved.

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the amendment moved by Mr James TO be passed.

Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

Mr James TO rose to claim a division.

CHAIRMAN (in Cantonese): Mr James TO has claimed a division. The division bell will ring for one minute.

CHAIRMAN (in Cantonese): Will Members please proceed to vote.

CHAIRMAN (in Cantonese): Before I declare that the voting shall stop, would Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr Michael HO, Mr CHEUNG Man-kwong, Mr SIN Chung-kai and Mr LAW Chi-kwong voted for the amendment.

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Dr Raymond HO, Mr Eric LI, Mr LEE Kai-ming, Dr LUI Ming-wah, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Dr LEONG Che-hung, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU, Mr Timothy FOK, Mr FUNG Chi-kin and Dr TANG Siu-tong voted against the amendment.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Mr James TO, Mr LEUNG Yiu-chung, Dr YEUNG Sum, Mr LAU Chin-shek, Miss Emily LAU, Mr Andrew CHENG and Mr SZETO Wah voted for the amendment.

Miss Christine LOH, Miss CHAN Yuen-han, Mr Gary CHENG, Mr Andrew WONG, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr David CHU, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung and Mr Ambrose LAU voted against the amendment.

THE CHAIRMAN, Mrs Rita FAN, did not cast any vote.

THE CHAIRMAN announced that among the Members returned by functional constituencies, 27 were present, four were in favour of the amendment and 23 against it; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 28 were present, 13 were in favour of the amendment and 14 against it. Since the question was not agreed by a majority of each of the two groups of Members present, she therefore declared that the amendment was negatived.

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That the sum for head 122 stand part of the Schedule. Does any Member wish to speak?

(No Member indicated a wish to speak)

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the sum for head 122 stand part of the Schedule. 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.

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the Schedule stand part of the Bill. According to Rule 68(4) of the Rules of Procedure, the question is not debatable. 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.

CHAIRMAN (in Cantonese): We are to consider the clauses of the Bill. I now propose the question to you and that is: That the following clauses stand part of the Bill.

CLERK (in Cantonese): Clauses 1 and 2.

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.

CHAIRMAN (in Cantonese): Council now resumes.

Council then resumed.

Third Reading of Bill

PRESIDENT (in Cantonese): Bill: Third Reading.

APPROPRIATION BILL 1999

FINANCIAL SECRETARY (in Cantonese): Madam President, the

Appropriation Bill 1999

has passed through Committee without amendment. I move that this Bill be read the Third time and do pass.

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

(Members raised their hands)

Miss Emily LAU rose to claim a division.

PRESIDENT (in Cantonese): Miss Emily LAU has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Members may wish to check their votes. If there are no queries, voting shall now stop.

PRESIDENT (in Cantonese): The result will be displayed.

Mr Kenneth TING, Mr James TIEN, Mr David CHU, Mr HO Sai-chu, Mr Eward HO, Mr Albert HO, Mr Michael HO, Dr Raymond HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Eric LI, Mr LEE Kai-ming, Mr Fred LI, Dr LUI Ming-wah, Mr NG Leung-sing, Prof NG Ching-fai, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr MA Fung-kwok, Mr James TO, Mr CHEUNG Man-kwong, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Miss Christine LOH, Mr CHAN Kwok-keung, Miss CHAN Yuen-han, Mr Bernard CHAN, Mr CHAN Wing-chan, Mr CHAN Kam-lam, Dr LEONG Che-hung, Mr Gary CHENG, Mr SIN Chung-kai, Mr Andrew WONG, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Dr YEUNG Sum, Mr YEUNG Yiu-chung, Mr LAU Kong-wah, Mr LAU Wong-fat, Mrs Miriam LAU, Mr Ambrose LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr LAW Chi-kwong, Mr TAM Yiu-chung, Mr FUNG Chi-kin and Dr TANG Siu-tong voted for the motion.

Miss Cyd HO, Mr LI Cheuk-yan, Mr LEUNG Yiu-chung, Mr LAU Chin-shek, and Miss Emily LAU voted against the motion.

THE PRESIDENT, Mrs Rita FAN, did not cast any vote.

THE PRESIDENT announced that there were 54 Members present, 48 were in favour of the motion and five against it. Since the question was agreed by a majority of the Members present, she therefore declared the motion was carried.

CLERK (in Cantonese): Appropriation Bill 1999.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will resume the Second Reading debate on the Adaptation of Laws (No. 4) Bill 1998.

Under Rule 21(4) of the Rules of Procedure, I have permitted Mr Andrew WONG, Chairman of the Bills Committee on the Adaptation of Laws (No. 4) Bill 1998, to address the Council on the Committee's Report.

ADAPTATION OF LAWS (NO. 4) BILL 1998

Resumption of debate on Second Reading which was moved on 11 November 1998

MR ANDREW WONG: Madam President, as Chairman of the Bills Committee on Adaptation of Laws (No. 4) Bill 1998, I wish to report on the main deliberations of the Bills Committee.

The Bill was introduced into the Legislative Council on 11 November 1998. It seeks to adapt the Legal Officers Ordinance, the Legal Practitioners Ordinance and its subsidiary legislation and related ordinance, and the Official Solicitor Ordinance to bring them into conformity with the Basic Law and with Hong Kong's status as a Special Administrative Region (SAR) of the People's Republic of China.

The Bills Committee has carefully considered the Bill and sought clarifications from the Administration on a number of proposals in the Bill. For details, I would like to refer Members to the report of the Bills Committee presented to this Council. Today, I would only speak on two proposals which the Bills Committee has agreed to support after detailed discussion and deliberation.

The first proposal is related to the rights and duties of the Secretary for Justice. The Bill proposes that all rights and duties which were exercisable and dischargeable by the former Attorney General immediately before 1 July 1997 under sections 5 and 6 of the Legal Officers Ordinance, except for those that are inconsistent with the Basic Law, shall on and after that date be exercisable by the Secretary for Justice. Some members are concerned that the proposal would have the effect of freezing the linkage between the rights and duties of the Secretary for Justice with those of the Attorney General of England as at 1 July 1997, thereby inhibiting any further developments in that area. In addition, it would be extremely difficult, as time lapses, to ascertain the rights and duties of the Secretary for Justice as they existed precisely at that point in time, that is, 1 July 1997.

Members have made a number of suggestions to deal with the matter. One suggestion is to codify the rights and duties of the Secretary for Justice. The Administration has explained that codification of common law principles is an extremely broad and complex question that has serious implications for major areas of existing laws (for example, contract and tort). The Administration is of the view that this falls outside the scope of the adaptation exercise.

Another suggestion is that the subject matter could be dealt with outside the present adaptation exercise, for example, by way of an amendment bill which could provide more scope and flexibility to address the concerns raised. The Administration has explained that the existing sections 5 and 6 of the Legal Officers Ordinance confer rights and powers on the former Attorney General of Hong Kong by reference, respectively, to the Attorney General and the Queen's Proctor in England. These rights and powers derive from both the common law and statutes in England. It is provided in Article 8 of the Basic Law that the laws previously in force in Hong Kong shall be maintained and subject to any amendment by the legislature of the SAR. Therefore, it will be inconsistent with the Basic Law if the powers of the Secretary for Justice would be dependent on a foreign legislature, namely, that of England. Furthermore, it is inconsistent with Hong Kong's status as a SAR, because the existence of the relevant references to Attorney General and Queen's Proctor in England is due to the fact that Hong Kong was a British colony prior to 1 July 1997. The Administration does not support the suggestion and opines that the two sections should be properly adapted as soon as possible.

On members' concern about the "freezing" effect of the proposed adaptation, the Administration has advised that as far as statutory rights of the former Attorney General under sections 5 and 6 of the Legal Officers Ordinance are concerned, rights based on the statutes in England cannot, after reunification, be amended by the British Parliament in such a way as to affect the Secretary for Justice's rights in Hong Kong. To that extent, they are frozen. But the Hong Kong legislature can amend those rights at any time. Proposed adaptation of the sections neither purport to prevent this nor could do so. The statutory rights are not, therefore, frozen as far as Hong Kong is concerned. With regard to the common law rights of the former Attorney General under these two sections, the fact that the Secretary for Justice is empowered to exercise the rights that were enjoyed by the former Attorney General immediately before reunification does not prevent the courts from developing those rights in the normal way.

Another adaptation proposal which members have had similar concern is section 3(3) of the Legal Practitioners Ordinance. The Bill proposes to repeal this section which deals with the jurisdiction of the court to admit persons to practise as a solicitor in the court. However, the Administration, having taken into account the views of the Hong Kong Bar Association, has subsequently proposed to introduce a Committee stage amendment to amend the section to provide that the court or any judge thereof may exercise the same jurisdiction as was exercisable immediately before 1 July 1997 by the then High Court or any judge thereof. A member points out that this replacement provision would lead to similar problems in that the jurisdiction of the court would be "frozen" as at 1 July 1997.

Members of the Bills Committee have different views on these two adaptation proposals. While concern has been expressed about the freezing effect of the proposed adaptations and whether the Administration's proposals have effectively changed the meaning of the existing laws, there is also the view that a less rigid approach should be adopted to deal with the present adaptation of law exercise as a "purist" approach would only give rise to arguments as to whether the adaptation principles have been strictly adhered to. Members who support the Administration's proposals consider that a line must be drawn between the present adaptation exercise and a law amendment exercise, and any issues which fall outside the scope of the present exercise could be pursued with the Administration separately and later on.

The Bills Committee has agreed to support the Administration's two proposals having taking into account two developments:

(a)On the rights and duties of the Secretary for Justice, the Hong Kong Bar Association has proposed that a footnote be inserted in the Bill to set out the repealed provisions which were the legal basis for the rights and duties of the former Attorney General prior to 1 July 1997. After discussing with the editor of the loose-leaf edition of the Laws of Hong Kong, the Administration has agreed to implement the proposal.

(b)The information provided by the Administration on how different common law jurisdictions (Singapore, Gambia, and Trinidad and Tobago) which were former British colonies dealt with similar provisions in their laws.

Madam President, the Bills Committee supports the Second Reading debate on the Bill be resumed today, subject to the Committee stage amendments to be moved by the Administration.

Thank you, Madam President.

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

(No Member indicated a wish to speak)

SECRETARY FOR JUSTICE (in Cantonese): Madam President, on 11 November 1998, I introduced the Adaptation of Laws (No. 4) Bill 1998 into this Council. The main purpose of the Bill is to adapt the provisions of three Ordinances 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.

I am grateful to the Honourable Andrew WONG, the Chairman of the Bills Committee, and to the members of the Committee, for their thorough consideration of the Bill. We have carefully considered the views of the members and have incorporated their helpful suggestions into the Committee stage amendments which I shall move later this afternoon.

One of the amendments deletes the adaptation of a military reference from the Bill, so that the reference can be adapted, together with other military references in a separate Adaptation of Laws Bill. The relevant amendment is to section 2 of Schedule 1 to the Bill.

Other amendments that I shall move are to ensure that a consistent approach is adopted in respect of the adaptation of certain terms. For instance, I shall move an amendment to section 7 of Schedule 1 to the Bill which will ensure that the word "Governor" is consistently adapted as "Chief Executive". I shall also move an amendment to section 1 of Schedule 3 in order that the term "Colonial Regulations" is consistently adapted as "Public Service (Administration) Order" with the term being properly defined.

The Bills Committee was concerned that the proposed repeal of section 3(3) of the Legal Practitioners Ordinance may impair the jurisdiction of the Court. While the Administration is of the view that the inherent jurisdiction of the Court would not be affected by that repeal, it considers that a replacement provision should be inserted to ensure that the jurisdiction of the Court is preserved. I shall, therefore, move an amendment to Schedule 2 to the Bill by deleting section 2 and substituting a replacement provision.

The other amendment that I shall move is a consequential amendment to a commencement provision. This is to ensure that relevant provisions will be deemed to have come into operation on 1 February 1999, the date on which certain provisions of the Mental Health (Amendment) Ordinance 1997 came into operation. The amendment is to clause 2(2) of the Bill.

Madam President, subject to the amendments that I shall move, I commend this Bill to Honourable Members for passage into law.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the Adaptation of Laws (No. 4) Bill 1998 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): Adaptation of Laws (No. 4) Bill 1998.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Committee stage. Council is now in Committee.

ADAPTATION OF LAWS (NO. 4) BILL 1998

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That the following clauses stand part of the Adaptation of Laws (No. 4) Bill 1998.

CLERK (in Cantonese): Clauses 1 and 3.

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): Clause 2.

SECRETARY FOR JUSTICE (in Cantonese): Madam Chairman, for the reasons I have explained earlier, I move that the clause be amended, as set out under my name in the paper circularized to Members.

Proposed amendment

Clause 2 (see Annex I)

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 and that is: That the amendment moved by the Secretary for Justice 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): Clause 2 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): Schedule 1.

SECRETARY FOR JUSTICE (in Cantonese): Madam Chairman, for the reasons I have explained earlier, I moved that the relevant sections be amended, as set out under my name in the paper circularized to Members.

Proposed amendment

Schedule 1 (see Annex I)

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 and that is: That the amendment moved by the Secretary for Justice 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): Schedule 1 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): Schedule 2.

SECRETARY FOR JUSTICE (in Cantonese): Madam Chairman, for the reasons I have explained earlier, I move that the relevant sections be amended, as set out under my name in the paper circularized to Members.

Proposed amendment

Schedule 2 (see Annex I)

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 and that is: That the amendment moved by the Secretary for Justice 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): Schedule 2 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): Schedule 3.

SECRETARY FOR JUSTICE (in Cantonese): Madam Chairman, for the reasons I have explained earlier, I move that the relevant sections be amended as set out under my name in the paper circularized to Members.

Proposed amendment

Schedule 3 (see Annex I)

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 and that is: That the amendment moved by the Secretary for Justice 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): Schedule 3 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.

PRESIDENT (in Cantonese): Council now resumes.

Council then resumed.

Third Reading of Bill

PRESIDENT (in Cantonese): Bill: Third Reading.

ADAPTATION OF LAWS (NO. 4) BILL 1998

SECRETARY FOR JUSTICE (in Cantonese): Madam President, the

Adaptation of Laws (No. 4) Bill 1998

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

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 4) 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): Adaptation of Laws (No. 4) Bill 1998.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will resume the Second Reading debate on the Adaptation of Laws (No. 6) Bill 1998.

Under the Rules of Procedure, I have permitted Miss Margaret NG, Chairman of the Bills Committee on the Adaptation of Laws (No. 6) Bill 1998, to address the Council on the Committee's Report.

ADAPTATION OF LAWS (NO. 6) BILL 1998

Resumption of debate on Second Reading which was moved on 11 November 1998

MISS MARGARET NG: Madam President, I rise to speak on behalf of the Bills Committee on Adaptation of Laws (No. 6) Bill 1998 of which I was elected Chairman.

The Bill aims at adapting 12 Ordinances and their subsidiary legislation which are related to government revenue in order to make them consistent with the Basic Law and the status of Hong Kong as a Special Administrative Region (SAR) of the People's Republic of China. All the Ordinances included in the Bill have already been adopted as laws of the SAR.

Although the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance have laid down how references in these Ordinances and their subsidiary legislation should be construed, the Administration considers that such references should not be retained in the Ordinances. Accordingly, the Administration has introduced the Bill to effect textual amendments to these Ordinances. When the adaptation amendments set out in the Bill are passed into law, they will take effect retrospectively as from the date of the establishment of the SAR.

As the report has set out in detail the deliberations of the Bills Committee, I will only speak on the main points of the Committee's deliberations.

Section 1 of Schedule 2 of the Bill proposes to amend the scope of the definition of transhipment in the definition of "export" under section 2(1) of the Dutiable Commodities Ordinance. Its effect is to expand the meaning of transhipment from one country to another to cover transhipment between two different places within the same country. Whilst the Bills Committee agrees that the proposed amendments can improve the text of the definition, it will effectively change the scope of the definition of transhipment. As the proposed amendments are neither related to the Basic Law nor necessitated by Hong Kong's new status as a SAR of the People's Republic of China, the Bills Committee is of the view that inclusion of the amendments in the Adaptation of Laws Programme is inappropriate. The Administration agrees with this view and will move a Committee stage amendment to delete the proposed adaptations from the Bill.

Regarding the proposed amendment in section 1 of Schedule 9 where reference to "Governor" under section 3(1) of the Tax Reserve Certificates Ordinance is proposed to be replaced by "Chief Executive in Council", the Administration has explained that references to "Governor", where they appear in the context of a power to make subsidiary legislation, will be replaced by "Chief Executive in Council" so as to tally with Article 56 of the Basic Law. In all other cases, the term "Governor" is to be adapted as "Chief Executive".

The Bills Committee has reservations on such a principle of adaptation and has made reference to the decisions of the Bills Committees on the Adaptation of Laws Bill 1998 and Adaptation of Laws (No. 2) Bill 1998 which were examining at the same time the guiding principles governing the Adaptation of Laws Programme. The two Bills Committees have subsequently come to a view with the Administration that all references to "Governor" would be adapted as "Chief Executive" irrespective of the character of instruments to be made by the Chief Executive. The Bills Committee on Adaptation of Laws (No. 6) Bill 1998 is in support of this decision, and the Administration has confirmed its intention to move a Committee stage amendment to this effect.

Having examined in detail the justifications provided by the Administration for the proposed adaptations and their practical implications, the Bills Committee supports the Bill and the Committee stage amendments to be moved by the Secretary for the Treasury.

Thank you, Madam President.

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

(No Member indicated a wish to speak)

SECRETARY FOR THE TREASURY: President, I am grateful to this Council for supporting the resumption of Second Reading debate of the Adaptation of Laws (No. 6) Bill 1998. I am in particular grateful to the Bills Committee and the Honourable Miss Margaret NG, Chairman of the Bills Committee, for the detailed scrutiny of the Bill.

The Bill aims at adapting 12 Ordinances and their subsidiary legislation which are related to government revenue in order to make them consistent with the Basic Law and the status of Hong Kong as a Special Administrative Region of the People's Republic of China.

I will move amendments to the Bill at the Committee stage to delete two sections from the Bill. These amendments have been agreed by the Bills Committee. I shall explain the amendments at the Committee stage.

President, I beg to move.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the Adaptation of Laws (No. 6) Bill 1998 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): Adaptation of Laws (No. 6) Bill 1998.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Committee stage. Council is now in Committee.

ADAPTATION OF LAWS (NO. 6) BILL 1998

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That the following clauses stand part of the Adaptation of Laws (No. 6) Bill 1998.

CLERK (in Cantonese): Clauses 1, 2 and 3.

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): Schedules 1, 3 to 8, 10, 11 and 12.

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): Schedule 2.

SECRETARY FOR THE TREASURY: Chairman, I move that section 1 of Schedule 2 to the Bill be amended as set out in my name in the paper circularized to Members.

The amendment seeks to delete the proposed adaptation amendments to the definition of "export" under the Dutiable Commodities Ordinance. Under this Ordinance, goods which are for export are excluded from the application of some of its provisions. In section 1(d) of Schedule 2 to the Bill, we originally proposed to replace "any country" and "another country" in the definition of "export" under the Ordinance by "a place outside Hong Kong" and "another place outside Hong Kong" respectively. The intention of the amendments was to enable goods which are exported from Hong Kong to the Mainland to continue to be covered by the definition and hence continue to be exempt from the application of some of the provisions of the Ordinance. The proposed amendments would also make references in the definition consistent with those for "transit cargo" under the Ordinance.

In the course of scrutinizing the Bill by the Bills Committee, the Department of Justice has further considered the present definition of the term and has concluded that based on the present construction, goods exported to the Mainland would already be covered, irrespective of whether the references to "any country" and "another country" are replaced. Although the original proposed amendments would also make the references in the definition of "export" consistent with those in "transit cargo", it may not be necessary to deal with such amendments under the adaptation of laws exercise. As such, we propose to delete from the Bill the amendments to the definition of "export" in Dutiable Commodities Ordinance.

Chairman, I beg to move.

Proposed amendment

Schedule 2 (see Annex II)

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 and that is: That the amendment moved by the Secretary for the Treasury 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): Schedule 2 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): Schedule 9.

SECRETARY FOR THE TREASURY: Chairman, I move that section 1 of Schedule 9 to the Bill be amended as set out in my name in the paper circularized to Members.

The amendment seeks to replace "Chief Executive in Council" with "Chief Executive", in place of "Governor" in section 3(1) of the Tax Reserve Certificates Ordinance. This ensures that a uniform approach is adopted in respect of the adaptation of the reference to "Governor" in our legislation.

Chairman, I beg to move.

Proposed amendment

Schedule 9 (see Annex II)

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 and that is: That the motion moved by the Secretary for the Treasury be passed. Will those in favour of the motion please raise their hands?

(Members raided 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): Schedule 9 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.

CHAIRMAN (in Cantonese): Council shall now resume.

Council then resumed.

Third Reading of Bill

PRESIDENT(in Cantonese): Bill: Third Reading.

ADAPTATION OF LAWS (NO. 6) BILL 1998

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, the

Adaptation of Laws (No. 6) Bill 1998

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

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 6) 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): Adaptation of Laws (No. 6) Bill 1998.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will resume the Second Reading debate on the Adaptation of Laws (No. 2) Bill 1998.

Under the Rules of Procedure, I have permitted Mr Andrew WONG, Chairman of the Bills Committee on the Adaptation of Laws (No. 2) Bill 1998, to address the Council on the Committee's Report.

ADAPTATION OF LAWS (NO. 2) BILL 1998

Resumption of debate on Second Reading which was moved on 14 October 1998

MR ANDREW WONG: Madam President, as Chairman of the Bills Committee on the Adaptation of Laws (No. 2) Bill 1998, I wish to report on the main deliberations of the Bills Committee.

The Bill seeks to adapt references in 12 Ordinances and their subsidiary legislation and bring them into conformity with the status of Hong Kong as a Special Administrative Region (SAR) of the People's Republic of China and with the Basic Law.

While most of the amendments are straightforward technical changes, some of the provisions proposed to be repealed or amended in the Bill may not be merely technical in nature. I shall highlight the more debatable ones.

The Bills Committee has discussed at length the proposed adaptation of reference to "Governor" to "Chief Executive in Council". The Administration's original approach was to identify every provision which confers a legislative function on the then Governor and to replace the reference to "Governor" by "Chief Executive in Council" in order to comply with the constitutional obligation under Article 56 of the Basic Law, namely, the Chief Executive's obligation to consult the Executive Council before making subordinate legislation.

In the view of the Administration, an instrument will have legislative effect if it has general application to the public or a significant sector of the public as opposed to individuals. For example, notices made under sections 4(1) and 4(2) of the Firearms and Ammunition Ordinance exempting a class or description of persons for the exemption from the prohibition of possession of arms and ammunition without licence have legislative effect and are therefore subsidiary legislation. The references to "Governor" in these sections should be replaced by "Chief Executive in Council". However, if notices made under these sections only relate to an individual person, they would not have legislative effect and hence may be made by the Chief Executive himself.

The Bills Committee has reservations about the amendments proposed by the Administration. The amendments, if adopted, may create anomaly because the Chief Executive may grant an exemption to any person by notice in the Gazette while the Commissioner of Police may grant such an exemption in writing to any person under the existing section 4(3). Members express reservations about the literal interpretation of Article 56 adopted by the Administration. Article 56 prescribes what the Chief Executive must do before making subordinate legislation. It does not necessarily mean that such a requirement has to be stated expressly in the relevant legislation of the ordinance. Members also express doubt about the Administration's rationale that an exemption notice concerning an individual does not have legislative effect and therefore it is not subsidiary legislation.

Having regard to the views of the Bills Committee, the Administration has then proposed to adopt a more mechanical approach, in fact, a wiser approach, in adaptations whereby all references to "Governor", in respect of making subordinate legislation and issuing administrative instruments, will be adapted to "Chief Executive". The Chief Executive's obligation to consult the Executive Council would be unaffected by such an approach. Where consultation has taken place, it will be reflected in the heading of the relevant subordinate legislation.

The Bills Committee accepts the new approach. The new approach would avoid the need to decide in the context of the adaptation of laws exercise the classification of a particular instrument as subordinate legislation or otherwise. The Administration agrees to move Committee stage amendments to this Bill and all other adaptation of laws bills which contain amendments replacing "Governor" by "Chief Executive in Council" to effect the new approach. In fact, the Administration has done so for the Adaptation of Laws (No. 6) Bill 1998 just a moment ago.

On the proposed deletion of the phrase "in accordance with the requirements of the British Pharmacopoeia" from the definition of "medicinal opium" in section 2(1) of the Dangerous Drugs Ordinance, the Bills Committee queries how the phrase in question is inconsistent with the Basic Law or with the status of Hong Kong as a SAR. Madam President, the Committee is concerned whether the proposed amendment is within the scope of the adaptation of laws exercise.

The Administration explains that as the Dangerous Drugs Ordinance was enacted in the 1960s, the Administration is unable to trace the background for adopting the provision, but it is not unreasonable to believe that the requirements in the British Pharmacopoeia were then adopted because such requirements were internationally accepted and because of the status of Hong Kong as a British colony. While the British Pharmacopoeia is used as a reference for drugs manufactured in the United Kingdom, other national or regional pharmacopoeia are also used as a reference on the standard of "medicinal opium" from other countries or territories of origins. The proposed deletion would more accurately reflect the existing practice of the Department of Health in deciding whether or not raw opium is for medicinal use.

In response to members' suggestion that some standard should be incorporated in the definition of "medicinal opium" for the purpose of certainty and clarity, the Administration proposes a Committee stage amendment to replace the phrase in question by "in accordance with the requirements of the European Pharmacopoeia or the United States Pharmacopoeia".

Having considered the Administration's explanation and given the amendment is a minor one, the majority of members of the Bills Committee support the Committee stage amendment and accept it as within the scope of the adaptation of laws exercise.

A member, however, does not support the proposed amendment to be dealt with in the context of adaptation. She considers that the adoption of the requirements in the British Pharmacopoeia was not necessarily because of the status of Hong Kong as a British colony. Any amendment to the existing legislation to reflect the practice of a government department is beyond the scope of the adaptation of laws exercise. I personally share her view.

On the proposed repeal of the existing section 41 of the Crimes Ordinance, the Administration explains that as provided under Article 63 of the Basic Law, the Department of Justice of the SAR shall control criminal prosecutions, free from any interference. While it does not take away the right of private prosecution, it confers, in the view of the Administration, on the Secretary for Justice an independent power of prosecution within the limits of high degree of autonomy enjoyed by the SAR. Section 41 empowers a judge or a magistrate to order the prosecution of a person who in the opinion of the judge or magistrate has been guilty of perjury. This section in effect compels the Secretary for Justice to prosecute a person once the court so orders. As such, it encroaches on the power of the Secretary for Justice to decide independently whether to prosecute a person for the said offence or not. The Administration, therefore, considers that apart from its being obsolete, section 41 is inconsistent with Article 63 and should be repealed in the adaptation of laws exercise.

The majority of members accepts the explanation given by the Administration and supports the repeal of section 41 in the adaptation of laws exercise. A member is of the view that section 41 should be repealed on the ground of its obsolescence but not on the ground that it is inconsistent with Article 63. She does not support the proposed repeal in the current exercise. I personally also share her view.

Madam President, the Committee stage amendments to be moved by the Secretary for Security later on today have the support of the Bills Committee.

Thank you, Madam President.

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

MISS MARGARET NG: Madam President, I had wanted to make general observations on the adaptation of laws exercise rather at an earlier part of this meeting. However, not having been able to return on time, I missed my opportunity. Perhaps, I would look for another opportunity of doing so.

At this stage, I would just like to identify myself with those dissenting views expressed in the speech of the Honourable Andrew WONG. Madam President, I take this opportunity to thank the Administration for their enormous patience and open-mindedness in listening to the views expressed in the Bills Committee. Nevertheless, for the reasons stated in Mr Andrew WONG's report, I will not support the Administration's amendment with respect to the Dangerous Drugs Ordinance relating to "medicinal opium" and also with respect to section 41 of the Crimes Ordinance. In the first case, I do not take the view that the reference to "British Pharmacopoeia" was due to colonialism, although I do agree that it is a better idea to amend it as "the European Pharmacopoeia or the United States Pharmacopoeia" in order to reflect more accurately the present practice. As far as section 41 is concerned, the Hong Kong Bar Association also takes the view that this does not conflict with Article 63 of the Basic Law, although we do agree that the section may be removed because it is obsolete. However, as it falls outside the exercise of adaptation, Madam President, I will vote against it.

Thank you, Madam President.

SECRETARY FOR SECURITY (in Cantonese): Madam President, the Adaptation of Laws (No. 2) Bill 1998 seeks to effect adaptations to seven Ordinances relating to criminal offences 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.

I wish especially to thank the Honourable Andrew WONG, Chairman of the Bills Committee, and other members of the Committee for their detailed and efficient scrutiny of the Bill. They have scrutinized very meticulously all the items in the various Schedules and put forward a number of proposals to improve the Bill. I shall move several amendments at the Committee stage. All these amendments have been discussed in the Bills Committee and received members' support.

Madam President, I commend the Adaptation of Laws (No. 2) Bill 1998 to this Council, and the relevant amendments which I shall move with detailed explanations at the Committee stage later on.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the Adaptation of Laws (No. 2) Bill 1998 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): Adaptation of Laws (No. 2) Bill 1998.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Committee stage. Council is now in Committee.

ADAPTATION OF LAWS (NO. 2) BILL 1998

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That the following clauses stand part of the Adaptation of Laws (No. 2) Bill 1998.

CLERK (in Cantonese): Clauses 1, 2 and 3.

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): Schedules 4, 5, 6, 9 to 12.

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): Schedules 1, 2, 7 and 8.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move that the definition of "Conventions" in paragraph (b) of section 1 of Schedule 1 be amended, as set out in the paper circularized to Members. The four conventions as described in paragraphs (a) to (d) under the definition of "Conventions" have now been replaced by the Single Convention on Narcotic Drugs [that is paragraph (e)], and before the reunification of Hong Kong to China, the Joint Liaison Group agreed that paragraph (e) will continue to apply to Hong Kong. Therefore, in addition to repealing paragraphs (a) to (d) under the definition of "Conventions", "(a), (b), (c), (d)," in paragraph (i) shall also be accordingly repealed.

Madam Chairman, I move that the definition of "medicinal opium" in paragraph (c) of section 1 of Schedule 1 be amended, by repealing "British Pharmacopoeia" and substituting "European Pharmacopoeia or the United States Pharmacopoeia" as set out in the paper circularized to Members. We have agreed to this amendment after considering the views of Members. The purpose of this amendment is to lay down a clear standard on "medicinal opium" by repealing "British Pharmacopoeia". At present, places like Britain, the United States, Canada and Australia which supply "medicinal opium" have all adopted standards laid down in the European Pharmacopoeia or the United States Pharmacopoeia, therefore, the proposed amendment is in line with the existing operations. All in all, the standards of the European Pharmacopoeia and the United States Pharmacopoeia is quite high, therefore, the effectiveness of this drug will be guaranteed.

Proposed amendment

Schedule 1 (see Annex III)

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 and that is: That the amendment moved by the Secretary for Security be passed.

Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

CHAIRMAN (in Cantonese): Does any Member wish to claim a division?

(No Member responded)

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

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move that section 6 of Schedule 1, section 9(b) of Schedule 2, sections 3, 4 and 5 of Schedule 7, and sections 1, 2, 4(a), 5, 7, 8 and 9 of Schedule 8 be amended, as set out in the paper circularized to Members. These amendments reflect that the Administration has proposed to adopt a rather "mechanical" approach in the adaptation of laws exercise in dealing with the term "Governor" and substituting all references to it by "Chief Executive". The second paragraph of Article 56 of the Basic Law provides that the Chief Executive shall consult the Executive Council before making subordinate legislation. Since there is such an requirement in the Basic Law, it is originally proposed that if the "Governor" is granted the power by any provisions of the principal legislation to make subordinate legislation, then all references to "Governor" should be substituted by "Chief Executive in Council". However, since it may not always be possible to clearly differentiate whether certain documents belong to the category of subordinate legislation, such an amendment will give rise to disputes which will be difficult to settle. The Administration, therefore, proposed to substitute all references to "Governor" by "Chief Executive", regardless of the fact whether the enactment of subordinate legislation is involved, to facilitate the smooth implementation of the adaptation of laws exercise. However, when the Chief Executive exercises his power to enact subordinate legislation, the title of the subordinate legislation will specify that it is enacted in consultation with the Executive Council in accordance with the provisions of the second paragraph of Article 56 of the Basic Law.

Proposed amendments

Schedule 1 (see Annex III)

Schedule 2 (see Annex III)

Schedule 7 (see Annex III)

Schedule 8 (see Annex III)

CHAIRMAN (in Cantonese): Members, as I would like to clarify certain points in relation to the amendments just moved by the Secretary of Security, I declare that the meeting will be suspended for 10 minutes and be resumed after I have dealt with that problem.

7.38 pm

Meeting suspended.

7.50 pm

Council then resumed.

CHAIRMAN (in Cantonese): Members, I would like to explain what happened just now.

Just now, in moving to repeal four conventions in the definition of "Conventions", the Secretary for Security also moved to repeal "British Pharmacopoeia" in the definition of "medicinal opium", and substitute it by "European Pharmacopoeia", and we have put the motion to vote. However, I was a bit doubtful whether the Secretary for Security had actually moved an amendment to the definition of "medicinal opium", so I suspended the meeting in order to review the video tape; I then found that the Secretary had actually said those few words of significance, and it means that she had "moved" the amendment, and we had put the motion to vote, therefore, the proceedings were in order.

We shall now continue with the meeting. Will Members please turn to page 27 of the script. The Secretary for Security has already moved an amendment to the Schedules to delete all references to "in Council". Does any Member wish to speak?

(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 Security 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): Schedules 1, 2, 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): Schedule 3.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move the amendments to the subheading and section 1 of Schedule 3 and the addition of new sections 1A and 2A to Schedule 3, as set out in the paper circularized to Members. I share the views of Members that in order to let the public be clearly aware of the scope of the adaptation of laws exercise in relation to the Crimes Ordinance under the Adaptation of Laws (No. 2) Bill 1998, we believe that the subheading of the Ordinance should be amended by adding (Parts III to XIII) after "Crimes Ordinance".

Section 1 of Schedule 3 amends section 20(1)(b) of the Crimes Ordinance by repealing "British ship" and substituting "Hong Kong ship". However, under the existing Crimes Ordinance, the definition of "Hong Kong ship" is only applicable to section 20A to 20C, therefore, we agreed to Members' suggestions that the definition of "Hong Kong ship" should be extended to all references to "Hong Kong ship" in section 20. Therefore, we suggest to add the definition of "Hong Kong ship" to section 19A of the existing Crimes Ordinance so that the definition applies to all provisions in Part III ( that is, sections 19A to 23C), and repeal the definition which is repeated in section 23A.

Proposed amendment

Schedule 3 (see Annex III)

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 and that is: That the amendment moved by the Secretary for Security 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.

CHAIRMAN (in Cantonese): Does any Member wish to speak on section 4 of Schedule 3?

(No Member indicated a wish to speak)

CHAIRMAN (in Cantonese): I now put the question to you and that is: That section 4 of Schedule 3 stand part of the Bill. Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

CHAIRMAN (in Cantonese): Does any Member wish to claim a division?

(No Member responded)

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

CHAIRMAN (in Cantonese): Schedule 3 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.

CHAIRMAN (in Cantonese): Council now resumes.

Council then resumed.

Third Reading of Bill

PRESIDENT (in Cantonese): Bill: Third Reading.

ADAPTATION OF LAWS (NO. 2) BILL 1998

SECRETARY FOR SECURITY (in Cantonese): Madam President, the

Adaptation of Laws (No. 2) Bill 1998

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

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 2) 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): Adaptation of Laws (No. 2) Bill 1998.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will resume the Second Reading debate on the Adaptation of Laws (No. 3) Bill 1998.

Under the Rules of Procedure, I have permitted Miss Margaret NG, Chairman of the Bills Committee on the Adaptation of Laws (No. 3) Bill 1998, to address the Council on the Committee's Report.

ADAPTATION OF LAWS (NO. 3) BILL 1998

Resumption of debate on Second Reading which was moved on 11 November 1998

MISS MARGARET NG: Madam President, as Chairman of the Bills Committee on the Adaptation of Laws (No. 3) Bill 1998, I wish to report on the main deliberations of the Bills Committee.

The Bill seeks to repeal the Foreign Jurisdiction (Expenses) Ordinance, and the Smuggling into China (Control) Ordinance and its subsidiary legislation. In the opinion of the Administration, they are not in conformity with the status of Hong Kong as a Special Administrative Region (SAR) of the People's Republic of China.

As the Foreign Jurisdiction (Expenses) Ordinance is for the specific purpose of implementing the United Kingdom Foreign Jurisdiction Acts which have ceased to apply to Hong Kong, the Bills Committee supports the repeal of the Ordinance.

The Bills Committee has reservations about whether the proposed repeal of the Smuggling into China (Control) Ordinance is within the scope of the adaptation of laws exercise. The explanation of the Administration is that: the Ordinance and its subsidiary legislation were enacted in 1948 to give effect to an agreement between the then British Government and the then Chinese National Government for various measures to prevent smuggling between Hong Kong and China. However, the Import and Export Ordinance was enacted in 1972, and since then, smuggling offences have been dealt with under that Ordinance. The provisions under the Smuggling into China (Control) Ordinance have never been invoked with one exception, namely, the customary line as laid down in the Ordinance continued to be used as the reference line, where the mainland security patrol vessels are allowed access north of the line. However, following the promulgation of the boundary of the SAR by the State Council in its Order No. 221 on 1 July 1997, the customary reference line has become obsolete and the purpose of the Ordinance is spent.

The Administration takes the view that as the 1948 Agreement has not been ratified by the Central People's Government, it is irrelevant for Hong Kong after reunification and, therefore, the continued implementation of that agreement is incompatible with the status of SAR. It follows that the Ordinance which gives effect to that Agreement is likewise incompatible with the status of SAR from a policy point of view. From this perspective, the Administration considers that the proposed repeal of the Ordinance falls within the scope of the adaptation of laws exercise.

Members agree that the customary reference line is incompatible with the boundary of the SAR promulgated by the State Council, and therefore should be repealed. However, they do not agree with the rationale given by the Administration because apart from the long title of the Ordinance, none of the provisions makes reference to the 1948 Agreement. Moreover, most of the provisions in the Ordinance are obsolete mainly by reason of the enactment of the Import and Export Ordinance. Hence, although the Ordinance and its subsidiary legislation should be repealed, the majority view does not support the repeal under the adaptation of laws exercise. One member considers that the proposed repeal could be dealt with under the current exercise.

Having regard to the views of the Bills Committee, the Administration agrees to move amendments at the Committee stage to remove the proposed repeal of the Smuggling into China (Control) Ordinance and its subsidiary legislation from the Bill. The Administration will pursue the repeal outside this exercise.

Thank you, Madam President.

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

(No Member indicated a wish to speak)

SECRETARY FOR SECURITY (in Cantonese): Madam President, the Adaptation of Laws (No. 3) Bill 1998 was First read in the Legislative Council on 11 November 1998. The purpose of the Bill is to repeal Ordinances that are not in conformity with Hong Kong's status as a Special Administrative Region of the People's Republic of China. Two Ordinances are covered by the Bill. They are the Foreign Jurisdiction (Expenses) Ordinance and the Smuggling into China (Control) Ordinance and its subsidiary legislation. We are very grateful to members of the Bills Committee for the time they spent in carefully examining the Bill, and for the valuable advice they tendered to us.

The Foreign Jurisdiction (Expenses) Ordinance which we seek to repeal under this Bill was enacted in 1889. It provides for expenses in relation to persons who have been convicted, or acquitted on the ground of insanity before courts in any country or place out of "Her Majesty's dominions" under the United Kingdom Foreign Jurisdiction Acts. Since Hong Kong's reunification with China, United Kingdom Acts have ceased to apply to the Hong Kong Special Administrative Region (SAR). It follows that the Foreign Jurisdiction (Expenses) Ordinance should be repealed. We so propose under the current adaptation of laws exercise and this has received the support of the Bills Committee. We could not trace any record of expenses incurred under this Ordinance and we believe there is no need for a new legislation to be enacted to meet its original intent.

The second Ordinance covered by the Bill is the Smuggling into China (Control) Ordinance which was enacted in 1948 to give effect to an agreement between the then Chinese National Government and the British Government for various measures to prevent smuggling between Hong Kong and the Mainland. The agreement has never been ratified by the Central People's Government of the People's Republic of China, and in our view, become irrelevant to the SAR after the reunification. From a policy point of view, the continued implementation of that agreement through the Smuggling into China (Control) Ordinance is incompatible with the status of the SAR.

Furthermore, since the enactment of the Import and Export Ordinance in 1970, smuggling offences have been dealt with entirely under that Ordinance. The provisions of the Smuggling into China (Control) Ordinance were no longer required and never invoked except that the line referred to in the Ordinance continued to be used a customary reference line, where mainland security vessels were allowed access north of the line. With the promulgation of the boundary of the SAR by the State Council in its Order No. 221 on 1 July 1997, even the customary reference line laid down in the Ordinance has become obsolete. Since the purpose of the Ordinance is totally spent, it should be repealed.

From a broader perspective, we considered that the retention of this Ordinance is incompatible with Hong Kong's new status as a Special Administrative Region of the People's Republic of China. Hence it is appropriate to pursue the proposed repeal of the Smuggling into China (Control) Ordinance under the adaptation of laws exercise.

While Members of the Bills Committee agree that the Smuggling into China (Control) Ordinance and its subsidiary legislation should be repealed, most of them take the view that the proposed repeal is justified largely on policy consideration. Given the narrow scope of the adaptation of laws exercise, Members feel that the proposed repeal of the Ordinance should be pursued outside this exercise.

Having carefully considered the views and concerns of Members, we have decided to take forward this proposed repeal outside the current adaptation of laws programme and to include it, instead, in a miscellaneous amendment bill to be introduced into this Council in future. Later on, I shall move Committee stage amendments to remove the proposed repeal of the Smuggling Into China (Control) Ordinance and its subsidiary legislation from the Bill.

Thank you.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the Adaptation of Laws (No. 3) Bill 1998 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): Adaptation of Laws (No. 3) Bill 1998.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Committee stage. Council is now in Committee.

ADAPTATION OF LAWS (NO. 3) BILL 1998

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That the following clauses stand part of the Adaptation of Laws (No. 3) Bill 1998.

CLERK (in Cantonese): Clause 1.

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): Clause 2.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move that the long title and clause 2 be amended, as set out in the paper circularized to Members. In the light of the views expressed by members of the Bills Committee that the repeal of the Smuggling into China (Control) Ordinance and its subsidiary legislation should be more suitably dealt with outside the adaptation of laws exercise, we now propose to amend the Bill by deleting clauses concerning the repeal of the Ordinance and its subsidiary legislation. I hope Members would support the amendment.

Proposed amendment

Clause 2 (see Annex IV)

CHAIRMAN (in Cantonese): Secretary for Security, would you only move that clause 2 be amended now? Concerning the long title, it should be dealt with after we have disposed of clause 2. This is because under the Rules of Procedure, we should deal with clause 2 first and the long title in the end. If you do not mind doing so, please move that clause 2 be amended first.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I do not mind.

CHAIRMAN (in Cantonese): The Secretary for Security has moved that clause 2 be amended. Does any Member wish to speak?

(No Member indicated a wish to speak)

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the amendment moved by the Secretary for Security be passed. The amendment seeks to amend clause 2 as set out in the paper circularized to Members.

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): Clause 2 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): Schedule.

CHAIRMAN (in Cantonese): Secretary for Security, please move the deletion of the Schedule.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move the deletion of the Schedule, as set out in the paper circularized to Members.

Proposed amendment

Schedule (see Annex IV)

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 and that is: That the amendment moved by the Secretary for Security 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.

CHAIRMAN (in Cantonese): As the amendment to delete the Schedule has been agreed, the Schedule is therefore deleted from the Bill.

CLERK (in Cantonese): Long title.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move that the long title of the Bill be amended.

Proposed amendment

Long title (see Annex IV)

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the amendment moved by the Secretary for Security 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.

CHAIRMAN (in Cantonese): Council now resumes.

Council then resumed.

Third Reading of Bill

PRESIDENT (in Cantonese): Bill: Third Reading.

ADAPTATION OF LAWS (NO. 3) BILL 1998

SECRETARY FOR SECURITY (in Cantonese): Madam President, the

Adaptation of Laws (No. 3) Bill 1998

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

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Adaptation of Laws (No. 3) 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): Adaptation of Laws (No. 3) Bill 1998.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the Council until 2.30 pm on Wednesday, 21 April 1999.

Adjourned accordingly at ten minutes past Eight o'clock.

Annex I

ADAPTATION OF LAWS (NO. 4) BILL 1998

　

COMMITTEE STAGE

　

Amendments to be moved by the Secretary for Justice

Clause	Amendment Proposed
2(2)	By deleting "come into operation on the day" and substituting "be deemed to have come into operation on 1 February 1999, which is the date".
Schedule 1, section 2	By deleting paragraph (c).
Schedule 1, section 7	By deleting "in Council".
Schedule 2	By deleting section 2 and substituting -
	"2.  Section 3(3) is repealed and the following substituted -
	"(3)Subject to the provisions of this Ordinance, the Court or any judge thereof may, in so far as it is not inconsistent with the Basic Law, exercise the same jurisdiction in respect of any person admitted to practise as a solicitor in the Court as was exercisable immediately before 1 July 1997 by the then High Court or any judge thereof, as the case may be, in respect of any person admitted to practise as a solicitor in the then High Court.".
Schedule 3, section 1	(a)  By deleting paragraph (b) and substituting -
	"(b)  in subsection (4), by repealing "Such Ordinances, Colonial Regulations" and substituting "The Public Service (Administration) Order, and such Ordinances";".
	(b)  By deleting paragraph (e) and substituting -
	"(e)by adding -
	"(9)In this section, "Public Service (Administration) Order" (《公務人員（管理）命令》) means -
	(a)the Public Service (Administration) Order 1997 (Executive Order No. 1 of 1997);
	(b)the Public Service (Disciplinary) Regulation made under section 21 of that Order (and together with that Order published as S.S. No. 5 to Gazette No. 2/1997); and
	(c)any other regulation made or any direction given under that Order,
	as amended from time to time.".".

Annex II

ADAPTATION OF LAWS (NO. 6) BILL 1998

　

COMMITTEE STAGE

　

Amendments to be moved by the Secretary for the Treasury

Clause	Amendment Proposed
Schedule 2,	By deleting paragraph (d).
section 1
Schedule 9,	By deleting "in Council".
section 1

Annex III

ADAPTATION OF LAWS (NO. 2) BILL 1998

　

COMMITTEE STAGE

　

Amendments to be moved by the Secretary for Security

Clause	Amendment Proposed
Schedule 1, section 1	(a)  By deleting paragraph (b) and substituting -
	"(b)in the definition of "Conventions" -
	(i)by repealing paragraphs (a) to (d);
	(ii)in paragraph (i), by repealing "(a), (b), (c), (d),";".
	(b)  By deleting paragraph (c) and substituting -
	"(c)in the definition of "medicinal opium", by repealing "British Pharmacopoeia" and substituting "European Pharmacopoeia or the United States Pharmacopoeia".".
Schedule 1, section 6	By deleting "in Council".
Schedule 2, section 9(b)	By deleting "in Council".
Schedule 3, subheading	By adding "(Parts III to XIII)" after "Crimes Ordinance".
Schedule 3, new	By adding before section 1 -
	"1A.Section 19A of the Crimes Ordinance (Cap. 200) is amended by adding -
	""Hong Kong ship" (香港船舶) means a ship which is registered or licensed in Hong Kong;".".
Schedule 3, section 1	By deleting "of the Crimes Ordinance (Cap. 200)".
Schedule 3, new	By adding -
	"2A.Section 23A is amended by repealing the definition of "Hong Kong ship".".
Schedule 7, section 3	By deleting "or Chief Executive in Council (as the case may be)".
Schedule 7, section 4	By deleting it and substituting -
	"4.Section 4(2) is amended by repealing "Governor" and substituting "Chief Executive".".
Schedule 7, section 5	In the proposed definition of "specified vessel", by deleting paragraph (f) and substituting -
	"(f)any other vessel or description of vessel which the Chief Executive may declare by notice in the Gazette to be a specified vessel,".
Schedule 8, sections 1, 2, 4(a), 5, 7, 8 and 9	By deleting "in Council".

Annex IV

ADAPTATION OF LAWS (NO. 3) BILL 1998

　

COMMITTEE STAGE

　

Amendments to be moved by the Secretary for Security

Clause	Amendment Proposed
Long title	By deleting "certain Ordinances that are" and substituting "the Foreign Jurisdiction (Expenses) Ordinance that is".
2	By deleting the clause and substituting -
	"2.Repeal
	The Foreign Jurisdiction (Expenses) Ordinance (Cap. 223) is repealed.".
Schedule	By deleting the Schedule.