OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 28 April 1999
The Council met at half-past Two o'clock

MEMBERS PRESENT:

THE PRESIDENT

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

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

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

THE HONOURABLE DAVID CHU YU-LIN

THE HONOURABLE HO SAI-CHU, J.P.

THE HONOURABLE CYD HO SAU-LAN

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

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE MICHAEL HO MUN-KA

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

THE HONOURABLE LEE WING-TAT

THE HONOURABLE LEE CHEUK-YAN

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

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

THE HONOURABLE LEE KAI-MING, J.P.

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

THE HONOURABLE FRED LI WAH-MING

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

THE HONOURABLE NG LEUNG-SING

PROF THE HONOURABLE NG CHING-FAI

THE HONOURABLE MARGARET NG

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

THE HONOURABLE RONALD ARCULLI, J.P.

THE HONOURABLE MA FUNG-KWOK

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHEUNG MAN-KWONG

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

THE HONOURABLE HUI CHEUNG-CHING

THE HONOURABLE CHRISTINE LOH

THE HONOURABLE CHAN KWOK-KEUNG

THE HONOURABLE CHAN YUEN-HAN

THE HONOURABLE BERNARD CHAN

THE HONOURABLE CHAN WING-CHAN

THE HONOURABLE CHAN KAM-LAM

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

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

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE GARY CHENG KAI-NAM

THE HONOURABLE SIN CHUNG-KAI

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

DR THE HONOURABLE PHILIP WONG YU-HONG

THE HONOURABLE WONG YUNG-KAN

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

THE HONOURABLE HOWARD YOUNG, J.P.

DR THE HONOURABLE YEUNG SUM

THE HONOURABLE YEUNG YIU-CHUNG

THE HONOURABLE LAU CHIN-SHEK, J.P.

THE HONOURABLE LAU KONG-WAH

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

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

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

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

THE HONOURABLE 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.

MEMBER ABSENT:

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

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

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

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

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.
Merchant Shipping (Safety) (Subdivision and Damage Stability of Cargo Ships Over 100 Metres in Length) (Amendment) Regulation 1999	99/99
Lands Tribunal (Amendment) Rules 1999	100/99
Hawker (Regional Council) (Amendment) Bylaw 1999	101/99
Hawker (Urban Council) (Amendment) Bylaw 1999	102/99
Statutes of the Chinese University of Hong Kong (Amendment) Statutes 1999	103/99
Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545) (Commencement) Notice 1999	104/99
Port Control (Cargo Working Areas) (Amendment) Regulation 1999 (L.N. 71 of 1999) (Commencement) Notice 1999	105/99

Sessional Paper

No. 123

─

Report of changes to the approved Estimates of Expenditure approved during the third quarter of 1998-99 (Public Finance Ordinance : Section 8)

Reports

Committee on Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region Progress Report for the period July 1998 to April 1999

Report of the Bills Committee on Adaptation of Laws Bill 1998

ADDRESS

PRESIDENT (in Cantonese): Address. Mrs Selina CHOW will address the Council on the Committee on Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region's progress report for the period July 1998 to April 1999.

Committee on Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region Progress Report for the period July 1998 to April 1999

MRS SELINA CHOW (in Cantonese): Madam President, on behalf of the Committee on Rules of Procedure (the Committee), I now table to this Council the Committee's progress report for the period July 1998 to April 1999.

The Committee has held a total of 22 meetings since it was set up on 10 July 1998. The Committee deliberated on a series of subjects, broadly under the following categories:

(a) procedures relating to the implementation of specific provisions of the Basic Law;

(b) improvement of the procedural arrangements of the Council; and

(c) refinement of the textual presentation of rules and procedures in the Rules of Procedure and other Rules of the committees of the Council.

This report mainly outlines the items deliberated by the Committee and the proposed amendments to the Rules of Procedure. I will explain the proposed amendments in detail when I later on move a resolution to amend the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region later.

During the initial period of the first term of the Legislative Council, the Administration considered that certain provisions of this Council's Rules of Procedures were in contravention of the Basic Law. Therefore, the Committee decided to study those items first. Two of the items under study concerned with whether the voting procedures prescribed in the Rules of Procedure had contravened Annex II to the Basic Law and whether such provisions as the proposing of motions by Members had contravened Article 48(10) and Article 74 of the Basic Law. The Committee has held discussions on these two subjects with the Director of Administration and sought an independent opinion from Mr Denis CHANG Khen-lee, S.C.. It has come to the conclusion that the relevant provisions of the Rules of Procedures are not in contravention of the Basic Law, and that they need not be amended in accordance with the Administration's request. I will explain the relevant circumstances when I move to amend the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region by way of a resolution later.

Apart from the above-mentioned two subjects, the Committee has completed deliberations on the following important subjects:

(a) the procedure to implement Article 79(6) of the Basic Law for relieving a Member of his duties;

(b) the procedure to implement Article 79(7) of the Basic Law for the censure of a Member;

(c) timing for commencement of Legislative Sessions; and

(d) order of speaking in motion debates.

In view of the importance and extensive scope of these subjects, the Committee has conducted consultation among all Members of this Council before finalizing its findings.

Concerning the implementation of Article 79(6) of the Basic Law for relieving a Member of his duties, the Committee has tabled a report on its work at the meeting of this Council on 9 September 1998. The consequential amendment made to the Rules of Procedure was passed by this Council on that same day. Therefore, I will not repeat the conclusion drawn by the Committee in respect of this subject in the report I now submit.

Finally, I would like to express my sincere gratitude for Members' time and efforts. On behalf of the Committee, I would also like to thank other Members for the valuable advice they have given to the Committee and a number of staff in the Secretariat for their efforts.

Thank you, Madam President.

ORAL ANSWERS TO QUESTIONS

PRESIDENT (in Cantonese): Questions. I would like to remind Members that question time normally does not exceed one and a half hours, with each question being allocated about 12 to 15 minutes. When asking supplementaries, Members should be as concise as possible. They should not ask more than one question, and should not make statements. To do so would contravene the Rules of Procedure.

After I have called upon a Member to ask a main question, other Members who wish to ask supplementary questions to this question need, in addition to raising their hands, to indicate their wish by pressing the "Request-to-Speak" buttons in front of their seats.

On the other hand, if a Member wishes to follow up and seek elucidation on an answer, or raise a point of order, please stand up to so indicate and wait for me to call before speaking.

PRESIDENT (in Cantonese) : I now invite Dr David LI to ask the first question.

Higher Cost of Doing Business in Hong Kong

1. DR DAVID LI: Madam President, in the last 18 months, the currencies of neighbouring economies have depreciated against the Hong Kong Dollar. In relative terms, the cost of doing business in Hong Kong is much higher. Will the Government inform this Council whether it has any evidence that multinational companies or, indeed, any businesses are investing elsewhere as a result of this; if there is such evidence, of the measures it is taking to avert such a trend?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, according to the 1998 Survey of Regional Representation by Overseas Companies in Hong Kong conducted by the Industry Department, there were a total of 819 regional headquarters and 1 630 regional offices established by overseas companies in Hong Kong as at 1 June 1998. During the year ending on 1 June 1998, only 11 regional headquarters were relocated out of Hong Kong, while another 37 regional offices ceased operations. In view of the relative significance of regional headquarters, the Industry Department has conducted a supplementary survey on the reasons for the relocation of the 11 regional headquarters. The high operating cost in Hong Kong and the relatively bleak prospects of the region after the Asian financial turmoil have been cited as the main reasons for their relocation.

On the other hand, a total of 65 regional headquarters and 136 regional offices were established in Hong Kong during the same period. In fact, among the regional headquarters and regional offices which responded to the Survey, 95% and 96% respectively indicated that they would continue their operation in Hong Kong.

The sharp depreciation of the currencies of East Asian economies has indeed resulted in their export prices being more attractive, hence posing a greater competition to Hong Kong exports. However, as Hong Kong's economy slackened last year as a result of the regional financial turmoil, we also experienced a remarkable fall in our operating cost. The rentals for offices, shops and industrial property dropped by 34%, 15% and 17% respectively in 1998. In the first quarter of 1999, office rentals experienced a further decrease of 11% as compared to the fourth quarter of 1998. Upon the expiration of existing tenancies, the effect of the sharp decline in market rentals will be more keenly felt, with the cost of doing business being driven down further. Besides, salaries and wages are expected to continue softening until the supply and demand of the labour market strike a better balance. The above factors will play a positive role in lowering the cost of doing business in Hong Kong and enhancing our competitiveness.

In fact, the cost of doing business is just one of the contributing factors to competitiveness. Hong Kong's economic fundamentals remain strong. These include, inter alia, the Mainland as our economic hinterland, robust financial and banking systems, a huge foreign exchange reserve, a sound legal system, a simple tax system with low tax rates, a clean government and efficient transport and communications facilities. All these factors contribute towards the maintenance of our competitiveness.

In attracting foreign investment, the Government has been working vigorously within the context of the free market to create a fair, highly transparent and business-friendly environment for investors. To promote business development, the Government provides various tax concessions and funding schemes to investors. We are also committed to providing the necessary infrastructural support to facilitate technological upgrading of our industries and enhance their competitiveness. Such tax concessions, funding support and infrastructural facilities are available to both local and foreign investors.

The tax concessions offered include a wide range of depreciation allowances and tax deductions. As regards funding schemes, we have been operating the Applied Research Fund, Industrial Support Fund and New Technology Training Scheme. We are also planning for the establishment of the Innovation and Technology Fund. In terms of infrastructural support, apart from the existing technological infrastructure that the Government has been providing, we are currently focusing our efforts on the construction of the Science Park, the development of the Cyberport and the planning of the Applied Science and Technology Research Institute. These essential components of our infrastructure will be instrumental in attracting overseas companies to invest in Hong Kong.

DR DAVID LI: Madam President, it is likely that China will join the World Trade Organization (WTO) in due course, will the Government inform this Council whether it is conducting any sensitivity study about the impact of this on Hong Kong's position as the location for regional headquarters?

PRESIDENT (in Cantonese): Dr LI, you may sit down after raising your supplementary question.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, Dr David LI was right. Our country's negotiations with the United States in respect of joining the WTO are entering the climax. We can say with cautious optimism that China is likely to join the WTO within this year. As announced by the Financial Secretary two weeks ago, an ad hoc group has been set up under his office to assess the impact of China's admission into the WTO on Hong Kong in various aspects. Moreover, it will assess what measures can be taken to encourage businessmen and entrepreneurs in Hong Kong to make efforts to gain commercial benefits under this environment, that is, under a more open economy brought about by China's WTO membership. In fact, China has already established direct trade relations with other major commercial partner countries in the world. There is no need for China to communicate with these countries through a third party just because it has not become a member of the WTO. Therefore, we are of the view that even if China succeeds in joining the WTO within this year, this will not affect Hong Kong as an intermediate location as well as undermining Hong Kong's role as a bridge between the Mainland and overseas countries.

MR JASPER TSANG (in Cantonese): Madam President, I believe if we only look at the rise and drop in the number of headquarters or regional offices set up by overseas companies in Hong Kong during the period from June 1997 to May 1998, it is not possible for us to assess the changes in Hong Kong's attractiveness to overseas companies as a result of Hong Kong's high currency value relative to our neighbouring economies. Will the Government inform this Council whether there was a very obvious difference in the number of overseas companies relocated out of Hong Kong when compared to the time when Hong Kong's currency value was not too high relative to the currency values of our neighbouring economies?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, the two figures to which Mr Jasper TSANG has referred are in fact not directly related to each other. In conducting the survey I mentioned just now, the Industry Department asked the responding companies what factors they would consider in deciding to set up their regional headquarters or regional offices in Hong Kong. Among the factors considered by these regional headquarters and regional offices, the linked exchange rate system ranked only 13 out of the 19 factors considered. 96% of them considered the linked exchange rate a favourable factor; 24% indicated neutrality, that is to say, the peg will not influence their decisions. Only 8% considered the peg an unfavourable factor for investment in Hong Kong. From these figures, we can see that basically our comparatively high currency value has not made any impact on their investment decisions.

MR HOWARD YOUNG: Madam President, based on the Secretary's reply, while we accept that the number of 11 regional headquarters relocated is less than that of the headquarters that has been established in Hong Kong, can the Government tell us whether it has, in fact, conducted an analysis on the original countries of the former and also the destinations that they have moved to, so that we could be more focused on our efforts in attracting multinational corporations to establish offices in Hong Kong, and also to know where the competition lies?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, in carrying out the survey on the regional representatives of overseas companies stationing in Hong Kong, we did raise similar questions, that is, what factors have attracted them to set up headquarters or regional offices in Hong Kong? Concerning the 19 factors I mentioned just now, I can list them out in a written answer if Mr YOUNG is interested. (Annex I)

As for the question concerning what other parts of Asia the 11 regional headquarters have moved to, according to our information, of the 11 companies, five have moved to Singapore, one to the United Kingdom and one to Australia. The remaining four companies declined to disclose the relevant details.

MR SIN CHUNG-KAI (in Cantonese): Madam President, will the Trade and Industry Bureau and its 10 overseas offices specially design a set of publicity strategies in connection with China's joining the WTO so as to publicize Hong Kong as an excellent bridgehead for entering the China market, thereby encouraging overseas companies to set up regional offices in Hong Kong?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, in fact, our overseas offices have all along been publicizing and promoting Hong Kong as the best location for the setting up of regional headquarters and regional offices. Of course, in the course of such promotion, they will mention what factors we have in Hong Kong which are conducive to the setting up of regional headquarters by these multinational companies. One of the major factors is the geographical position of Hong Kong and the Mainland. Hong Kong can act as a window for the Mainland to communicate with overseas countries and give play to its intermediatry role for foreign countries to gain access to the doors of the Mainland. We have given publicity in this aspect. Of course, after China has succeeded in joining the WTO, we will have one more point for the publicity drive.

MR CHAN KAM-LAM (in Cantonese): Madam President, the Secretary stated in his main reply that 11 regional headquarters had been relocated out of Hong Kong, while another 37 regional offices had ceased operations. On the other hand, a total of 65 regional headquarters and 136 regional offices were established in Hong Kong. May I have the information concerning what trades these figures were involved with and what impact these figures will have on our manpower resources?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I am afraid I do not have such information on hand. I will give Mr CHAN a written reply. (Annex II)

MR HOWARD YOUNG (in Cantonese): Madam President, concerning the survey carried out in 1998, a Member remarked just now that by looking only at the information up to June last year, it may not be possible for us to spot the impact of depreciated currency values or related aspects. Will the Secretary inform this Council whether the survey is carried out on a regular or yearly basis? In other words, can we expect to have new figures illustrating the relocation tendency of multinational companies available in the coming few months?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, the answer is positive.

PRESIDENT (in Cantonese): Second question.

Origin Rule for Footwear

2. MR HUI CHEUNG-CHING (in Cantonese): Madam President, the Administration has recently relaxed the origin rule for footwear, allowing certain products, the non-principal manufacturing processes of which are performed outside Hong Kong to be labeled "made in Hong Kong" for export registration. It is reported that hundreds of manufacturers consequently plan to have the production lines currently operating in the Mainland partially relocated back in Hong Kong, so that their products can be exported as products made in Hong Kong to countries which currently levy anti-dumping duties and impose quota limits on footwear "made in China". In this connection, will the Government inform this Council of the policies and specific measures adopted by the relevant government departments to provide assistance for those manufacturers in labour training, the siting of factories, taxation and so on, in order to co-ordinate and encourage the relocation of their manufacturing processes back in Hong Kong, thereby facilitating the export of footwear and increasing employment opportunities?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, the Administration's position towards the origin rule has always been to ensure that goods manufactured and exported by Hong Kong should comply with the international requirement on the origin on the one hand, and allowing manufacturers to perform non-principal manufacturing processes outside Hong Kong without breaching the above rule on the other, thereby enhancing the competitiveness of products made in Hong Kong. Based on this principle, we made an announcement on 15 February to amend the origin rule in respect of footwear made in Hong Kong to redefine the principal manufacturing processes of Hongkong-made footwear. The new rule permits certain non-principal manufacturing processes to be performed outside Hong Kong. Manufacturers can now manufacture unformed vamps and soles outside Hong Kong at a lower production cost and import them into Hong Kong to supplement the principal manufacturing processes performed locally. The Trade Department had consulted the industry in detail and taken into full account the recommendations made by them before implementing this measure.

Since the implementation of the new rule, the number of factory registration applications made to the Trade Department by footwear factories has not shown any sharp increase. Since 15 February, only one footwear factory has submitted its application. However, we note that many footwear manufacturers have indicated their interest in relocating their shoe shaping production lines to Hong Kong while keeping the existing production lines for vamps and soles in the Mainland. This will enable them to export their products to members of the European Union as made in Hong Kong products.

Contacts between the Industry Department and footwear manufacturers indicate that securing sites for their factories does not pose too much of a problem because many of the manufacturers have still kept their plants in Hong Kong after moving the production lines to the Mainland a few years ago. They can simply reopen their plants and resume production. What they need is assistance in securing loans, technological support and labour training.

Regarding credit facilities, some manufacturers have indicated their wish for assistance to facilitate their raising of capital to purchase the necessary machinery. But the Government considers the provision of capital should ultimately be left to the market. Nonetheless, with a view to relieving the liquidity crunch, the Government launched the Special Finance Scheme for small and medium enterprises (SMEs) last August. Under the scheme, SMEs obtain loans from participating lending institutions with the Government acting as a guarantor. The ceiling of each guaranteed loan is set at $2 million. There are no special restrictions on the use of the loans so obtained. All enterprises registered in Hong Kong, including footwear manufacturers, are qualified to apply.

On technological support, the footwear industry has benefitted from the Industrial Support Fund run by the Industry Department which has provided support to technology upgrading in the industry. Projects financed by the funding scheme include the "Development and Demonstration of Rink Production System for Footwear Industry", "Computer-assisted Order Processing for Shoe Manufacturing Industry" and "Information Handbook for Merchandisers of the Hong Kong Footwear Industry". The funds committed amount to nearly $4 million.

On labour training, we understand that the Employees Retraining Board has approved the launching of two tailor-made programmes for two footwear factories to build up a pool of shoe-making craftsmen to tie in with the development of new production lines in Hong Kong.

As regards taxation, our simple taxation structure with its low tax rates is already an incentive which attracts various businesses to operate in Hong Kong. As such, we see no strong justification for implementing special tax measures aiming at giving favourable treatment to certain industries or manufacturers.

The Government will continue with its efforts in providing the necessary support to the manufacturing sector, including of course the footwear industry, which will enable manufacturers to take full advantage of every opportunity available in the market and offer them a greater scope for development.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, the Secretary mentioned in the second paragraph of the main reply that many manufacturers had indicated interest in setting up production lines in Hong Kong. In this aspect, what is the exact figure? What assistance do they want from the Government before they are willing to implement their plan to set up production lines here? What is the Government's response to their views?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I do not have on hand figures indicating how many manufacturers have indicated interest in setting up shoe shaping production lines in Hong Kong. Neither do I have any information indicating whether they have made any requests to the Trade Department. Of course, I can give a written reply to Mr HUI. (Annex III)

DR LUI MING-WAH (in Cantonese): Madam President, it is already a very big progress for the Government to, without breaching the origin rule, allow manufacturers to perform non-principal manufacturing processes outside Hong Kong and principal manufacturing processes in Hong Kong, thereby enabling the products to be exported under the label "made in Hong Kong". In doing so, it will not only increase local employment opportunities, but also reduce price pressure on the export "made in Hong Kong" products. This is worth commendation indeed. Although the Government announced this measure in February, the response from the footwear industry has not been too enthusiastic so far. Will the Government inform this Council whether this is due to inadequate publicity? If so, are there any other publicity channels to give manufacturers a better idea of this new measure? Secondly, many manufacturers have moved their factories to the Mainland for more than 10 years and they do not have any plants in Hong Kong. Under such circumstances, can the Government consider letting vacant premises in the industrial estates to the footwear industry at a low price? If not, why not?

PRESIDENT (in Cantonese): Secretary, Dr LUI Ming-wah has raised two supplementary questions. In accordance with the Rules of Procedure, I will ask you to answer only one of the supplementary questions. However, if you have on hand the information for the other supplementary question, you can, for the sake of saving time, answer the other supplementary raised by Dr LUI in a concise manner.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, we think the Trade Department has done sufficient publicity work. Furthermore, Mr HUI Cheung-ching having asked this question in this Council today, if the media is so co-operative to give coverage in the newspapers tomorrow (laughter), I believe more people will be aware that the Government has amended the relevant regulation. Of course, if we consider there is a need to give more publicity after a review, we will definitely do so. We will discuss with the Director of Trade as soon as possible as to whether or not it is necessary to strengthen the publicity work.

As regards the second supplementary question, although many footwear manufacturers have moved their factories to the Mainland more than 10 years ago and do not have any plants in Hong Kong, the vacancy ratio of industrial buildings in Hong Kong over the recent 10-odd months was still very high. With the drop in the value of industrial property, rentals have also dropped constantly. For footwear manufacturers who intend to relocate their factories back in Hong Kong, I believe they should not have much difficulty insofar as the siting of factories is concerned. As for industrial estates, the Government will allow factories to move into such estates according to certain criteria. If footwear manufacturers comply with the relevant criteria, they will be allowed to move there. However, most footwear factories can operate in multi-storey factory buildings as they do not need to apply innovative technology and operate in one-story factories with a high ceiling. Therefore, I think most footwear manufacturers will not meet the criteria for moving into industrial estates.

DR TANG SIU-TONG (in Cantonese): Madam President, the sixth paragraph of the main reply pointed out that the Employees Retraining Board (ERB) had approved the launching of two tailor-made programmes for craftsmen. Will the Government inform this Council of the specific details and how many craftsmen are expected to be provided for local footwear factories?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, according to the information I have on hand, the ERB approved two tailor-made programmes for the footwear industry at the end of March this year. The Clothing Industry Training Authority will be responsible for training unemployed people who are interested in joining the footwear industry to be footwear craftsmen for two footwear factories. Nevertheless, the information I have on hand does not indicate how many craftsmen will be trained. With the President's permission, I will reply in writing. (Annex IV)

MR KENNETH TING (in Cantonese): Madam President, apart from the footwear industry, I believe other industries would also like to relocate their factories back in Hong Kong for certain reasons, such as customs and excise considerations. Does the Government have any special response in this area?

PRESIDENT (in Cantonese): Mr Kenneth TING, your supplementary question is not directly related to the principal question. Therefore, I would like you to sit down and think about it. I will let you raise your supplementary question again if such an opportunity arises later.

MR KENNETH TING (in Cantonese): Fine.

MR FUNG CHI-KIN (in Cantonese): Madam President, I think the reason for relocating the footwear industry's manufacturing processes back in Hong Kong is mainly to solve the "made in Hong Kong" problem. I wonder if the Secretary is aware of the main considerations of footwear manufacturers. First, they may need to "write off" their investment made in the Mainland in respect of other on-going manufacturing processes and invest in Hong Kong again. Does the Government know whether footwear manufacturers are concerned with cost effectiveness in this area? Secondly, the Government mentioned that footwear manufacturers could consider applying for loans specially designed for SMEs, with the Government acting as a guarantor for a maximum of $2 million. But I was told that this loan amount is not going to be enough as far as the footwear industry is concerned.

PRESIDENT (in Cantonese): Mr FUNG Chi-kin, you have also raised two supplementary questions in a row. This is not in line with the Rules of Procedure. Secretary, you are free to decide how to reply.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, regarding the first supplementary question, I do not have on hand the information indicating what factors those manufacturers who are contemplating to return to Hong Kong must consider. But I think I can answer Mr FUNG in writing. (Annex V) As for the second supplementary question, even if the $2 million guaranteed by the Government under the Special Finance Scheme for SMEs is not enough, the Government will not, according to the existing economic policy, subsidize individual industries. Just as I said in the main reply, this should mainly be left to the market. We should allow the banks to, in accordance with their usual operational methods and criteria, decide whether or not to grant loans to footwear factories.

MRS SELINA CHOW (in Cantonese): Madam President, the Chief Executive has been calling for the development of high value-add industries. But as far as I understand it, the footwear industry is unable to link with the design industry in Hong Kong as most footwear manufacturers do not adopt local designs. Will the Secretary inform this Council, for the sake of attracting footwear manufacturers to relocate their production lines back in Hong Kong and putting this into practice, what the Government will do to link it with the provision of design talents? Hong Kong has indeed the talents needed. It is only that the linkage is not yet put in place at the moment.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, most of the shoes produced by local footwear manufacturers are designed by importers who place the orders or foreign footwear manufacturers before they are handed back to local manufacturers who will have them produced in the Mainland or Hong Kong. As for the designs of designers from what places these foreign footwear manufacturers or importers will adopt, it is purely their commercial decision. Of course, if the design industry in Hong Kong sets up some organizations similar to an association, they can consider what they can do to attract commission by foreign manufacturers.

MR HO SAI-CHU (in Cantonese): Madam President, the first sentence of the last paragraph of the main reply reads, "The Government will continue with its efforts in providing the necessary support to the manufacturing sector, including of course the footwear industry,". My question is: Has the Government considered making appropriate amendments to the relevant legislation so as to attract the other manufacturing industries to move back to Hong Kong ?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, the prerequisite for the origin rule concerns mainly with the compliance of the major origin principle acceptable to the international community. Therefore, there is little room for us to change the existing origin rule. Another factor is, in different markets, such as the United States and the European Union, the origin rules governing the same category of goods might differ. While the major principles are the same, there may be a slight difference in details. Therefore, it will not be easy to identify rules that can be changed and, at the same time, meet the requirements of several major markets. The WTO has come to realize this problem years ago. Therefore, it has embarked on negotiations since 1995 in the hope of seeking a principle acceptable to all WTO members, that is to say, a standardized origin rule for each category of products. Work in this area has been going on for four years. But just as other work carried out by the WTO, such work will, more often than not, only bear fruit after an even longer period. For the time being, there is little room for changes.

PRESIDENT (in Cantonese): Third question.

Insurance Cover for Employees' Compensation

3. MR BERNARD CHAN: Madam President, will the Government inform this Council of the following data in the past five years:

(a) the number of cases in which an employer was prosecuted under section 40(2) of the Employees' Compensation Ordinance (ECO) for employing an employee without a valid policy of insurance in respect of the liability of the employer under the ECO, and the number of employees involved in each of the cases prosecuted; and

(b) the number of known cases in which the number of employees covered by a policy of insurance required under section 40(1) of the ECO is less than the actual number of employees employed by the employer; and the measures that the relevant authorities have put in place in order to deter employers from understating the number of employees when taking out such policies of insurance?

SECRETARY FOR EDUCATION AND MANPOWER: Madam President,

(a) Under the ECO, all employers are compulsorily required to take out insurance policies to cover their liabilities for injuries or death at work for their employees. Statistics on prosecutions against offending employers who failed to take out insurance policies under the ECO in the past five years are as follows:

Year	Summonses Heard
1995	530
1996	753
1997	737
1998	990
1999	310
(January - March)

In respect of the number of employees involved in each prosecution case, the Labour Department only keeps statistics since 1998. The average number of employees involved in each prosecution case is 1.5 for 1998, and 1.6 for the first quarter of 1999.

(b) In regard to the possibility that employers may have understated the number of employees in the insurance policy, we are aware that there is generally a standard clause in the employees' compensation insurance policy to the effect that the insured has to inform the insurer the actual number of employees and their earnings on the expiry of the policy. If the actual number of employees or their earnings differ from that estimated at the time when the policy was taken out, the difference in premium will be adjusted proportionately. As this is a contractual matter between the insurer and its customers, the Government has not kept statistical information on these adjustments. But I would like to point out that, even if the number of employees as stated in the insurance policy is less than the actual number of employees, all employees who are injured or died arising out of and in the course of employment, or their dependents, are entitled to receive their compensation in full under the ECO.

The Labour Department has stepped up efforts to remind employers to take out sufficient insurance cover for their employees. These included enhanced publicity and more frequent inspections undertaken by Labour Inspectors.

In addition, we are planning to revise upwards the maximum fine for failure to take out a valid insurance policy under the ECO from the existing $50,000 and two years' imprisonment to $100,000 and two years' imprisonment.

MR BERNARD CHAN: The answer to part (a) of my question has shown a rising trend of prosecutions. I would like to ask the Secretary whether these cases were reported by the employees or through government inspection?

SECRETARY FOR EDUCATION AND MANPOWER: Madam President, the rising number of prosecutions in 1999 as compared with the same period in 1998 is due to more frequent inspections by the Labour Department. This can also answer the question raised by Mr CHAN that all these cases have arisen from the Labour Department's inspections and not from voluntary reports by the employers.

MR LEE KAI-MING (in Cantonese): Madam President, employers' failure to take out adequate insurance cover will not only affect the companies, but also directly affect the employees' interests. This is because it is the current practice for the Employees' Compensation Insurance Levies Management Board to distribute the surcharge on the Employees' Compensation Insurance Levies collected annually to the Occupational Safety and Health Council, the Occuptional Deafness Compensation Fund and so on. We can see that the number of prosecution cases has risen each year. Although we can see that the Labour Department has conducted more inspections, but why will the figure rise with more inspection? This illustrates that it is common among employers to understate the number of employees and to fail to take out insurance cover for employees. Therefore, the number will rise with more inspections. Can the Government amend the legislation? Is it because the penalty is so light that there is no deterrent effect? Or is it fundamentally because the penalties imposed by the Court are so lenient that they cannot achieve any deterrent effect to stop the figure from constantly rising?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, according to recent cases, the fines imposed by the Court are roughly between $2,000 and $3,000. It can be said that there is not enough deterrent effect as far as employers are concerned. Therefore, I said in the last paragraph of the main reply that we plan to amend the ECO in a bid to raise the maximum fine. I hope this message can be brought to the Court as well. Basically, with more inspections, the number of prosecution cases will also rise. Looking at the figures alone, for instance, we can note that there are more than 16 000 cases related to compensation in the first three months of 1999. However, there is only one case in which the employer has failed to take out insurance cover for his employees. Therefore, I believe the absolute figure is in fact not so serious.

MR LAU CHIN-SHEK (in Cantonese): Madam President, in part (b) of the main reply, the Secretary mentioned that all employees who are injured or died arising out of and in the course of employment, or their dependents, are entitled to receive their compensation in full under the ECO. Will the Secretary tell us exactly in how many cases has the Employees' Compensation Assistance Fund been required to effect payments because employers have not taken out insurance cover for their employees and yet are unable to provide compensation? Will the Secretary inform this Council whether the Administration has instituted double prosecutions against those employers who have failed to take out insurance cover for their employees and at the same time are unable to provide compensation; and of the number of the relevant cases and the amount of fines?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, as far as the first question is concerned, if the employers have failed to take out insurance cover for their employees and at the same time are unable to provide compensation, the relevant cases will be referred to the Employees' Compensation Assistance Fund. According to the information I have on hand, in 1998, we have 20 such cases, with the Fund paying out roughly $26 million; in the first three months of 1999, there were seven such cases. Of course, these cases took place before 1999, and the Fund has paid out nearly $6 million for the cases.

The second question raised by Mr LAU touched upon the relevant cases and penalties. I think he was referring to whether we have instituted prosecution against those 20 or seven cases. I believe we have done that. But as for the penalties, I do not have such information on hand. I will study the issue with my colleagues from the Labour Department later. If I am given the relevant information, I will give Mr LAU a written reply. (Annex VI)

MR NG LEUNG-SING (in Cantonese): Madam President, Mr Bernard CHAN mentioned in part (b) of his question that there is a need to prevent employers from understating the number of employees when taking out insurance policies. In response, the Government stated that the Labour Department has enhanced publicity to remind employers to take out sufficient insurance cover. Will the Government inform this Council whether, under such circumstances, it is satisfied with its publicity work and, as a result of which, it will not consider introducing some additional and suitable penalties to reinforce the taking out of sufficient insurance cover?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, of course I agree that it is not enough to rely solely on publicity. Therefore, I mentioned in the last paragraph of the main reply that we would suggest raising the penalties. As for enhancing publicity, we can of course put more efforts into this area. For instance, we have recently placed the relevant legislation onto the Internet in the hope that this can achieve a better effect.

MR ERIC LI (in Cantonese): Madam President, in fact, Mr LEE Kai-ming has already raised part of my supplementary question just now. It is now a common phenomenon for employers to take out insufficient insurance cover. It seems that we spot more problems just because the Government has carried out inspection more frequently. The penalties imposed by the Court also differ greatly from what is laid down in the current legislation. While the maximum fine is $50,000, the fine imposed by the Court is $2,000 only. Will the Government inform this Council whether it has a more specific timetable for amending the legislation; and whether, in the meantime, it will consider lodging appeals with respect to some relatively serious cases, such as cases involving repeated offences, so as to let the court appreciate the seriousness of the problem?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, as far as the first question is concerned, according to the timetable we have at the moment, we hope to table the relevant bill to this Council for scrutiny in this legislative year. As for the second question concerning whether or not the Government will, depending on individual circumstances, consider lodging appeals when it is considered the penalties imposed by the Court are too light or the amount of fines too small, I will put these views on record and take them into consideration when it is appropriate to do so.

MR ANDREW CHENG (in Cantonese): Madam President, according to part (a) of the main reply, Honourable colleagues are concerned with the fact that among the prosecution cases, the number of employers who have failed to take out insurance cover for their employees is constantly on the rise. In fact, in amending the legislation or in understanding the whole policy, can the Government consider, drawing reference from the vehicle registration requirement under which drivers are required to take out third party insurance before renewing their licences, requiring employers to take out insurance cover for their employees when they apply for business registration? Has the Government considered this method? This is because some first-time employers might indeed not be aware of the need to take out insurance cover for their employees, while some employers might avoid doing so deliberately. If such a policy or amendment is put in place, can it solve the problem?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I will definitely consider this suggestion with the relevant department. But very often, even if an individual or a new organization has taken out insurance cover when applying for business registration, the number of staff recorded at that time might not be the same as the number recorded later. In fact, I do not want them to have the wrong impression that once they have taken out insurance cover, they will not be required to do it again even though there is an increase in the number of employees. Nevertheless, I will put Mr CHENG's suggestion on record and will examine its feasibility with the relevant department.

MR LEE KAI-MING (in Cantonese): Madam President, thank you for allowing me to raise my supplementary question for a second time. In answering the supplementary question raised by Mr LAU Chin-shek just now, the Secretary mentioned that one case involving the failure of an employer to take out insurance cover for his employees had already been recorded this year. Madam President, we should understand that if an employer has failed to take out insurance cover and if his company declares bankruptcy and is unable to take up the liability of providing compensation, his employees will need to apply to the Employees' Compensation Assistance Fund Board for compensation. The Fund might then need to pay out more than $60 million for each case. As far as I know, the Fund is now on the verge of bankruptcy. Will the Secretary inform this Council of the measures the Government will take when the Employees' Compensation Assistance Fund suffers from inadequate levies and is on the verge of bankruptcy because employers have taken out insufficient insurance cover or have failed to take out insurance cover?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, under the circumstances that employers have failed to take out insurance cover for their employees, of course, employers are obliged to provide compensation for their employees who are injured or died. But when the employers are unable to provide compensation, just as what Mr LEE said, the Employees' Compensation Assistance Fund will make compensation instead. I have also mentioned earlier that in 1998 and 1999, we have indeed paid out a considerable sum of money. As for the amount of compensation for the case recorded in 1999, I do not have the relevant information on hand. At present, the financial situation of the Employees' Compensation Assistance Fund is indeed not satisfactory. We are now conducting studies in this aspect.

PRESIDENT (in Cantonese): Fourth question.

Native-speaking English Teachers Scheme

4. MR DAVID CHU (in Cantonese): Madam President, it has been reported that a survey on Native-speaking English Teachers (NETs) found that more than 30% of the respondents planned not to renew their contracts upon expiry. More than half of the respondents also thought that the recruitment procedure they had undergone was very time-consuming, while most of them considered that they had not been provided with sufficient information on the living environment and education system in Hong Kong, resulting in difficulties in adapting to the life in Hong Kong after their arrival. In this connection, will the Government inform this Council of:

(a) the recruitment procedure and the time required; whether it has reviewed the procedure; if so, the details of it; if not, the reasons for that; and

(b) the plans in place to facilitate these teachers in adapting to the teaching and living environment in Hong Kong, as well as renewing their contracts and staying on?

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

(a) Regarding the recruitment of NETs, schools have the option to decide whether to conduct the recruitment themselves or authorize the Education Department (ED) to do so on their behalf. Recruitment conducted by the ED takes about four to five months to complete, from placing advertisements for vacancies to offering appointments. Advertisements for teaching vacancies are normally put up from February to March, with interviews held both locally and overseas in mid-May. The ED and other departments concerned will assess the academic qualifications and working experience of the applicants to ensure that they meet the recruitment requirements, and will determine their entry pay. Offers for appointment will be made starting from June.

The ED conducted a review on the recruitment procedures last year. Applicants are now provided with samples of the required academic qualifications and certification on working experience so as to facilitate the submission of the required documents. As a result, the time required for assessing the applicants' academic qualifications has been reduced from over one month last year to about two weeks at present.

(b) During the interview stage, NETs were furnished with information on Hong Kong by the ED, including a video tape produced by the ED to brief them on the NET Scheme, the education system, and the teaching and living environment in Hong Kong. In addition, they were provided with information leaflets/brochures on Hong Kong published by the Government, the Hong Kong Tourist Association, various consulates and major business associations. Appointment letters were sent to these teachers together with contact telephone numbers and e-mail addresses of various consulates, relevant officers of the ED and some serving NETs. They also received a memorandum prepared specially to remind them of the procedures they had to go through and of matters requiring attention before and after their arrival in Hong Kong.

The ED organized induction courses for these teachers after they had reported for duty. The courses cover life in Hong Kong, its culture, tradition, education system, language education policy, cultural and social background of students, and English teaching method, and so on. In-service NETs, principals and English subject panel chairpersons were also invited to share their experience. For instance, in November 1998, the ED organized seminars in each of the 18 districts of Hong Kong, inviting all NETs, principals and English subject panel chairpersons to participate. In January and February this year, three regional gatherings were organized jointly by the ED and the English Schools Foundation (ESF) to provide opportunities for NETs from different schools to exchange their expertise. The ESF also organized workshops and publishes monthly newsletters for NETs to help them adapt to the local social and school environment. At present, most of the NETs have adapted to the local working environment. As for the small number of teachers who are still unable to adapt to the living or working environment of Hong Kong, the ED will continue to make efforts to help them overcome their difficulties and to provide guidance to schools on offering assistance to these NETs.

The ED is closely monitoring the views of the teachers on the Scheme, with a view to encouraging good teachers to stay for a second contract. However, whether NETs will stay on upon expiry of their existing contracts depends to a large extent on their personal and professional considerations. The ED plans to conduct a survey on schools in early 2000 to ascertain the number of teachers willing to renew their contracts.

MR DAVID CHU (in Cantonese): Madam President, will the Government consider extending the NET Scheme to primary schools?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, some primary schools have applied to recruit NETs under the present Quality Education Fund and the Fund has already approved several applications as a pilot scheme. We will give consideration to Mr CHU's suggestion in the light of our future policies and resources.

DR YEUNG SUM (in Cantonese): Madam President, the NET Scheme is a very good scheme. Other than the problems mentioned by the Secretary in his main reply just now, what are the most fundamental problems confronting the Scheme currently and what solutions are there?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, the Scheme encounters mainly two problems: firstly, the NETs' adaption to a different environment after their arrival in Hong Kong; secondly, their co-ordination with the principal and teachers of the school they serve and how they can give play to their expertise in their work. I have already mentioned in my main reply eariler that the ED has been organizing workshops and holding meetings with them to facilitate the exchange of experiences. Besides, we have also commissioned the Hong Kong Institute of Education to undertake a two-year assessment which will study the benefits we may receive after hiring the NETs and specific areas for improvement in the Scheme. Although the assessment will take two years, an interim report will be released and we will try our best to improve the Scheme in accordance with the findings of the interim report for the to benefit of schools, teachers and students.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, as far as I know, the NET Scheme has encountered a lot of problems ever since its inception. Just as the Secretary said, the greatest problem is the adaptation of the teachers. A batch of NETs will definitely quit after this year's summer holiday. Does the Government have any preventive measures in place to ensure that there will be sufficient NETs teaching when school resumes on 1 September, so that this year's scenario will not be repeated in which some NETs did not report for duty until as late as February, March or even April?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, we are currently conducting a new round of recruitment exercise at present. The response to the recruitment this time is very good and we have received over 1 000 applications. We will hold interviews in May and offers for appointment will be made in June. There are about 86 vacancies at the moment. We will consider drawing up a waiting list so if vacancies occur again in the future, we can make offers for appointment to these equally eligible applicants as soon as possible.

MR CHEUNG MAN-KWONG (in Cantonese): "Knowing a person by repute is not as good as seeing him in the flesh". No matter how much information is provided to the NETs beforehand, it does not necessarily convince them to stay. At present, it is reported that 30% of the NETs do not intend to renew their contracts; some of them criticize that the workloads of the NETs are very heavy, public examinations are not suitable for students of lower standard, and the education system of Hong Kong is terrible. All these make them feel that they are useless. Will the Secretary tell us whether the NETs' criticism of the Hong Kong education system is reasonable? Do they quit because they feel useless, or the education system in Hong Kong is really as terrible as described by them?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, of course, not all NETs responded to the survey and the survey shows only about 30% of the respondents were considering not to renew their contracts upon expiry. In fact, so far, only eight NETs really quitted their jobs, which account for approximately 2% of all the NETs. One of them quitted for a teaching job in another place, while two went to work for our tertiary institutions. Therefore, I do not want to jump to a conclusion now and say that many NETs quit due to dissatisfaction with our education system. I would like to observe for a longer time before drawing my conclusion. Early next year, we will officially ask all the NETs to indicate whether they are willing to renew their contracts.

DR RAYMOND HO (in Cantonese): Madam President, in order to raise the English standard in Hong Kong, I agree that the NET Scheme should be implemented. However, a lot of practical problems lie in the way. I am the chairman of the council of a secondary school and thus have discussed these problems with the NETs. Although the Government provided them with information on Hong Kong, I realize that they did not know much about Hong Kong before they came. Some of them have never taught abroad or in any place outside their country, so they found difficulties in adapting to the new environment and did not understand the relationship between students and their teachers and parents here. For the teachers recruited from the United Kingdom, can we ask the British Commissioner to talk with them and give them more information on Hong Kong rather than just relying on video tapes and written material? Will that be more helpful?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, of course, other than furnishing the NETs with video tapes, we would also explain the situation in Hong Kong to them during the interviews. After their arrival, we would also liaise with the cultural societies or consulates of their countries in order to help them further understand Hong Kong. As to whether we can further liaise with their local education institutions or work more in terms of publicity, after listening to Dr the Honourable Raymond HO's views, we will consider how improvements can be made in these areas when we review the Scheme in the future.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, just now many Honourable colleagues said that many problems were encountered in the course of recruiting NETs and the NETs found great difficulties in adaptation after their arrival in Hong Kong. As a result, their work of teaching is influenced. In order to alleviate the pressure on the NETs and to reduce the problems they face in adaptation, will the Secretary consider adopting other methods to enhance the quality of English education in Hong Kong, for instance, improving our curricula and examination system as suggested earlier by the Honourable CHEUNG Man-kwong?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, the NET Scheme is only one of the methods of raising the English standard of our students. We do have other methods and they are already being carried out, such as all programmes of elevating English standard under the Quality Education Fund and setting up language laboratories in schools. Moreover, in the future, we may set language benchmarks which teachers have to meet. The NET Scheme, therefore, is only one of our many methods. We have undertaken to regularly review the NET Scheme and we will conduct a more comprehensive review after two years. We will share the result of the review with Members by then.

MR AMBROSE CHEUNG (in Cantonese): Madam President, other than the NETs' adaptation problem mentioned by the Secretary, will he also consider reviewing the term of the present contract? We can see that a lot of thoughts and resources have been put into the recruitment procedure of NETs, has the Secretary considered reviewing whether the term of the present contract is suitable? How can the mobility of the NETs be stabilized so as to reduce the impact on students and schools?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, when we conduct a comprehensive review of the Scheme in the future, we may reconsider the term of the contract. However, my initial view is that the present two-year contract is a rather standardized one. If it is too long, there may be a lack of flexibility; if it is too short, people who are interested in coming to work in Hong Kong may feel insecure. Therefore, I believe that two years are more or less appropriate. However, when we conduct the comprehensive review, we will listen to the views of the NETs to see if there is a need to revise the term of the contract.

PRESIDENT (in Cantonese): Since this Council has already spent over 15 minutes on this question, we will now move on to the fifth question.

Military Personnel's Visit to Lantau

5. MR ALBERT HO (in Cantonese): Madam President, on 1 February this year, the Police Force deployed a constable to provide assistance in traffic arrangement upon the request of the People's Liberation Army Military Force in Hong Kong (the Garrison), to facilitate visiting military personnel going to Lantau Island. In this connection, will the Government inform this Council of:

(a) the purpose of the military personnel's visit to Lantau, and the places on Lantau which they visited on that day;

(b) the number of military personnel involved and the type of vehicles used by the Garrison; and

(c) the policy on providing traffic arrangement assistance to the Garrison; and the measures to prevent such assistance from being abused or being regarded as a privilege of the Garrison?

SECRETARY FOR SECURITY (in Cantonese): Madam President,

(a) and (b)

On 1 February this year, the Garrison made arrangements for a group of military personnel visiting Hong Kong to inspect the military installations and geographical conditions in Lantau, including the new Airport and the Buddha Statue at the Po Lin Monastery. The inspection team comprised about 15 military personnel and vehicles deployed included a military jeep, a minibus and a saloon car.

(c) Government departments have maintained close liaison with and provided necessary assistance to the Garrison to support its discharge of duties in the Hong Kong Special Administrative Region (SAR). These are undertaken strictly in accordance with the Basic Law, the Garrison Law and the laws of the SAR.

The police have laid down clear criteria for providing road users with appropriate assistance in traffic arrangement as and when necessary, to ensure the safety of road users and the smooth flow of traffic. These criteria equally apply to the Garrison's vehicles where assistance is required. When handling requests for assistance from the Garrison, the police would take in consideration factors such as the size, type and number of vehicles involved, the geographical environment of the area, whether the drivers are familiar with the road conditions in Hong Kong, the impact of the routing and itinerary on the local traffic, and the status of the military personnel concerned and so on.

In considering request from any organization for assistance in traffic arrangement, the police will invariably consider the actual circumstances and needs at the time in accordance with the established criteria and make the necessary arrangement. There will be no question of abuse or privileges being granted to any organization.

MR ALBERT HO (in Cantonese): Madam President, the Government of course has the responsibility to support the Garrison in the discharge of its duties in Hong Kong. We also welcome their visit to our scenic spots, including the Buddha Statue. My concern is, however, what kind of special traffic assistance they would actually need under the circumstances that the inspection team comprised only about 15 military personnel and the convoy included a military jeep, a minibus and a saloon car, according to parts (a) and (b) of the reply. Is it because they are the Garrison we have to clear traffic and lead the way for them?

SECRETARY FOR SECURITY (in Cantonese): Madam President, perhaps let me first explain the background against which assistance was rendered. Earlier on, a military vehicle of the Garrison was stuck at a curve when travelling along the Tung Chung Road which is circuitous and narrow. As a result, traffic was halted and the police was called in to provide assistance. In view of this, at the end of 1997, the Hong Kong Police Force voluntarily required the Garrison to serve them advance notice whenever large vehicles were to be used on the roads in Lantau. The purpose is to provide assistance to them when they drive along those narrow roads so as to ensure the safety of road users and the smooth flow of traffic.

In accordance with the agreement, the Garrison asked for traffic assistance in Lantau on 1 February and the police responded positively on the ground that their drivers were not familiar with the roads there. Although only three vehicles were to be deployed, it was still possible that they would be stuck at the curve in a narrow road in Lantau as what had happened before. Hence, the police rendered assistance by clearing traffic for them.

MISS EMILY LAU (in Cantonese): Madam President, are those three vehicles big ones, because the Secretary for Security said that one reason for rendering assistance is the size of the vehicles? Does the Secretary know that some police officers have lodged a complaint about this because they are against carrying out such duty?

SECRETARY FOR SECURITY (in Cantonese): Madam President, in regard to Miss LAU's supplementary question, the vehicles involved in this case are a military jeep, a minibus and a saloon car, as I have said earlier. I think it is merely a matter of comparison as to whether they are big or small. Compared with a public bus, a minibus is certainly not a big one. For safety's sake and in view of the drivers' unfamiliarity with the roads in Lantau, the police considered it necessary to clear traffic for them.

In regard to the rumour that some police officers have made a complaint about this, an investigation has been conducted to find that the press report is not true.

MR LAU KONG-WAH (in Cantonese): Madam President, sometimes we also need the assistance of the police when there is a vehicle parade. That is nothing strange. What is the communication mechanism between the Garrison and the police on traffic arrangement and does it perform satisfactorily?

SECRETARY FOR SECURITY (in Cantonese): Madam President, in regard to the provision of traffic assistance, the police have rendered different forms of assistance not more than 10 times to the Garrison in support of its discharge of duties over the past year. These include way leading, traffic clearance and protection along the way.

MR JAMES TO (in Cantonese): Madam President, according to the main reply, one of the considerations is the status of the military personnel concerned. Does "status" refer to their rank? Is there any specific guidelines as to which ranks would be entitled to such assistance?

SECRETARY FOR SECURITY (in Cantonese): Madam President, the rank of the officers concerned is one of our considerations.

PRESIDENT (in Cantonese): Mr James TO, which part of your question has not been answered?

MR JAMES TO (in Cantonese): Madam President, I understand that rank is one of the considerations. But my question is: Which ranks of officers will be entitled to such assistance?

SECRETARY FOR SECURITY (in Cantonese): Madam President, it is not convenient for me to disclose the details here as it involves the Garrison's affairs.

MR ANDREW WONG (in Cantonese): Madam President, according to the main reply, the inspection team comprised about 15 people. Is it more than or less than 15 people? Did the team also comprise people other than military personnel; and what is their number?

SECRETARY FOR SECURITY (in Cantonese): Madam President, I do not have the breakdown of these 15 people on hand. Perhaps I should correct the main reply by saying that the number of military personnel is 15.

MR ANDREW WONG (in Cantonese): In the latter part of my supplementary question, I asked if there were non-military personnel in the team and their number. I am not asking for a breakdown of the figure.

SECRETARY FOR SECURITY (in Cantonese): Madam President, I do not have the information. All I have on hand is that there were 15 military personnel.

MISS EMILY LAU (in Cantonese): Madam President, this question is about an inspection team. But they paid a visit to the Buddha Statue at the Po Lin Monastery. So the team should be regarded as a sight-seeing group in nature. In that case, can it be regarded as an official inspection team?

SECRETARY FOR SECURITY (in Cantonese): Madam President, first of all, I would like to point out that the occasion on that day was mainly for the Garrison to inspect the military installations in Lantau. When the police studied the route upon receipt of their request for assistance, they found that the inspection team could pay a visit to the Buddha Statue at the Po Lin Monastery on their way to their destination without making a detour. We thought this is quite normal and we should not object to it. The reason is that we often arrange in a convenient way a tour round Hong Kong's scenic spots, such as the Peak and the Tsing Ma Bridge, for our visitors who may be high-ranking military officers or foreign government officials who visit Hong Kong on our invitation as honoured guests. The purpose is to let them get a better understanding and a good impression of Hong Kong. Hence, I do not think there is anything unusual in such an arrangement.

MR LAU KONG-WAH (in Cantonese): Madam President, the Secretary has not answered my question in a precise way. Although she said she was not in a position to disclose their ranks, can she tell us which ranks of government officials are authorized to grant approval to such an arrangement?

SECRETARY FOR SECURITY (in Cantonese): Madam President, neither do I have information on hand indicating which ranks of police officers can approve such an arrangement. However, as I have explained earlier, both sides have entered into an agreement and it is not a serious matter as far as traffic clearance and arrangement are concerned. I do not think the approval of very high-ranking police officers is required.

MR LAU KONG-WAH (in Cantonese): Can the Secretary give me a written reply?

SECRETARY FOR SECURITY (in Cantonese): Madam President, I can. (Annex VII)

MR ANDREW CHENG (in Cantonese): Madam President, this incident involved an inspection team which consisted of 15 military personnel, a military jeep, a minibus and a saloon car. As I see it, the convoy can hardly be considered a very complicated or a big one. And the traffic conditions and geographical environment of the location concerned is relatively simple. Was it imperative that the Security Branch or the Hong Kong Police Force made the same arrangement for similar simple operation of the British Garrison in the past? Is there any concrete data on this? If yes, then we can see if the Chinese Garrison enjoys privilege or not. We hope to obtain more information. The Secretary said that it is not convenient to disclose the ranks of the military personnel. But can she inform this Council how many times the police have rendered assistance to the British Garrison and the Garrison at present after Hong Kong's return to China?

SECRETARY FOR SECURITY (in Cantonese): Madam President, in regard to Mr Andrew CHENG's question, I believe if the British Garrison before the handover had made the same request to the police for assistance in leading the way or traffic clearance in order to avoid traffic accident or congestion, the police would have handled it in the same way. I wonder if the police have any data to indicate how many times they had offered similar assistance to the British Garrison. I also doubt if they have kept such minor information. But I would check it out. (Annex VIII)

MR FRED LI (in Cantonese): Madam President, since the Secretary is reluctant to disclose the ranks of the 15 people, I would not pursue any further. Is there any criteria against which the Government will determine the minimum rank which would entitle an officer to police assistance in traffic clearance? For instance, when municipal councillors or members of parliament of foreign countries visit Hong Kong, I believe the Hong Kong Government will make different arrangement for them. For instance, personnel of different levels will occupy different vehicles when they are going to pay a visit. Has the Government laid down different criteria for determining what reception standards are adopted?

SECRETARY FOR SECURITY (in Cantonese): Madam President, in regard to Mr LI's question, two factors will be considered by the police in deciding whether assistance should be provided to clear traffic for them. Firstly, security needs; secondly, the status of the visitors. Hence we will also consider whether the visitors are heads of state or holding a ministerial office or above. However, it does not mean that we must provide traffic clearance assistance to personnel of a certain rank because we also have to assess if there is any security need and the actual traffic conditions, including whether it is during rush hours, the number of vehicles involved, and whether it will lead to traffic congestion and late arrival if assistance is not provided. We will consider all the above factors, but we will not stick to them without any flexibility.

PRESIDENT (in Cantonese): Sixth question.

Japanese Sashimi and Sushi Shops

6. DR TANG SIU-TONG (in Cantonese): Madam President, since later on a bill to scrap the two Municipal Councils will be tabled, perhaps Members may be interested to know that we will have a much heavier workload after the Municipal Councils have been scrapped.

PRESIDENT (in Cantonese): Dr TANG Siu-tong, you cannot introduce matter which is not related to the main question. Please go to your oral question direct.

DR TANG SIU-TONG (in Cantonese): Yes, Madam President. It is reported that more than half of the shops now selling Japanese sashimi and sushi are operating without licences. Disregarding the stipulated requirement to store the foods at a low temperatures, these stores are jeopardizing public health. In this connection, will the Government inform this Council of:

(a) the number of such shops that have been licensed to operate; whether it has estimated the number of shops operating without licences; the actions that it has taken against such unlicensed shops;

(b) the number of such shops prosecuted over the past three years for not storing the sashimi and sushi on sale at low temperatures, and among them, the number of shops that were prosecuted more than once; and

(c) the number of persons who became unwell and required hospitalization over the past three years after eating unclean sashimi or sushi; the major kinds of diseases that they contracted; and the plans it has put in place to educate the public to be mindful of the hygiene condition of such foods?

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

(a) In the Provisional Regional Council and the Provisional Urban Council areas, there are respectively 211 and 354 shops granted a licence or permit to sell Japanese sashimi and sushi.

The two Municipal Services Departments estimate that a total of about 42 shops have been selling sashimi and sushi without a licence or permit. They have taken prosecution actions against them. The two departments will further step up inspections and take prosecution actions against such unlicensed shops. Applications for "Prohibition Orders" and "Closure Orders" will be made to the Court, where necessary, to stop their unlicensed operation.

(b) According to the licensing requirements of the two Provisional Municipal Councils, the sashimi and sushi on sale should be stored at low temperatures of 0⁰C to 4⁰C.

Since the introduction of licensing control by the Provisional Regional Council and the Provisional Urban Council on 1 February 1997 and 1 March 1997 respectively, the two concerned Municipal Services Departments have issued 30 and 42 verbal warnings respectively to operators in breach of this requirement. In the event that the warning is not heeded, follow-up actions will be taken, including the issue of written warnings, suspension or cancellation of the shop's licence or permit. There are a total of 10 shops which have been issued more than one verbal warnings.

Since this issue only involves the enforcement of a licensing condition, the maximum penalty is the cancellation of the licence or permit concerned. There is no prosecution involved.

(c) In the past three years, 77 persons complained of gastrointestinal discomfort after consumption of sushi and sashimi. Among these, 12 were hospitalized. They all developed symptoms of food poisoning, including abdominal pain, nausea, vomiting and diarrhoea.

To enhance public awareness of food safety in the handling and consumption of sushi and sashimi, education and publicity programmes are conducted through various channels such as pamphlets, posters, newsletters, exhibitions, seminars, telephone hotlines, media interviews and newspaper columns to disseminate to members of the public and the food trade the knowledge and importance of food, environmental and personal hygiene.

DR TANG SIU-TONG (in Cantonese): Madam President, in part (c) of the main reply, the Administration mentioned that in the past three years, 77 persons complained of gastrointestinal discomfort after consumption of sushi and sashimi. How many of these 77 people had patronized unlicensed food establishments?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I do not have such information on hand. I would try to provide a written reply, but I doubt whether the two Municipal Councils have such information. (Annex IX)

MR MICHAEL HO (in Cantonese): Madam President, the issue of unlicensed shops was mentioned in the main reply. Since there are so many unlicensed shops, will the Administration inform this Council what actions have been taken by the two Municipal Services Departments, or what advice have they given the two Municipal Councils, on curbing the operations of these shops? Why is that the authorities have so far been unable to deal with the issue of unlicensed shops properly?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, according to the information on hand, I do not know what plans have been made by the two Municipal Services Departments and the two Municipal Councils on curbing the operations of unlicensed shops, but I know that the two Municipal Services Departments have worked very hard in prosecuting the unlicensed establishments. As to how the Urban Council will deal with this issue, I believe that the Urban Council can answer Mr HO's supplementary question.

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

MR MICHAEL HO (in Cantonese): Madam President, the Secretary just said that she does not have such information, can she provide the information later on?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I will try to find out. (Annex X)

MR AMBROSE CHEUNG (in Cantonese): Madam President, is the Secretary aware that about 18 months ago, the Provisional Urban Council endorsed a policy to introduce more stringent legislation on curbing unlicensed food establishments, including sashimi and sushi shops? Will the Secretary tell us why has the Administration delayed the implementation of this policy over the past 18 months and failed to enact relevant legislation to curb such unlicensed food establishments? Today, the main reply of the Secretary clearly indicated that unlicensed shops are in a more advantageous position than licensed shops because unlicensed shops do not have to worry about closures. Even if unlicensed shops are eventually closed down, it may be nine or 12 months later, whereas licensed shops will have to be closed down immediately. I would like to ask the Secretary ......

PRESIDENT (in Cantonese): Mr CHEUNG, it is question time. I think you have already asked your supplementary question.

MR AMBROSE CHEUNG (in Cantonese): Then, will the Secretary please answer it. (Laughter)

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): May I ask Mr CHEUNG to repeat his question? (Laughter)

MR AMBROSE CHEUNG (in Cantonese): Madam President, the first part of my supplementary question is: Is the Secretary aware that 18 months ago, the Urban Council endorsed a policy to ask the Urban Services Department to amend the existing Ordinance, so as to facilitate its stepping up actions on curbing unlicensed operations, including granting the Director of Urban Services the power to close down unlicensed food establishments immediately? The second part of my supplementary question is: Why has the Administration been delaying the enactment of this amendment in the past 18 months?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, the supplementary question of Mr CHEUNG touches on the working relationship between the Urban Council and the Urban Services Department, so I do not know why the amendment has been delayed, but I can try to find out. However, I believe that Mr CHEUNG should be fully aware of what happened in the Urban Council.

MR AMBROSE CHEUNG (in Cantonese): Madam President, according to the 1973 Memorandum of Administration, the Urban Council and Urban Services Department are accountable to the serving Chief Secretary for Administration. A Member has raised this question, but there is no answer and even the Secretary said that she does not know. Can the other Bureau Secretaries answer my supplementary question?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I will try to seek an answer to Mr CHEUNG's supplementary question and give him an answer in writing. (Annex XI)

MR HO SAI-CHU (in Cantonese): Madam President, everyone knows that globefish, commonly known as puffer fish, may be an ingredient of Japanese sashimi and sushi. Those who consumed improperly prepared puffer fish will not only be hospitalized or suffer from diarrhoea because improperly prepared puffer fish may be lethal. While unlicensed food establishments are definitely not up to standard in this respect, has the Administration issued a special licence for slaughtering and preparing globefish?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I understand that the Urban Services Department has only issued a general licence for all Japanese sashimi and sushi, and no special licence has been issued for the preparation of any particular species of fish. I understand that Members are concerned because Japanese sashimi and sushi belong to the category of high-risk food, and special care must be taken in their preparation. Special conditions have been laid down by the two Municipal Services Departments on the handling and storage of sashimi and sushi, and in order to guarantee that this type of food is safe for consumption, it is stipulated in the licensing conditions that they should be properly stored in separate containers and refrigerators.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, in paragraph (a) of the main reply, the Secretary mentioned that a total of about 42 shops have been selling sashimi and sushi without a licence or permit. How can members of the public distinguish between licensed and unlicensed shops so that they will know that the food of these shops is safe for consumption?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I understand that all licensed food establishments are required to display their licences at prominent locations, therefore, members of the public can easily tell whether the establishment is licensed.

MR LAU KONG-WAH (in Cantonese): Madam President, the Secretary has just deferred a number of supplementary questions to the two Municipal Councils, but I would like her to answer my question. My question is, the hygienic conditions of other countries, Japan for example, is very high, can Hong Kong measure up to their standard?

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, generally speaking, it is very difficult for us to make a direct comparison, for even the food establishments in Hong Kong have different standards, but it is true that Japan has far more experience than us in handling sashimi and sushi. Since the licensing system of Hong Kong was only introduced in February and March 1997, it is still a rather new system. As to whether we can enhance our standard, I hope that, given the two years experience of the two Municipal Councils, our hygienic standard can gradually be improved.

WRITTEN ANSWERS TO QUESTIONS

Chain-handcuffing of Illegal Workers under Arrest

7. MR HO SAI-CHU (in Chinese): It is reported that the police chain-handcuff a number of illegal workers together when making arrest. In this connection, will the Government inform this Council whether:

(a) the above practice is commonly used by the police in other types of cases in which more than one suspect are arrested at the same time;

(b) any review has been conducted to see if such a practice is appropriate; and

(c) consideration will be given to changing the practice of chain-handcuffing illegal workers under arrest, on humanitarian and human rights grounds?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) The Police General Orders (PGO) provide that a police officer may only use handcuffs under the following situations:

(i) to ensure the security and control of a person whom he has reason to believe is likely to escape; or

(ii) to protect himself or another person, including the person to be restrained, from any injury.

In accordance with the PGO, arrested persons will only be handcuffed where there is a possibility that the arrested persons may escape. This is particularly so in outdoor areas such as construction sites where illegal workers arrested do try to escape.

(b) and (c)

The PGO govern the operation of the Police Force and are under constant review to ensure that police officers discharge their statutory duties in the most appropriate manner. Whilst respecting the rights of arrested persons, the police officers have a duty to maintain proper custody of such persons. We believe the current practice described in part (a) above has struck a balance between the two.

Naming of Streets

8. MR CYD HO (in Chinese): It is reported that some people in the cultural circle have criticized the Administration for lack of creativity in naming streets, and for adopting street names that were translated into English in a slapdash way. Moreover, the procedure for naming of streets in Kowloon and Hong Kong is different from that in the New Territories. In this connection, will the Government inform this Council:

(a) how the relevant authorities solicit views from local groups and individuals on the proposed names of new streets in the districts concerned;

(b) whether it will consider inviting the public to propose names for new streets; if so, the details of that; if not, the reasons for that; and

(c) whether it plans to adopt a standard procedure for naming streets in Kowloon, Hong Kong and the New Territories; if so, the details of that; if not, the reasons for that?

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

(a) On the naming of new streets, the relevant authorities (the Provisional Urban Council for the Urban Council area and the Director of Lands for the New Territories) solicit through the District Offices views and suggestions from local groups and individuals including the relevant Area Committees, Mutual Aid Committees, Owners' Incorporation, and the Provisional District Boards as appropriate. For streets within village areas, the District Offices will also consult the village representatives and rural committees.

(b) The present system allows members of the public of the district concerned to propose names for the new streets. We consider that the present system is working well and the residents of the district concerned are in the best position to advise the relevant authorities on these matters.

(c) Currently, the procedures for naming streets in the Urban Council area and the New Territories are basically identical. The relevant authorities will seek the views and suggestions from local groups and individuals through the District Offices as mentioned at (a) above. The views and suggestions received will be circulated to the various government departments including the Official Languages Agency, Rating and Valuation Department, Post Office, the Highways Department, and the Land Registry and so on for comments.

In addition, similar rules are applied by the two authorities in naming new streets. In general, the name of a person or institution/organization or names that carry an element of advertising should not be adopted. Except when the name of a nearby place, development or estate is adopted for the street, current practice is that the English name to be given to a street is the anglicized version (not English translation) or the Chinese name as transcribed in the "Three Way Chinese Commercial/Telegraphic Code Book". This seeks to provide a consistent approach to the translation of street names and avoid confusion.

To enhance efficiency and achieve better co-ordination in the naming process, as well as erection and maintenance of street name plates and handling of public enquiries, the Administration has proposed in the Provision of Municipal Services (Reorganization) Bill to be introduced into this Council on 28 April 1999, the transfer of authority for naming streets in Hong Kong Island and Kowloon to the Director of Lands upon the dissolution of the Provisional Urban Council

Quality of Potable Water

9. DR LEONG CHE-HUNG: Regarding media reports that the water quality standards used in Hong Kong for monitoring the quality of potable water are in certain aspects lower than those adopted by the United States or European Union countries, will the Administration inform this Council of:

(a) a breakdown of the results of water quality tests conducted in various districts in Hong Kong in each month of last year; and how such figures compare with the water quality standards adopted by these countries; and

(b) the estimated expenses for raising the quality of potable water to meet the standards adopted by these countries?

SECRETARY FOR WORKS: Madam President,

(a) Hong Kong adopts the World Health Organization (WHO) (1993) Guidelines to Drinking-water Quality to monitor the quality of potable water. The WHO does not set out the minimum test frequencies of its Guideline Values (GVs) except only for two bacteriological parameters, that is, Coliform and E. Coli counts, at minimum monthly intervals. The testing frequencies adopted by the Water Supplies Department and the water quality test results for 1998-99 by regions are given in the attached table against the GVs of the WHO. The test results indicate that the quality of treated water in Hong Kong complies with the WHO guidelines at all times. The Maximum Contaminant Levels (MCLs) of the United States Environmental Protection Agency (USEPA) and the Parametric Values (PVs) of the European Community (EC) for those parameters covered by the WHO guidelines are also listed.

(b) All 19 existing treatments works will require the addition of at least one granular activated carbon filtration treatment stage to ensure compliance with all the WHO, the USEPA and the EC standards. The capital costs for providing these additional treatment works are roughly estimated at about $40 billion with an annual recurrent cost of around $20 million. The estimated timeframe for completion of the upgrading works is expected to be seven years to allow continuous operation of the existing installations during the upgrading works.

Typical Average Water Quality in Five Regions of Hong Kong Water Supplies Department in 1998-99

@Typical

Parameters

Sampling

Units

HK&I

MNE

MNW

MSW

MSE

WHO

USEPA

EC

Frequency

GV

MCL

PV

Antimony

3/Y

mg/l

<0.001

<0.001

<0.001

<0.001

<0.001

0.005

0.006

0.005

Arsenic

3/Y

mg/l

<0.001

<0.001

<0.001

<0.001

<0.001

0.01

0.05

0.01

Barium

3/Y

mg/l

0.010

0.021

0.018

0.014

0.017

0.7

2

-

Boron

3/Y

mg/l

<0.07

<0.07

<0.07

<0.07

<0.07

0.3

-

1

Cadmium

3/Y

mg/l

<0.0001

<0.0001

<0.0001

<0.0001

<0.0001

0.003

0.005

0.005

Chromium

3/Y

mg/l

<0.04

<0.04

<0.04

<0.04

<0.04

0.05

0.1

0.05

Copper

3/Y

mg/l

<0.09

<0.09

<0.09

<0.09

<0.09

2

1.3

2

Lead

3/Y

mg/l

<0.001

0.0011

<0.001

<0.001

<0.001

0.01

0.015

0.01

Manganese

3/Y

mg/l

<0.007

<0.007

0.015

<0.007

<0.007

0.5

-

-

Mercury

3/Y

mg/l

<0.00005

<0.00005

<0.00005

<0.00005

<0.00005

0.001

0.002

0.001

Molybdenum

3/Y

mg/l

<0.02

<0.02

<0.02

<0.02

<0.02

0.07

-

-

Nickel

3/Y

mg/l

<0.02

<0.02

<0.02

<0.02

<0.02

0.02

-

0.02

Selenium

3/Y

mg/l

<0.001

<0.001

<0.001

<0.001

<0.001

0.01

0.05

0.01

Carbon tetrachloride

6/Y

m g/l

<0.50

<0.50

<0.50

<0.50

<0.50

2

5

-

Dichloromethane

6/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

5

-

1,2-Dichloroethane

6/Y

m g/l

<7.5

<7.5

<7.5

<7.5

<7.5

30

5

3

1,1,1-Trichloroethane

6/Y

m g/l

<500

<500

<500

<500

<500

2 000

200

-

Vinyl chloride

6/Y

m g/l

<1.2

<1.2

<1.2

<1.2

<1.2

5

2

0.5

1,1-Dichloroethene

6/Y

m g/l

<7.5

<7.5

<7.5

<7.5

<7.5

30

7

-

1,2-Dichloroethene

6/Y

m g/l

<12

<12

<12

<12

<12

50

cis-isomer: 70, trans-isomer: 100

-

Trichloroethene

6/Y

m g/l

<18

<18

<18

<18

<18

70

5

(d)

Tetrachloroethene

6/Y

m g/l

<10

<10

<10

<10

<10

40

5

(d)

Benzene

6/Y

m g/l

<2.5

<2.5

<2.5

<2.5

<2.5

10

5

1

Toluene

6/Y

m g/l

<175

<175

<175

<175

<175

700

1 000

-

Xylenes

6/Y

m g/l

<125

<125

<125

<125

<125

500

10 000

-

Ethylbenzene

6/Y

m g/l

<75

<75

<75

<75

<75

300

700

-

Styrene

6/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

100

-

Benzo(a)pyrene

3/Y

m g/l

<0.18

<0.18

<0.18

<0.18

<0.18

0.7

0.2

0.01

Monochlorobenzene

6/Y

m g/l

<75

<75

<75

<75

<75

300

100

-

1,2-Dichlorobenzene

6/Y

m g/l

<250

<250

<250

<250

<250

1 000

600

-

1,4-Dichlorobenzene

6/Y

m g/l

<75

<75

<75

<75

<75

300

75

-

Trichlorobenzenes

6/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

-

-

Hexachlorobutadiene

6/Y

m g/l

<0.15

<0.15

<0.15

<0.15

<0.15

0.6

-

-

Alachlor

3/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

2

(e)

Aldicarb

3/Y

m g/l

<2.5

<2.5

<2.5

<2.5

<2.5

10

-

(e)

Aldrin/Dieldrin

3/Y

m g/l

<0.008

<0.008

<0.008

<0.008

<0.008

0.03

-

(e)

Atrazine

3/Y

m g/l

<0.50

<0.50

<0.50

<0.50

<0.50

2

3

(e)

Bentazon

3/Y

m g/l

<7.5

<7.5

<7.5

<7.5

<7.5

30

-

(e)

Carbofuran

3/Y

m g/l

<1.2

<1.2

<1.2

<1.2

<1.2

5

40

(e)

Chlordane

3/Y

m g/l

<0.050

<0.050

<0.050

<0.050

<0.050

0.2

2

(e)

Chlorotoluron

3/Y

m g/l

<7.5

<7.5

<7.5

<7.5

<7.5

30

-

(e)

DDT

3/Y

m g/l

<0.50

<0.50

<0.50

<0.50

<0.50

2

-

(e)

1,2-Dibromo-3-chloropropane

6/Y

m g/l

<0.25

<0.25

<0.25

<0.25

<0.25

1

0.2

(e)

2,4-D

3/Y

m g/l

<7.5

<7.5

<7.5

<7.5

<7.5

30

70

(e)

1,2-Dichloropropane

6/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

5

(e)

1,3-Dichloropropene

6/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

-

(e)

Heptachlor/Heptachlor epoxide

3/Y

m g/l

<0.008

<0.008

<0.008

<0.008

<0.008

0.03

Heptachlor: 0.4, Heptachlor epoxide: 0.2

(e)

Hexachlorobenzene

3/Y

m g/l

<0.25

<0.25

<0.25

<0.25

<0.25

1

1

(e)

Isoproturon

3/Y

m g/l

<2.2

<2.2

<2.2

<2.2

<2.2

9

-

(e)

Lindane

3/Y

m g/l

<0.50

<0.50

<0.50

<0.50

<0.50

2

0.2

(e)

MCPA

3/Y

m g/l

<2.0

<2.0

<2.0

<2.0

<2.0

2

-

(e)

Methoxychlor

3/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

40

(e)

Metolachlor

3/Y

m g/l

<2.5

<2.5

<2.5

<2.5

<2.5

10

-

(e)

Molinate

3/Y

m g/l

<1.5

<1.5

<1.5

<1.5

<1.5

6

-

(e)

Pendimethalin

3/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

-

(e)

Pentachlorophenol

3/Y

m g/l

<2.2

<2.2

<2.2

<2.2

<2.2

9

1

(e)

Permethrin

3/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

-

(e)

Propanil

3/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

-

(e)

Pyridate

3/Y

m g/l

<25

<25

<25

<25

<25

100

-

(e)

Simazine

3/Y

m g/l

<0.50

<0.50

<0.50

<0.50

<0.50

2

4

(e)

Trifluralin

3/Y

m g/l

<5.0

<5.0

<5.0

<5.0

<5.0

20

-

(e)

2,4-DB

3/Y

m g/l

<22

<22

<22

<22

<22

90

-

(e)

Dichlorprop (or 2, 4-DP)

3/Y

m g/l

<25

<25

<25

<25

<25

100

-

(e)

Fenoprop (or 2,4,5-TP)

3/Y

m g/l

<2.2

<2.2

<2.2

<2.2

<2.2

9

-

(e)

Mecoprop (or MCPP)

3/Y

m g/l

<2.5

<2.5

<2.5

<2.5

<2.5

10

-

(e)

2,4,5-T

3/Y

m g/l

<2.2

<2.2

<2.2

<2.2

<2.2

9

-

(e)

2,4,6-Trichlorophenol

3/Y

m g/l

<50

<50

<50

<50

<50

200

-

-

Bromoform

6/Y

m g/l

<1

<1

<1

<1

<1

100

(b)

(b)

Dibromochloromethane

6/Y

m g/l

2

2

1

2

4

100

(b)

(b)

Bromodichloromethane

6/Y

m g/l

5

9

8

8

12

60

(b)

(b)

Chloroform

6/Y

m g/l

18

41

40

34

30

200

(b)

(b)

Sum of ratio of 4 trihalomethanes to their respective GVs

6/Y

0.2

0.4

0.3

0.3

0.4

1.0

-

-

Total Trihalomethanes

6/Y

m g/l

24

52

49

44

45

-

100

100

Coliform

1/M

no./100ml

0

0

0

0

0

0

(c)

0

E.Coli

1/M

no./100ml

0

0

0

0

0

0

0

0

Chlorine

6/D

(mg/l)

1.0 (a)

5

-

-

Cyanide

4/Y

(mg/l)

< 0.01

< 0.01

< 0.01

< 0.01

< 0.01

0.07

0.2

0.05

Cyanogen Chloride (as CN)

4/Y

(mg/l)

< 0.01

< 0.01

< 0.01

< 0.01

< 0.01

0.07

-

-

Fluoride

6/D

(mg/l)

0.48 (a)

1.5

4

1.5

Monochloramine

6/D

(mg/l)

<3 (a)

3

-

-

Nitrite (as NO2)

1/M

(mg/l)

< 0.003

< 0.003

< 0.003

< 0.003

< 0.003

3

3.3

0.5

Nitrate (as NO3)

1/M

(mg/l)

1.1

6.3

8.9

4.3

8.0

50

44

50

Notes:

@ Typical sampling frequency adopted by Water Supplies Department at each sampling point taken per time interval expressed as day (D), week (W), month (M) or year (Y).

HK& I refers to Hong Kong and Islands Region, covering Hong Kong Island, Lantau, Cheung Chau and Peng Chau.

MNE refers to Mainland North East Region, covering Sheung Shui, Fanling, Tai Po, Sha Tin and Ma On Shan.

MNW refers to Mainland South West Region, covering Ngau Tam Mei, Yuen Long, Tuen Mun, Sham Tseng.

MSW refers to Mainland South West Region, covering Tsing Yi, Tsuen Wan, Kwai Chung, Urban Kowloon to Kowloon City.

MSE refers to Mainland South East Region, covering Sai Kung, Tseung Kwan O, Wong Tai Sin, San Po Kong, Kwun Tong and Yau Tong.

WHO refers to the World Health Organization 1993 Guidelines for Drinking Water Quality.

USEPA refers to the United States Environmental Protection Agency, Maximum Contaminant Level (MCL), (1998).

EC refers to the European Community, Parametric Values (1998).

(a) Territory average.

(b) Sum of the concentrations of chloroform, bromoform, dibromochloromethane and bromodichloromethane should be less than 100 m g/1.

(c) No more than 5% of the samples/month may be positive. Test for faecal coliforms must be conducted for each positive sample. No faecal coliform can be detected in each sample.

(d) Sum of the concentrations of trichloroethene and tetrachloroethene should be less than 10 m g/1.

(e) Each pesticide has a parametric value of 0.10 m g/l and the sum of all individual pesticides detected should be less than 0.5 m g/l.

Computer System Failures at Border Check Points

10. MR KENNETH TING (in Chinese): It is reported that the computer systems in the border check points of the mainland Customs at Huanggang Port and Wenjindu Port broke down successively on the 8th of this month, causing delays to some 4 000 cross-boundary container trucks and serious traffic congestion at the border. In this connection, will the Government inform this Council:

(a) whether it knows the total number of computer system failures at the border check points of the mainland Customs in the past three years;

(b) whether it has assessed the losses caused by such failures to the industrial and business sectors and the transport industry in Hong Kong; if so, the specific figures of the losses; if not, whether it will conduct assessments;

(c) whether it has discussed with the mainland Customs and urged the latter to install back-up computer systems or draw up contingency measures at various mainland border check points as soon as possible, so as to prevent the recurrence of similar incidents; if so, the progress in this regard; and

(d) of the measures in place to ease traffic congestion on the Hong Kong side of the border when similar incidents recur in the future?

SECRETARY FOR TRANSPORT (in Chinese): Madam President,

(a) Based on available records maintained by the Customs and Excise Department and the Immigration Department, the numbers of incidents of boundary control point congestions caused by computer failures for the period May 1996 to April 1999 were 30 at Huanggong and eight at Wenjindu respectively.

(b) The Administration has not carried out any assessment of the economic losses to the industrial and business sectors caused by failures of the computer systems at the boundary control points. It is very difficult to carry out such assessments as the impacts will depend on a number of factors, which include the number of cross-boundary vehicles affected and the resultant increases in the traffic time, the types and value of goods involved, the operating characteristics of the trucking industry, as well as the conditions of domestic traffic. Such assessments can at best be very crude, and the impacts can be expected to vary widely with the specific timings of the incidents. Also, most of the required information is not readily available as we do not keep details regarding the effects of computer failures at control points at Shenzhen.

(c) Through the established boundary liaison channels, the Administration has expressed our concern about the impact of computer failures at control points on the traffic flow in the Northern New Territories. We have also urged our counterpart to consider measures to minimize problems caused by computer failures. The mainland authorities have agreed that in case of computer failures on the mainland side of the control points, they would convert to manual operation and inform our boundary authorities immediately. There is a general practice that they will make public announcements if the computer systems could not resume normal operation within 30 minutes. Close liaison will be maintained by both sides on contingency measures until the operation of the computer systems resume normal. We will continue to urge for improvements.

(d) Contingency plans have been drawn up to deal with contingencies which may affect the flow of vehicular traffic at boundary crossings and nearby strategic road networks. The boundary liaison channels will be immediately activated to co-ordinate contingency measures that need to be taken to manage the situation. Under the contingency plans, departments concerned will work together to implement traffic control measures to manage the vehicular flow, liaise closely with their counterparts to keep track of developments and monitor closely the traffic flow. Information will also be disseminated through the media to the trucking and freight trade and the public to keep them informed of the traffic build-up and the anticipated waiting time in the event of contingencies. They would also be advised to use other crossing points as appropriate. Such plans are being kept under regular review.

Use of Vacant Units in Private Flatted Factories

11. DR LUI MING-WAH (in Chinese): As there is a large number of vacant units in private flatted factories in the urban area, will the Government inform this Council whether it will consider rezoning the sites of such factories for commercial/residential use and enact legislation or take other measures to encourage the owners concerned to convert the vacant premises into commercial residential premises, so as to relieve the shortage of residential units in the urban area, improve the urban environment and put the land to more effective use; if not, please state the details?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Chinese): Madam President, 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 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 hectare is for residential development).

To facilitate industrial buildings to be converted or redeveloped to commercial/residential uses, the Government has introduced a new "Residential (Group E)" (R(E)) zoning in late 1998 with a view to phasing out certain pockets of industrial land being located in a predominantly residential neighbourhood. Under this zoning, redevelopment of industrial buildings to industrial uses will not be permitted while redevelopment to residential and other uses may be permitted through the planning permission system. Since the introduction of this new zoning, the Board has rezoned about 4 hecatres of existing industrial land to R(E). As redevelopment of industrial buildings could be facilitated through re-zoning, we do not consider it necessary or appropriate to enact legislation to force owners of such buildings to redevelop.

Traffic Demand of Pleasure Vessels

12. MRS SOPHIE LEUNG (in Chinese): In recent years, large scale reclamation works have been carried out in the Victoria Harbour, thus narrowing the navigation channels. Meanwhile, the number of vessels cruising in the harbour has continuously increased. In this connection, will the Government inform this Council:

(a) of the measures to be taken by the authorities to ensure safe marine traffic for pleasure vessels and merchant ships; and

(b) whether the authorities have, in planning the reclamation works, considered the traffic demand of pleasure vessels and the provision of berthing places for these vessels; if not, the reasons for that?

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

(a) The Marine Department has implemented the following measures to ensure the navigation safety of vessels in the Victoria Harbour:

(1) Navigation buoys are laid in the centre of principal fairways to separate vessel traffic of opposite direction so as to minimize the risk of collision.

(2) In order to reduce the number of large ships going through the central harbour, vessels working at the eastern harbour area are required to enter or leave via Lei Yu Mun, and those working on the western side of the harbour are required to enter or leave via the Green Island channel.

(3) Patrol craft are deployed 24 hours to patrol the harbour to ensure marine safety regulations are followed by all vessels.

(4) Marine safety campaigns are organized and Marine Department Notices are issued on a regular basis to increase the awareness of navigation safety by vessel operators.

(b) In the planning of all reclamation projects, the Administration will carry out a marine-traffic impact assessment. If it is found that the reclamation works will affect the existing berthing spaces (including those for pleasure vessels), the Administration will provide new berthing spaces in the reclamation areas or other areas as far as possible. The long-term demand for berthing spaces of pleasure vessels and other vessels will be taken into consideration in the planning for future coastal and typhoon shelter development.

Water Depth of Victoria Harbour

13. MR LAW CHI-KWONG (in Chinese): Regarding the depths of water in the Victoria Harbour, will the Government inform this Council of:

(a) the highest, lowest and average depths of water as well as the deepest and the shallowest locations in the Victoria Harbour in each of the past 10 years; and

(b) the causes of such variations in the depths of water in the Victoria Harbour?

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

(a) In the past 10 years, there has been no major change in the water depth of major fairways in the Victoria Harbour, which is maintained at about 11 m. The deepest point of the major fairways in the Victoria Harbour is at Lei Yu Mun which is about 43 m. The shallowest point is at Yau Ma Tei fairway which is about 7 m.

(b) Due to geological conditions, water depth in the Victoria Harbour is affected by natural sedimentation. The Marine Department will regularly survey the navigation channels, mooring buoy areas, and anchorages and carry out maintenance dredging to ensure that there is sufficient depth for the passage of ocean-going vessels in the major fairways.

Examining Investigations Conducted by the SFC

14. MR SIN CHUNG-KAI (in Chinese): The Operations Review Committee of the Independent Commission Against Corruption (ICAC) is responsible for examining progress reports submitted by the Operations Department of ICAC on current major investigations, cases that have been investigated for over 12 months and searches authorized by the Commissioner of ICAC under the Prevention of Bribery Ordinance (Cap. 201), and so on. In this connection, will the Government inform this Council whether or not it will follow the above practice and establish an independent committee for the Securities and Futures Commission (SFC) tasked to examine investigations conducted by the SFC so as to enhance its transparency; if so, whether legislative amendments are involved, and the specific timetable for that; if not, the reasons for that?

SECRETARY FOR FINANCIAL SERVICES (in Chinese): Madam President, the (SFC) is empowered under the Securities and Futures Commission Ordinance (Cap. 24) to administer legislation governing the securities and futures markets. Its regulatory functions encompass regulation of the exchanges and clearing houses, licensing of market intermediaries, protection of investors, investigations into market misconduct and certain aspects of the corporate governance of listed companies. In performing its functions, the SFC will have to make decisions pursuant to the powers vested in it under relevant ordinances, subject to necessary checks and balances against possible abuse.

Under the Securities and Futures Commission Ordinance, the SFC shall comprise not less than eight Directors including the Chairman appointed by the Chief Executive. The Ordinance further provides that half of the directors must be non-executive. Currently, the SFC has 12 Directors including six who are Non-Executive Directors (NEDs). The NEDs are not SFC staff and are not involved in the day-to-day management of SFC affairs. They oversee the work of the SFC on a regular basis to act as the first line of independent supervision of the SFC Executive's work.

Also the Ordinance provides for the establishment of an independent Securities and Futures Appeals Panel, comprising members who are not directors or employees of the SFC to hear appeals from parties aggrieved by decisions made by the SFC. The SFC is also subject to the scrutiny of the Ombudsman and the ICAC. In addition, its decisions are subject to judicial review.

We are now modernizing existing ordinances governing the securities and futures markets, with a view to consolidating them into a composite Securities and Futures Bill. We shall take the opportunity to strengthen the regulatory powers of the SFC in the light of market developments, in order to enable it to perform its regulatory functions effectively for the better protection of investors. In the process, we are mindful of the need to strengthen also the existing checks and balances so as to ensure that they are commensurate with the strengthened regulatory powers. It is important that these powers shall be exercised judiciously and fairly, without creating unnecessary burden on the regulated community or stifling market growth and innovations or opening up greater opportunities for abuse.

Administrative review of the investigatory process conducted by the SFC, like the operations review mechanism for the ICAC, can be one of the additional checks and balances to be considered. I have already requested the SFC to give active and positive consideration to this option. As announced by the Financial Secretary in the Budget in March, we aim to introduce the composite Securities and Futures Bill to the Legislative Council by the end of this year. Additional checks and balances will be introduced in the context of this legislative exercise, as and when they are ready.

Emission of Excessive Fumes from Vessels

15. MR LEUNG YIU-CHUNG (in Chinese): Will the Government inform this Council whether there is legislation in place to control the emission of excessive fumes from vessels in the Hong Kong waters; if so, of the number of prosecutions instituted against vessels involved in the emission of excessive fumes in the past three years; the number of convicted cases among them and the average penalties imposed in such cases; if not, the reasons for that; whether it will consider introducing such legislation?

SECRETARY FOR ECONOMIC SERVICES (in Chinese): Madam President, the emission of smoke from vessels in the waters of Hong Kong is governed by section 50 of the Shipping and Port Control Ordinance, which provides that except in circumstances affecting the safety of life or of the vessel, no vessel shall emit excessive smoke. The maximum penalty for contravention of this section is a fine of $20,000. In receiving a complaint, the Marine Department will measure the quantity of smoke emitted from the vessel. If the quantity of smoke emitted is found to be exceeding the standard stipulated in Air Pollution Control (Smoke) Regulations, prosecution action will be initiated.

In the three years from 1996 to 1998, the Administration has initiated a total of four prosecution cases on vessels emitting excessive smoke. They were all convicted and the average penalty in each case was $2,000.

Solution to the Millennium Bug Problem

16. MR YEUNG YIU-CHUNG (in Chinese): It is reported that some of the methods used to tackle the Year 2000 (Y2K) compliance problem for computers (commonly known as the "millennium bug problem") merely serve to postpone the problem by several decades, rather than solving it completely. In this connection, will the Government inform this Council if it knows whether:

(a) the methods currently adopted by government departments and public-funded organizations can completely solve the millennium bug problem; if not, the reasons for that; and

(b) the Hong Kong Productivity Council, in providing Y2K compliance services for small and medium enterprises, has informed the enterprises whether or not the methods adopted can solve the millennium bug problem completely, so that the enterprises will not adopt temporary solutions unknowingly; if not, the reason for that?

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

(a) In the majority of cases, government departments and government funded organizations adopt comprehensive rectification programmes for non-compliant systems to achieve full Y2K compliance. For a handful of older systems expected to be replaced in a few years' time, after discussions with the technical departments and having considered the cost-effectiveness of various solutions, the concerned departments may, in view of the design and characteristics of these older systems, adopt expedient measures to enable such systems to continue operation beyond 2000 until replacement takes place. These expedient measures are accepted by the industry as feasible solutions to the Y2K problem.

(b) Based on the solutions provided by computer softwares and hardwares suppliers for their products, the Hong Kong Productivity Council draws up Y2K rectification proposals for individual small and medium enterprises. These proposals will set out the feasible solutions and the effectiveness of each solution. It is then up to individual enterprises to decide on their own the most suitable solution.

Provision of Infrastructure in Government Tunnels for Telephone Service Providers

17. MISS CHRISTINE LOH: Some mobile telephone service providers are unable to provide telephone services inside government tunnels because the Electrical and Mechanical Services Department (EMSD) cannot provide the relevant infrastructure inside the tunnels. In this connection, will the Government inform this Council:

(a) of the reasons for the EMSD's inability to provide such infrastructure;

(b) when the EMSD will complete installation of the necessary infrastructure;

(c) of the names of such telephone service providers; and

(d) whether the inability of the EMSD to provide infrastructure for all service providers affects the level playing field, and if so, the role of the Office of Telecommunications Authority (OFTA) to ensure fair competition?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING: Madam President,

(a) Primarily, due to the limited space in cable trays and ducts of the five government tunnels, there are technical constraints in entertaining the applications from four Personal Communications Services (PCS) operators for them to install mobile telecommunications facilities inside the five government tunnels.

(b) To resolve the problem identified in (a) above, the OFTA is now co-ordinating with the Transport Department (TD) which is responsible for the operation and management of government tunnels and the EMSD, which serves as the technical adviser to the TD of the electrical and mechanical services in these tunnels, as well as the PCS operators to explore technically feasible options which will make more efficient use of the cabling space in government tunnels, thus facilitating the extension of network coverage of the PCS operators to these tunnels at the earliest opportunity.

(c) Hong Kong Telecom CSL Limited, Mandarin Communications Limited, New World PCS Limited and Peoples Telephone Company Limited have made applications for the installation of mobile telecommunications facilities inside government tunnels.

(d) The Administration is committed to maintaining a level playing field for the telecommunications industry. In this regard, it seeks to ensure that the mobile network operators will have access to government tunnels for extending the coverage of their networks on a non-discriminatory basis. To this end, the OFTA is now holding discussions with the TD, the EMSD and the four PCS operators to ensure that limited resources (for example, space in cable trays and ducts in the government tunnels) are shared to the extent permitted by technical feasibility.

Installation of Sensory Devices on the Gates of Buses

18. MR LAU KONG-WAH (in Chinese): It is reported that on 5 April, a bus driver allegedly closed the boarding gate and started the bus without noticing that an elderly man was still boarding the bus. As a result, the old man got his leg trapped by the boarding gate and was dragged along and injured, and it was found that no sensory device was installed on the boarding gate of the bus involved in the incident. In this connection, will the Government inform this Council whether it knows:

(a) the number of public buses which are installed with sensory devices on both the boarding and alighting gates, and of its percentage in the total number of public buses;

(b) if the franchised bus companies have plans to install sensory devices on the gates of all their buses; if so, of the respective completion schedules for such installation for various companies; and

(c) the measures that the franchised bus companies will adopt to prevent the recurrence of similar incidents?

SECRETARY FOR TRANSPORT (in Chinese): Madam President, there are currently a total of 5 850 franchised buses in the territory, of which 5 000 buses or 85% of the fleet are equipped with sensory devices or warning buzzers at the middle doors. Of these 5 000 buses:

(a) 2 100 buses or 36% of the fleet are fitted with door sensors. These sensors will re-open the door when something is trapped; and

(b) 2 900 buses or 49% of the fleet are fitted with warning buzzers which will give a warning sound when the door is about to close. This is a device which would help prevent incidents of trapping.

Another 500 buses with middle doors, which account for 9% of the fleet, do not have sensors or buzzers. 320 are old buses which will be replaced by new buses with sensors within the next 12 months. In view of this replacement programme, there is no plan to retrofit these old buses with sensors or buzzers. As for the other 180 buses, the bus operator concerned is looking into the feasibility of retrofitting these buses with sensors. The remaining 350 buses have front doors only.

The front doors of the bus fleet are not equipped with sensory devices or warning buzzers. These doors are just next to the drivers' seat and can be easily monitored by the drivers. To prevent incidents such as that mentioned by the Honourable LAU Kong-wah, all the franchised bus companies have committed to ensuring that their drivers are properly trained on safe boarding and alighting of passengers. This is part of their driver training programmes. Regular reminders are also given to drivers.

Detention of Hong Kong Residents in the Mainland

19. MISS EMILY LAU (in Chinese): It is reported that Mr LOK Yuk-shing, who is a Hong Kong resident, has been detained since 12 June last year by the Yih Ju Meng Public Security Bureau in Inner Mongolia autonomous region. On 6 July last year, he was formally arrested for alleged fraudulent practices and has been detained in the Dongsheng Public Security Detention Centre since then. According to Article 69 of the Criminal Procedure Law of the People's Republic of China, if the public security authority considers the arrest of the detainee necessary, it shall, within three days following the detention of the detainee, submit the case to the People's Procuratorate for examination and approval. Under special circumstances, the detention period may be extended for one to four days prior to submitting the case for examination and approval. Moreover, Article 124 stipulates that the suspect, after being arrested, shall not be kept in custody for investigation purpose for a period exceeding two months. In this connection, will the executive authorities inform this Council whether there is any measure to protect the legal rights of Hong Kong people arrested in the Mainland, and whether any follow-up actions have been taken on this case; if either answer is in the negative, the reasons for that?

SECRETARY FOR SECURITY (in Chinese): Madam President, apart from the general provisions relating to duration of detention as mentioned above, we are aware of other provisions in the Criminal Procedure Law of the People's Republic of China for the detention period to be extended or even counted afresh under certain circumstances. Articles 69(2), 126, 127 and 128 of the same Law are examples.

All along we are very concerned about cases of Hong Kong residents detained in the Mainland and attach great importance to the requests for assistance from their family members. On receipt of representations or enquiries relating to the judicial proceedings of the Mainland from the family members, we will do the utmost to assist in conveying these requests and representations to the relevant mainland authorities. We closely monitor developments of all these cases. Whilst we are not in a position to interfere with the legal and judicial proceedings in the Mainland (just as we do not interfere with those of other jurisdictions), there are effective channels through which representations relating to judicial proceedings of the Mainland are conveyed to the appropriate mainland authorities for necessary action. From 1 July 1997 to 20 April 1999, 13 detention or imprisonment cases (involving 18 persons) out of 27 referrals by the Government have been given positive response by the mainland authorities. Among them, 17 persons have returned Hong Kong and one was released on bail. The others are serving sentences, awaiting trial or pending further investigations.

In the case of Mr LOK, we have on several occasions conveyed the requests of his family to the relevant mainland authorities. We have been advised recently that the relevant procuratorate has on 4 February initiated public prosecution against Mr LOK. We have requested the mainland authorities to deal with the matter fairly and expeditiously in accordance with the relevant laws of the Mainland. Furthermore, we are liaising with the relevant mainland authorities to establish a notification system for Hong Kong residents detained or imprisoned in the Mainland, so that relevant parties could be informed of the situation of the detained, and assistance rendered to them or their family members at the earliest opportunity.

List of Companies and Construction Sites with the Highest Industrial Accident Rates

20. DR TANG SIU-TONG (in Chinese): It is reported that the Labour Department has recently complied for its internal reference a list of the 50 companies and construction sites with the highest industrial accident rates. In this connection, will the Government inform this Council whether the department plans to update the list regularly and:

(a) publish the list for general information; if not, the reason for that; and

(b) forward the list to government departments and organizations in the public sector for their reference in selecting contractors for services and works projects; if not, the reasons for that?

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

(a) The Labour Department has prepared a list of 50 companies deserving close attention by reference to the number of work injury reports received. This list is primarily a management tool to enable resources to be utilized more cost effectively by targeting enforcement at companies with higher accident statistics.

Having regard to paragraphs 2.6(b) and 2.12 of the Code on Access to Information, the Labour Department does not intend to publish the list for general information. This is because disclosure of the information may lead to advantages gained by companies who are in competition with companies appearing on the list. Furthermore, if there is currently legal proceedings against a company on the list, disclosure of the list may be prejudicial to its position in having a fair trial.

(b) As a matter of practice, the Labour Department regularly exchanges information with other relevant government bureaux and departments for the purpose of monitoring and enhancing the safety performance of the construction industry. The Works Bureau has in place a monitoring system under which a public works contractor having five convictions for safety related offences within a rolling six-month period may be barred from tendering for new public works contracts. The Housing Authority, in awarding contracts for its public housing construction programme, also takes into account the safety performance of the tenderers.

BILLS

First Reading of Bills

PRESIDENT (in Cantonese): Bills: First Reading.

PROVISION OF MUNICIPAL SERVICES (REORGANIZATION) BILL

INSURANCE COMPANIES (AMENDMENT) BILL 1999

CLERK (in Cantonese): Provision of Municipal Services (Reorganization) Bill

Insurance Companies (Amendment) Bill 1999

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

Second Reading of Bills

PRESIDENT (in Cantonese): Bills: Second Reading.

(During the Second Reading, all Members from the Democratic Party left the Chamber)

PROVISION OF MUNICIPAL SERVICES (REORGANIZATION) BILL

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, I move the Second Reading of the Provision of Municipal Services (Reorganization) Bill.

In October 1997, the Chief Executive proposed in his first policy address that the structure of the two Provisional Municipal Councils and the 18 Provisional District Boards should be reviewed to ascertain if the present structure could cope with the social changes in providing efficient services that suit the needs of the public.

After a review and consultation with the community that last for more than a year, the Chief Executive announced in his policy address last year his decision on the restructuring the district organizations. Included in his decision are:

(a) to retain the structure of 18 District Councils, and to strengthen their work on consultation and supervision in respect of municipal services;

(b) to restructure the framework for food safety and environmental hygiene services, including to:

─ establish an Environment and Food Bureau to co-ordinate and formulate policies on environmental protection, food safety, environmental hygiene, natural conservation and to enhance development in agriculture and fisheries industries;

─ establish a new Department of Food and Environmental Hygiene for food safety and environmental hygiene;

─ establish a Food and Environmental Hygiene Advisory Committee to give advice on and monitor work on the above areas;

(c) to establish a new administrative framework for the development of culture, arts and sport and to consult the concerned organizations and parties on the details;

(d) to obviate the need of retaining the Provisional Municipal Councils after the terms of office of their members expire at the end of this year.

We trust the new framework for municipal services can improve the co-ordination of our services, enhance our ability to cope with food safety emergencies, encourage participation of professionals and the general public, make better use of resources and help the formulation of overall cultural and sports policies.

On 10 March this year, this Council passed the District Councils Ordinance to implement the structure and electoral arrangements for the first term of District Councils of the Hong Kong Special Administration Region.

After further consultations with the industry and the public, and drawing reference from the Consultant's Report, the Secretary for Home Affairs announced in late March decisions about a new framework for culture, arts, recreation and sports, including:

─ the establishment of a new Culture and Leisure Services Department under the Home Affairs Bureau to take over work on culture and sports done by the Municipal Services Departments;

─ the establishment of a high-level non-statutory Cultural and Heritage Commission to advise the Government on overall policies on culture, arts and heritage and on funding priorities; and

─ the enhancement of the composition of the Hong Kong Arts Development Council and the Hong Kong Sports Development Board.

The Bill tabled today seeks to implement the proposed reorganization of municipal services, and to vest the property, functions, rights and liabilities of the two Municipal Councils (the two Councils) in the Government and other statutory bodies. It also repeals the respective Ordinances governing the two Councils and eliminates certain discrepancies in their subsidiary legislation. This opportunity is also taken to repeal some out-dated provisions.

There are four parts to the Bill:

Part I, commencement and interpretation;

Part II, repeal of the Ordinances governing the two Councils and incidental and supplemental provisions;

Part III, specific provisions relating to transfer of functions and consequential and related amendments; and

Part IV, general.

Furthermore, Schedules 1 to 7 contain details of amendments or substitution of titles or repeal of enactments caused by a transfer of function. Around 60 ordinances and 100 pieces of subsidiary legislation are affected. Most of the amendments are technical arising from a transfer of functions to the Government or specification of public offices. Therefore, despite their huge number, these amendments are not complicated.

As regards the arrangement of transferring the property, functions, rights and liabilities of the two Councils to the Government, the Bill contains savings and transitional provisions written in detail to safeguard the interests of third parties and administrative and legal continuity. Major provisions include:

(a) the transfer of rights, obligations and liabilities of the two Councils to the Government to protect the lawful interests of third parties;

(b) the continued effectiveness of licences and permits issued by the two Councils;

(c) the saving of all liabilities arising out of offences committed or those offences committed against enactments repealed by the ordinance, and the power to prosecute, to ensure there is legal continuity;

(d) the temporary retention of fee standards. We expect to spend a year or two to standardize the fees of about 900 items for the two Councils; and

(e) the unification of the different subsidiary legislations. Where necessary, we will solve the problem with transitional arrangements, such as the granting of a grace period of two years for commercial bathhouses in the New Territories currently not under regulation, so that they can comply with the requirements of the relevant regulation for commercial bathhouses.

The Bill also proposes to set up three new statutory bodies responsible for the licensing and appeal matters. They are:

(a) a new Liquor Licensing Board to replace the present boards under the two Councils;

(b) a new Licensing Appeals Board to replace the present Appeal Boards of the two Councils as a first level institution for hearing of appeals in connection with various licences issued under the Public Health and Municipal Services Ordinance; and

(c) a new Municipal Services Appeals Board to replace the Regional Services Appeals Board and the Urban Services Appeals Board to deal with appeals against decisions of the Licensing Appeals Board and those relating to liquor licences and licences for places of public entertainment.

We believe the establishment of these statutory bodies, to be managed by independent persons and professionals who are familiar with the matters, can continue to ensure the fairness, openness and impartiality of the system.

Recently, there have been reports about concerns over the question of whether or not the changes proposed in the Bill will contravene the Basic Law. Article 97 of the Basic Law provides that "District organizations which are not organs of political power may be established in the Hong Kong Special Administrative Region, to be consulted by the government of the Region on district administration and other affairs, or to be responsible for providing services in such fields as culture, recreation and environmental sanitation." According to the legal advice given to the Government, this is a loose enabling provision providing sufficient flexibility for the Administration to carry out reform in the way stipulated in the Bill. So, the proposed amendments are entirely in conformity with the provisions of the Basic Law.

In addition, there are queries that scrapping the two Councils may deprive the people of the rights to elect municipal councillors and to stand for such elections, in breach of Article 39 of the Basic Law regarding the remaining in force of the provisions of the International Covenant on Civil and Political Rights as applied to Hong Kong. We have made reference to authoritative interpretation of the Covenant. The right to elect and to stand for election relates only to the legislature, not district organizations which are not "organs of political power". So, the Bill does not contravene Article 39 of the Basic Law.

I understand Members present are concerned how municipal services can be improved, such as procedures for the issue of liquor licences and licenses for eating establishments. I also understand they are concerned about how the new structure can streamline staff and make better use of resources. The present Bill has provided a new legal framework. As regards arrangements for the two Councils and the Municipal Services Departments, and the ways to improve services and make better use of resources, these are mainly administrative matters. My colleagues and I are prepared to listen to the views of the two Councils, which have abundant experience in various services from which we can learn. We will consider proposing to members from the two Councils to attend meetings of the relevant panels of the Legislative Council for discussions in those aspects. This will be of enormous help to us in implementing arrangements to improve services and to downsize.

Finally, as the terms of office of the members of the two Councils will expire at the end of this year, the new framework must be ready before the end of the year so that it can commence operation on 1 January next year. Otherwise, service to the public will be seriously disrupted. The best arrangement is for this Bill to be passed in October this year to allow time for the Finance Committee to scrutinize funding applications for the establishment, organization and newly-created directorate staff and their redeployment in the new institution. Time is also required for the relevant departments to make the necessary transitional arrangements. I sincerely hope Members can agree to our targets and scrutinize this Bill expeditiously.

There are over six months before the end of October. Despite the fact that some Members may hold different views from ours about arrangements proposed in the Bill, but I firmly believe that our distance may be shortened through discussions and negotiations in the scrutiny of the Bill. Finally, I hope a consensus may be reached on the constitution of a new framework that can tie in with Hong Kong's development in respect of food safety, environmental hygiene, environmental protection, culture and sports in the new millenium. Thank you.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Provision of Municipal Services (Reorganization) 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.

INSURANCE COMPANIES (AMENDMENT) BILL 1999

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

The Government introduced this Bill for the purpose of strengthening the regulation of the operations of Lloyd's to provide a level playing field for all people carrying on insurance business in Hong Kong. The Bill also seeks to speed up the submission of financial information by an insurer and provides that an insurer must supply claims statistics for a longer period, so that the Insurance Authority could monitor the financial position of the insurance industry more effectively to protect the interests of policy holders.

We hope to make improvements in three areas:

First, providing for greater regulation of the operations of Lloyd's. In considering how to strengthen regulation on the operations of Lloyd's, the Government is guided by its consistent principle of providing a level playing field for all participants in the market. Hence, we have to take into account the unique modus operandi of Lloyd's which distinguishes it from the average insurance company in proposing the specific regulatory requirements.

Lloyd's is an insurance organization which was set up in London, England in the 17th century. Unlike an ordinary insurance company, it allows members to operate in the insurance market as franchisees organized into syndicates. Due to its historical background and unique modus operandi, Lloyd's operates differently from the average insurance company.

Lloyd's has had a long history of operation. It enjoys a good international reputation and recognition in many countries. Because of this, like many other countries, Hong Kong has made special provisions to regulate the operations of Lloyd's. Lloyd's need only appoint an authorized representative in Hong Kong, submit a copy of the annual statement provided to the monitoring authority in the United Kingdom and pay an annual authorization fee. However, the average insurance company has to comply with all the regulatory requirements of the Ordinance, including the maintenance of local assets, submission of local business statements and being subject to the powers of intervention of the Insurance Authority.

The insurance industry has expressed concern over the preferential treatment given to Lloyd's under the existing Insurance Companies Ordinance. The financial difficulty which Lloyd's experienced between the end of the '80s and the early '90s and its acceptance of body corporates undertaking only limited liability as members have increased the industry's concern. Many people have doubts about whether the existing regulatory regime for Lloyd's is adequate to protect the interests of policy holders in Hong Kong and whether it is consistent with our present policy on a level playing field.

We propose to amend the Insurance Companies Ordinance to provide for greater regulation of the operations of Lloyd's in Hong Kong. It is proposed that Lloyd's shall comply with the regulations that apply to other authorized insurers, including regulations relating to the solvency margin, local assets, proper management, financial statements as well as insurance agents within the period of regulation. The proposed regulations have already been suitably adjusted, taking into account the unique modus operandi of Lloyd's and its accounting system. In addition, Lloyd's shall be subject to the powers of intervention of the Insurance Authority. This new regulatory regime is similar to the regulatory regime established for Lloyd's in countries with similar standards of regulation, including Singapore and Australia.

Second, requiring an insurer to speed up its submission of financial information. Under the Ordinance, an insurer shall submit a statement of its general business and a Statement of Assets and Liabilities to the Insurance Authority within six months after the close of its financial year in order to report its financial position with regard to its general business in Hong Kong. This information is very important for the Insurance Authority in assessing and monitoring the operation and financial strength of the insurer in Hong Kong. In view of the rapidly changing business environment, the period of six months now stipulated under the law is too long. We propose to shorten the period to four months so that the Insurance Authority can make a timely assessment and make rectifications more promptly when necessary to protect the interests of policy holders in Hong Kong. In addition, it would enable the Insurance Authority to release statistics on the industry more quickly which will help to promote the transparency of the whole market.

Due to the accounting work that needs to be done by the insurer and the limitations of auditors in complying with the relevant regulations, we consider that four months' time is appropriate, which is similar to the requirement that banks established in Hong Kong have to meet. As for the accounts and statements of the global business, after consulting the insurance industry, we agree that the time within which this information must be submitted should be maintained at six months.

Third, the supply of claims statistics for a longer period of time. Claims faced by an insurer might not be settled for years, such as claims arising from the bodily injury sustained by a third party. The insurer must reserve adequate funds at the close of each financial year to deal with claims that might arise in future.

To help the Insurance Authority assess whether an insurer has made adequate claims provision, the Insurance Companies Ordinance stipulates that an insurer must provide claims statistics for eight development years with regard to its general business. The purpose of this is to help the Insurance Authority estimate the final costs of losses on the insurer, in order to calculate the amount of outstanding claims that need to be paid by the insurer. With this information, the Insurance Authority can assess whether the insurer's claims provision is adequate. If this provision is inadequate, the Insurance Authority will ask the insurer to allocate funds from its accumulated profit or inject new capital to make up for the shortfall.

The effectiveness of the supervision described above hinges on whether or not the claims development statistics obtained by the Insurance Authority is adequate. The experience of recent years tells us that claims, especially those related to bodily injury sustained by a third party, usually take 12 years to settle. Therefore, we propose to amend this Ordinance by requiring the supply of claims development statistics for 12 years instead of eight years.

To sum up the above three points, the Insurance Companies (Amendment) Bill 1999 helps to promote fair competition among participants in the insurance market, enables the Insurance Authority to monitor the financial position of an insurer more effectively and helps to enhance the transparency of the market.

I urge Members to support our amendments. Thank you, Madam President.

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

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

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): We will now resume the Second Reading debate on the Adaptation of Laws Bill 1998.

Under Rule 21(4) of the Rules of Procedure, I have permitted Mr Andrew WONG, Chairman of Bills Committee on Adaptation of Laws Bill 1998, to address the Council on the Committee's Report.

ADAPTATION OF LAWS 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 Bill 1998, I wish to report on the main deliberations of the Bills Committee.

The Bill seeks to adapt references in 15 Ordinances and their subsidiary legislation to 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.

One of the key concerns of the Bills Committee is the proposed adaptation of reference to "Colonial Regulations" to "relevant executive order". This new term, "relevant executive order", is defined as "any executive order issued by the Chief Executive for the administration of the public service and any regulation or direction made under such order".

Members point out that prior to the reunification, the Colonial Regulations were imperial instruments made under the Royal Prerogative. Article 48(4) of the Basic Law confers on the Chief Executive the power to issue executive orders. However, the scope of such orders is not specified. It is doubtful whether executive orders issued by the Chief Executive would be equivalent to the Colonial Regulations and whether such orders would be confined to the administration of the public service. In the event that the Chief Executive promulgates executive orders in relation to other government policies, such promulgation would have far-reaching repercussions from the constitutional point of view. Members are also concerned that there may be an increasing number of executive orders issued by the Chief Executive in future.

As advised by the Administration, the Public Service (Administration) Order 1997 (Executive Order No. 1 of 1997) is, at present, the only executive order issued by the Chief Executive. Prior to the reunification, the administration of the public service was provided in the relevant provisions in the Letters Patent, Colonial Regulations and Civil Service Regulations. Over the years, many provisions in the Colonial Regulations pertaining to the administrative details of the management of the public service were translated into the Civil Service Regulations. Provisions in the Letters Patent and Colonial Regulations which have not been translated into the Civil Service Regulations relate to the authority to appoint, dismiss and discipline public servants; to act on representations made by public servants; and to make related disciplinary regulations. The Letters Patent and Colonial Regulations no longer apply to the SAR, it was necessary to replace and localize these provisions to maintain continuity. An executive order issued by the Chief Executive provides the legal backing to enable the SAR Government to preserve its executive authority for the continued administration of the public service. The Administration considers that the constitutionality and legality of the Public Service (Administration) Order 1997 were confirmed by the Court of First Instance in an application for judicial review in 1998.

Some members also point out that although the Court has confirmed the legality of the Executive Order, the Court does not rule on whether an executive order issued by the Chief Executive is equivalent to the Colonial Regulations. Should executive orders have legal status, the making of the Executive Order is tantamount to conferring on the Chief Executive a legislative power.

I personally consider that the best way of handling the adaptation in question is to formulate those provisions of the Colonial Regulations which are still applicable into regulations to be made by the Chief Executive in Council under a new civil service ordinance to be enacted by the legislature, somewhat along the lines of the Public Finance Ordinance. The proposed adaptation is indeed not a technical amendment, but a legal and constitutional matter.

In the view of the Administration, an executive order issued by the Chief Executive does not constitute a departure from the previous system adopted by the Administration prior to the reunification, in which any administrative order made by the then Governor was not subject to the approval by the Legislative Council. The term "relevant executive orders", in fact, refers to the Public Service (Administration) Order 1997. This Order and the Public Service (Disciplinary) Regulations made under it have effectively replaced the Colonial Regulations dealing with the administration of the public service.

As the promulgation of executive orders is a constitutional matter, the Bills Committee agrees that the matter should be followed up by the relevant panel subsequently. To provide clarity and certainty, the Committee suggests that the specific executive order in force be included in the definition of "relevant executive order".

The Administration proposes to adapt the reference to "Colonial Regulations" to "Public Service (Administration) Order". A definition of the new term will be provided in the Bill. The Bills Committee accepts the proposals. The relevant Committee stage amendments will be moved by the Administration.

On the proposed adaptation of reference to "Regulations of the Hong Kong Government" to "Government Regulations", the Bills Committee notes from the Administration that there is no such document entitled "Regulations of the Hong Kong Government". Only an instrument known as the "Government Regulations" is available to regulate the public service. Apart from the seven volumes of "Government Regulations", there are other administrative rules or regulations such as bureau and departmental circulars, instructions, standing orders and so on which supplemented the "Government Regulations" and are of equal application and force to the Regulations. Given the different types of instruments and the purposes for which they are issued, a generic term "government regulations" is proposed. This new term would cover the different administrative rules and regulations and the possible introduction of any new instrument in future.

The Bills Committee accepts the new term "government regulations" and its definition.

Madam President, prior to the reunification, a section of "saving the rights of Her Majesty the Queen, Her Heirs or Successors" is required to be included in each private bill under the Royal Instructions. The Royal Instructions have ceased to apply to the SAR. By virtue of Annex 3 of the Decision of the Standing Committee of the National People's Congress (NPC) on Treatment of the Laws Previously in Force in Hong Kong made in accordance with Article 160 of the Basic Law of the SAR of the People's Republic of China, the savings provision shall be construed as a reference to "nothing in this Ordinance shall affect or be deemed to affect the rights of the Central (People's Government) or the Government of the SAR under the Basic Law or other laws".

According to the Chinese text of Annex 3 of the Decision of the Standing Committee of the NPC, the rights of "中央" and so on are to be saved. The Bill, however, proposes to adapt the savings provision to make it read saving the rights of the "Central People's Government" (中央人民政府) and so on. At the suggestion of the Bills Committee, the Administration agrees to move technical amendments to bring the wordings of the savings provision in line with the Chinese text of the Decision of the Standing Committee of the NPC (this Decision has no English version), in other words, "中央" instead of "中央人民政府" in Chinese, and "Central Authorities" instead of "Central People's Government" in English.

Lastly, Madam President, Members will recall that the proposed adaptation of reference to "Governor" to "Chief Executive in Council" was examined by this Committee and the Bills Committee on Adaptation of Laws (No. 2) Bill 1998. The Administration agrees to move Committee stage amendments to this Bill and other Adaptation of Laws Bills to effect the new approach, that is, all references to "Governor" will be adapted to "Chief Executive", irrespective of the character of the instruments to be made by the Chief Executive.

Madam President, subject to the Committee stage amendments to be moved by the Secretary for Security, the Bills Committee supports the Bill.

Thank you, Madam President.

MISS MARGARET NG: Madam President, the adaptation of laws is an arduous exercise. I have my doubts as to how necessary or helpful the exercise may be. There are huge resources implications. Yet, where the Administration has proposed to introduce these bills, the legislature must do its best to take them through the legislative process. I hope that we have demonstrated our willingness to respect and to work with the Administration throughout this exercise.

The difficulty is the scope of the Adaptation of Laws Bills. On the one hand, it appears very narrow: it seems largely to do with removing terms and expressions or references which are colonial, and replacing them with terms and expressions or references which reflect Hong Kong's status as a Special Administrative Region (SAR) of the People's Republic of China. For example, changing "Governor" to "Chief Executive", "the Colony" to "Hong Kong". Yet, on the other hand, the task could be broad and deep: for the aim of adaptation is also to make Hong Kong legislation conform with the Basic Law. We are only at the very beginning of understanding the true legal implication of the Basic Law and its impact on the laws of the SAR. To really do the job, one would need no less than a series of Law Reform Commission studies over a number of decades.

I suspect that really the better thing to do is to carry out mechanical adaptations editorially, of course, with suitable overall enabling legislation, and then to leave the rest to the courts and to future amendment of law or law reform exercises. Surely, any court looking at references to the power of the "Attorney General" in a statute would have the intelligence to read "Secretary for Justice".

We further note that the present programme comprising 64 bills, even when finished, would be incomplete. For all "adaptation" involving the Chinese People's Liberation Army garrison in the SAR, all matters pertaining to Article 23 offences, all matters to do with the present Crown Proceedings Ordinance, just to name a few, are to be addressed only in a future exercise. Less extensively, after the change of sovereignty in Macau, further adjustments will have to be made. All in all, my most optimistic estimate is that the whole thing will take less than 50 years from July 1997 to complete.

So, Madam President, we are very much dealing with the middle ground. And this is not in itself by any means free of pitfalls. We have to firmly bear in mind throughout a number of principles. For example, we must be wary of not turning adaptation into an occasion for purging the law of politically incorrect matters. It is not right to remove a reference to "the British Pharmacopoeia" unless the British Pharmacopoeia was used because of Hong Kong's status then as a British Colony, nor is it right to repeal the Smuggling into China (Control) Ordinance because it came into being as a result of an agreement in 1948 between the colonial government and the Nationalist Government of China.

I suggest that we have no need to erase all traces of our colonial past in the anxiety to embrace our liberated future.

There are other more serious pitfalls. We must not, in the course of adaptation, inadvertently or without due process or deliberation change the law. This can happen in a number of ways. One way is, by deletion, to make the law less clear and certain. One example is to remove the term "Colonial Regulations" and substitute "relevant executive order" or with "relevant government regulations". A reference to a named and identified document is certain, while a general term may be less so. The same may be said of deleting "British Pharmacopoeia" altogether without substitution in the definition for "medicinal opium" in the Dangerous Drugs Ordinance.

Another way is by interpreting the law in the process of adaptation. An example is to adapt "Governor" to either "Chief Executive" or "Chief Executive in Council" depending on whether the power to make subordinate legislation is involved. So that where we have the Governor may by notice in the Gazette exempt "any person or description or class of persons" from a certain requirement, the proposal was to adapt this to (1) the Chief Executive exempting any person, and (2) the Chief Executive in Council exempting any description or class or persons. The reason given by the Administration is that Article 56 of the Basic Law provides that the Chief Executive "shall consult the Executive Council before ...... making subordinate legislation".

This adaptation, therefore, involves the interpretation of Article 56 as to what the Chief Executive is required to do, and the interpretation for the relevant provision in the Ordinance as to whether it concerns the making of subordinate legislation.

Then again, some adaptation may seem unexceptionable, but can in fact be most unhelpful. One example is the rights of the Attorney General. Under section 5 of the Legal Practitioners Ordinance, they were, in relation to Hong Kong courts, the same as the rights of Attorney General in England in relation to the Courts there. To adapt this to "the Secretary for Justice's rights shall be the same as those of the Attorney General's rights on 1 July 1997" just begs the question. Moreover, in a few years' time, the innocent citizen consulting the Ordinance will not be able to see what the rights of the Attorney General were.

Yet another area requiring attention is that, in adapting references to former British authorities to the People's Republic of China's authorities, we must not diminish the autonomy, in practice and in law, enjoyed by Hong Kong.

And, Madam President, this is my greatest doubt about the exercise: Is it correct just to "adapt" the law but keep it as it was? Can this be compatible with ensuring Hong Kong law conforms to the Basic Law?

In its landmark judgment on 29 January 1999, the Court of Final Appeal expressly refers to the "new order" under the Basic Law. This must govern the laws to be enacted by this Council. Our job is not to preserve the colonial regime. It is to ensure the implementation of the Basic Law. Let us take, for example, the controversial adaptation of "Crown" to "State" in section 66 of the Interpretation and General Clauses Ordinance (Cap.1) in 1998. At that time, the presumed exemption of state organizations with offices in the SAR from the binding effect of Hong Kong legislation was justified on the grounds that this was the case in Hong Kong under colonial administration. Changing it would be a law reform exercise, not an adaptation one.

But where does that leave the letter and spirit of Article 22 of the Basic Law which stipulates that such state organizations with offices in the SAR must obey Hong Kong laws? The intention must be that they are to be bound by the law, whatever was the case with the colonial powers. The better expression of this provision of the Basic Law must be that they are bound unless expressly exempted, not exempted unless expressly bound.

Madam President, these are profoundly stirring thoughts. As I have said at the beginning of my speech, whether to embark on an adaptation of laws exercise is a matter for the Administration, and as a Member of this Council, I will use all diligence to ensure that they are properly dealt with without undue delay. I am pleased to acknowledge the courtesy and propriety with which the Administration teams, particularly the Law Draftsman and his colleagues, respond to our comments and requests. But I would very much like the Administration to go further by considering seriously the questions that I have raised today.

With these words, Madam President, I support the Second Reading of the Bill.

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 Bill 1998 seeks to adapt 15 Ordinances relating to security, together with their subsidiary legislation, 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 to thank especially the Chairman of the Bills Committee, Mr Andrew WONG, as well as other members. In the course of the deliberations on the Bill, Chairman WONG and other members discussed the contents of the various Schedules thoroughly and efficiently and made a number of suggestions to improve the Bill. I will move several amendments at the Committee stage. These amendments were discussed in the Bills Committee meetings and were approved and supported by its members.

Madam President, I hope that Members will support the Adaptation of Laws Bill 1998 and the amendments that I will move at the Committee stage later on.

Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the Adaptation of Laws 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 Bill 1998.

Council went into Committee.

Committee Stage

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

ADAPTATION OF LAWS 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 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, 4, 5, 6, 8, 10 and 11.

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 2, 3, 7, 9 and 12 to 15.

SECRETARY FOR SECURITY (in Cantonese): Madam Chairman, I move that section 4 of Schedule 2, section 1 of Schedule 9, section 4 of Schedule 12, section 1(b) of Schedule 13, sections 7(a) (equivalent to section 7(b) in the English version) and 8 of Schedule 14 be amended with regard to the adaptation of the reference to "Governor". The Government proposes that all references to "Governor" should be amended to "Chief Executive", irrespective if the reference refers to the making of subordinate legislation. Similar amendments were supported and passed by Members during the resumption of the Second Reading debate on the Adaptation Of Laws (No. 2) Bill 1998 on 31 March this year.

Madam Chairman, I move to delete the proposed definition of "relevant executive order" in section 1(b) of Schedule 3 and substitute the definition of "Public Service (Administration) Order", as set out in the paper circularized to Members.

The purpose of this amendment is to adopt a clearer approach in adapting the Colonial Regulations. The proposed amendment will apply to future amendments made to the existing executive order as well as any regulation made or any direction given under that order.

Subsequent to the substitution of "Public Service (Administration) Order" for "relevant executive order" in section 1(b), I move that sections 6, 7, 8, 9(a) and (b) and 22 be amended in the same manner.

Madam Chairman, I move that section 3 of Schedule 7 be amended by deleting paragraph (a) of that section. Paragraph (a) of section 3 proposes to delete the item "including a cadet" from the Schedule of the Rehabilitation of Offenders Ordinance, since the Hong Kong Police Force no longer has the post of cadet. However, some Members consider that the proposal does not fall within the scope of the adaptation of laws and that the matter should be separately dealt with in future. Therefore, we have agreed to delete that proposal from Schedule 7.

Madam Chairman, I move that section 6 of Schedule 15 of the Bill be amended by changing the wording in that saving to "Nothing in this Ordinance shall affect or be deemed to affect the rights of the Central Authorities or the Government of the Hong Kong Special Administrative Region under the Basic Law and other laws".

I agree with Members that according to the Decision of the Standing Committee of the National People's Congress on treatment of the Law Previsouly in Force in Hong Kong made in accordance with Article 160 of the Basic Law of the Hong Kong Special Administration Region of the People's Republic of China, the term “中央” has a wider scope than "Central People's Government", since the NPC or other state organizations are not included in the definition of "Central People's Government". In the adaptation, it is a more appropriate term to substitute for "Her Majesty the Queen" in the context of the saving. Therefore, we have agreed to amend the Chinese version of section 6 of Schedule 15 by substituting “中央”for “中央人民政府”, and adopt the term "Central Authorities" in the English version.

Thank you, Madam Chairman.

Proposed amendments

Schedule 2 (see Annex XII)

Schedule 3 (see Annex XII)

Schedule 7 (see Annex XII)

Schedule 9 (see Annex XII)

Schedule 12 (see Annex XII)

Schedule 13 (see Annex XII)

Schedule 14 (see Annex XII)

Schedule 15 (see Annex XII)

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 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 2, 3, 7, 9 and 12 to 15 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 BILL 1998

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

Adaptation of Laws 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 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 Bill 1998.

MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Members' motions. Proposed resolution under Article 75 of the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China.

PROPOSED RESOLUTION UNDER ARTICLE 75 OF THE BASIC LAW OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE'S REPUBLIC OF CHINA

MRS SELINA CHOW (in Cantonese): Madam President, I move the resolution to amend the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region (SAR) under my name. The contents of the resolution have been set out in the Appendix to the Agenda.

The Committee on Rules of Procedure of the Legislative Council of the SAR has held a total number of 22 meetings since July 1998. A number of subjects were discussed in these meetings and amendments on the Rules of Procedure were proposed. Of these, the proposal on the necessary procedural arrangements to relieve a Member of the Legislative Council of his or her duties as provided in Article 79(6) of the Basic Law was introduced to this Council on 9 September 1998 and was passed. As for other amendments proposed by the Committee on the Rules of Procedure, they have been included into this resolution.

Having given notice for this resolution on 13 April 1999, I received a letter from the Director of Administration on 26 April 1999 in which views on three proposed amendments in the resolution were given. The Committee on Rules of Procedure considered the views of the Administration carefully in the meeting held yesterday. After the meeting, I wrote to the Director of Administration. The Secretariat has sent the letter from the Director of Administration and my reply by fax to Honourable Members for their reference.

I would like to explain the Committee's views on this issue.

In the consultation exercise held by the Committee earlier, the Director of Administration informed the Committee on 19 August 1998 that "the Administration will continue to plan on the basis that policy addresses in subsequent years will be delivered in the month of October." That is to say, the future policy addresses will be delivered in October as planned by the Administration. The Committee thought that if the Chief Executive is to deliver his policy address at the first meeting of a Session, then in order to reflect the function of the Legislative Council in hearing and debating on the policy address of the Chief Executive, and to help Members anticipate the amount of work to be handled in the first meeting of a Session, it would be proper to add the new subrule (1A) to Rule 13 of the Rules of Procedure, to specify that the Chief Executive shall deliver a policy address to the Council, if he so wishes, at the first meeting of a Session. But this provision does not bind the Chief Executive that he can only deliver his policy address at the first meeting of a Session and not at any other time. The provision also does not intend to require the Chief Executive to fulfil any obligation. The Committee understands that under the Basic Law, it is up to the Chief Executive himself to decide whether or not he would deliver a policy address. Indeed, the Committee is also aware that a similar provision was made in the Standing Orders of the former Legislative Council.

As for the "voting procedure" and "applicability of Article 74 of the Basic Law", the Committee has sought advice from the Administration on the question of whether the rules in the Rules of Procedure have contravened the Basic Law. It has also sought the advice of the Legal Adviser of the Legislative Council Secretariat as well as independent legal advice from Mr Denis CHANG, S.C. Upon considering the views from all parties concerned, the Committee concluded that the rules concerned did not contravene the Basic Law. However, the Committee thought that it was necessary to state the following clearly in the Rules of Procedure:

1. It is necessary to explain the meaning of a "majority vote" in the newly added subrule (4) of Rule 46, so that it will refer to Members voting in favour of a question exceed half of the number of Members present at the time of voting.

2. As for the procedure regarding a ruling to be made by the President of the Legislative Council on whether a bill introduced by a Member has touched on the specified areas found in Article 74 of the Basic Law, the procedure specified in Rule 51(3) should also be specified in Rule 51(4). Therefore, it is necessary to add the wording "in the opinion of the President" in Rule 51(4), to spell out clearly the role played by the President of the Legislative Council.

The Committee has prepared two reports on the results of deliberations on the following two topics: the voting procedure; and on the procedure of introducing a bill by Members as provided in Article 74 of the Basic Law and the interpretation of Article 48(10) of the Basic Law. The two reports have been sent to the Government on 23 September 1998 for comments from a legal perspective, but so far no reply has been received.

I wish to stress that all the proposed amendments on the Rules of Procedure are the results of careful deliberations by the Committee. The Committee firmly believes that these proposed amendments do not contravene the Basic Law, therefore it has decided to ask me to move the resolution concerned as has been originally planned.

I would like to outline briefly on other proposed amendments in the resolution:

(a) To simplify the procedure of electing the President of the Legislative Council and the chairmen of committees, the Committee thinks it is necessary to determine the order of precedence of a Member of the Council according to the continuous period of time for which he has held office in the Council. At the first meeting of a new term, the Member who has held office in the Council for the longest continuous period of time shall preside at the meeting. To match this arrangement, the Committee concludes that Rule 1A shall be added to the Rules of Procedure and an amendment should be made to the Schedule of the Rules of Procedure. At the same time, Rules 71(3) and 75(3) will be abolished. They are respectively on the holding of the first meeting of a committee by the clerk to the committee and on the election of a member to preside at the meeting.

(b) On the indication of the intention to speak, according to current rules, Members who intend to speak shall rise or raise their hands. As the electronic voting system in the Chamber has now installed a device whereby, if a Member has pressed the "Request-to-Speak" button to indicate his wish to speak the President should be in a position to know, a consequential amendment to Rule 36 should be made so that the requirement would be more flexible.

(c) On voting procedure. If a Member wishes to claim a division, the current rule is for the division bell to ring for one to three minutes so that Members will be notified. To cope with the situation where the division bell does not function, and that is not something impossible, the Committee suggests that subrule (8) should be added to Rule 49 the effect that the President or Chairman shall order the Clerk to arrange for Members within the precincts of the Chamber to be notified of the division. The division shall be held six minutes after the order has been made.

(d) To reflect the role of the President in deciding whether a bill relates to government policies, the Committee thinks that appropriate amendments should be made to Rules 31, 51 and 57.

(e) On the term of a select committee. The Committee thinks that a select committee should be dissolved upon the end of a term in the Legislative Council and not upon the end of a Session. The Committee proposes to amend Rule 78 to reflect the changes.

(f) On the registration and report of personal interest of Members. The Committee thinks that the deadline for registration of personal interests of Members should be changed. Donations received by Members for the purpose of meeting their expenses in the election should be considered as registrable interests. Therefore, Rules 83 and 84 should be amended.

As for the requirement that Members shall not vote upon any question, whether in the Council or in any committee or subcommittee, in which he has a direct pecuniary interest, according to the current vote counting arrangement, there is no difference between a member who is present but does not cast any vote and that of a member who votes against the question. Therefore, the Committee thinks that where there is such a direct pecuniary interest on a question to be voted on in the Council or a committee of the whole Council, the Member concerned shall withdraw therefrom when the vote is taken, except where his interest is in common with the rest of the population of Hong Kong or a sector thereof or his vote is given on a matter of government policy. Therefore, the Committee proposes to amend Rule 84(1).

On the other hand, the Committee thinks that the Member concerned shall withdraw when a vote is taken on a motion moved to disallow that Member's vote. But the Member concerned can choose to remain or withdraw when the motion is being debated. An amendment is made to Rule 84 for this purpose.

As for the requirement for Members to declare any direct pecuniary interest which he has in any matter to be discussed, the Committee has considered the practice in other overseas legislatures and decides that the requirement shall only be applied to Members who speak in a meeting. Therefore, an amendment is proposed to subrule 84(3) to reflect this principle.

(g) As for the signification of membership of a Bills Committee from Members after the expiry date, the Committee thinks that subrule (1A) should be added to Rule 76 to provide for the manner and timing of such signification decided by the House Committee.

(h) In the application of procedures on the censuring of Members stipulated in Article 79(7) of the Basic Law, the Committee concludes that:

- For motions moved according to Article 79(7) of the Basic Law, the Committee thinks that more stringent requirements should be made for such motions so as to prevent accusations of a frivolous nature. Therefore, apart from the mover of the motion, there should be three other Members who second the motion.

- To make the objective of the motion absolutely clear and definite, the Rules of Procedure should specify the wording of such type of motions. The reason to censure a certain Member or the circumstances surrounding a censure should be appended in the schedule to the motion which should stand as part of the motion itself. No amendments are to be made on such motions.

- Once such a motion is moved, the debate should be adjourned and referred to an investigation committee appointed by the President of the Legislative Council. Any Member who does not think that the matter should be handled by the investigation committee may move without notice that the investigation be stopped. If the Legislative Council passes this motion, the original motion shall not proceed.

- The investigation committee shall be responsible for establishing the facts of the case and to give its views on whether or not the facts as established constitute grounds to censure the Member concerned.

- An investigation committee shall consist of seven members, including a chairman and a deputy chairman. To avoid conflict of interest, the mover of the motion, the Members jointly signing the motion and the Member who is accused of misbehaviour or breach of oath shall not be appointed to the committee. To encourage members to be present in meetings, the quorum of a meeting of an investigation committee should be five members, including the chairman or the member to preside over the meeting.

- To ensure that the investigation is carried out in a fair manner, the hearing of evidence from witnesses should be conducted in camera. If the alleged Member chooses to hold the first meeting in public, then subsequent meetings are to be held in public as well. But the committee may decide on sufficient reason upon a request made by a member of the committee or an application made by a witness, to hold any such meetings or any part thereof in camera. Internal discussions of an investigation committee must be done in camera.

- Upon completion of the matter referred to it and after reporting to the Council, the committee shall be dissolved accordingly. The investigation committee may be revived to deal with any further matters arising therefrom the motion. However, the question of whether the Member concerned will be censured and hence be disqualified should be decided by the Legislative Council.

To implement these proposals, the Committee on Rules of Procedure has come to the view that Rules 30, 40, 46, 47, 49B, 80 and 81 should be amended and new Rule 73A added.

I urge Members to support my resolution and amend the Rules of Procedure.

Thank you, Madam President.

Mrs Selina CHOW moved the following motion:

"That the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region be amended -
	(1) in Part A, by adding -
	"1A. Precedence of Members
	(1) The order of precedence of a Member of the Council shall be determined according to the continuous period of time for which he has held office in the Council; a Member who has held office in the Council for a longer continuous period of time shall be given higher precedence.
	(2) As between two or more Members who have held office for an equal continuous period of time, precedence shall be given to the one who first made or subscribed the oath or affirmation in accordance with Rule 1 (Oath or Affirmation).";
	(2) in Rule 13, by adding before subrule (1) -
	"(1A) The Chief Executive shall deliver a Policy Address to the Council, if he so wishes, at the first meeting of a session.";
	(3) in Rule 30, by adding -
	"(1A) Notice of a motion moved under Rule 49B(1A) (Disqualification of Member from Office) shall be signed by the Member wishing to move the motion and 3 other Members.";
	(4) in Rule 31, by repealing "任何議案或修正案，如其目的或效力經 立法會主席或全體委員會主席裁定為" and substituting "立法會主席 或全體委員會主席如認為任何議案或修正案的目的或效力";
	(5) in Rule 36 -
	(a) in subrule (3), by repealing "rise or raise their hands at the same time to speak" and substituting "indicate their intention to speak at the same time";
	(b) in subrule (4), by repealing "any other Members wishing to speak shall rise or raise their hands" and substituting "the President or Chairman shall thereupon call such other Members who indicate or have indicated their intention to speak";
	(6) in Rule 40 -
	(a) in subrule (6), by repealing "A" and substituting "Except as otherwise provided in subrule (6A), a";
	(b) by adding -
	"(6A) A debate adjourned under the provisions of Rule 49B(2A) (Disqualification of Member from Office) shall be resumed at the earliest meeting of the Council at which normal business is transacted after the report of the investigation committee has been laid on the Table of the Council.";
	(7) in Rule 46 -
	(a) in subrule (1) -
	(i) by repealing "Relieving a Member of His Duties" and substituting "Disqualification of Member from Office";
	(ii) by repealing ", 79(7)";
	(b) by adding -
	"(4) There is a majority vote when the Members voting in favour of a question exceed half of the number of Members present at the time of voting.";
	(8) in Rule 47(2) -
	(a) by repealing "Relieving a Member of His Duties" and substituting "Disqualification of Member from Office";
	(b) by repealing ", 79(7)";
	(9) in Rule 49 -
	(a) in subrule (1) -
	(i) by repealing "After the Clerk has recorded the votes in a seating plan, the President or Chairman shall read out the names and the number of Members abstaining" and substituting "After the Clerk has recorded the abstentions in a seating plan, the President or Chairman shall read out the names and the number of Members abstaining";
	(ii) by adding "The Clerk shall record also in a seating plan the names of all other Members who are present, and the President or Chairman shall read out their names and number accordingly." before "If";
	(b) in subrule (2) -
	(i) by repealing "and" before "who abstain";
	(ii) by adding ", and any other Members who are present" after "voting";
	(c) by adding -
	"(8) If the division bell does not function, the President or Chairman shall order the Clerk to arrange for Members within the precincts of the Chamber to be notified of the division. The division shall be held six minutes after the order has been made.";
	(10) in Rule 49B -
	(a) in the heading, by repealing "Relieving a Member of His Duties" and substituting "Disqualification of Member from Office";
	(b) by adding -
	"(1A) A motion to censure a Member under Article 79(7) of the Basic Law shall be moved in the following form:
	"That this Council, in accordance with Article 79(7) of the Basic Law, censures (name of Member) for misbehaviour/breach of oath under Article 104 of the Basic Law/misbehaviour and breach of oath under Article 104 of the Basic Law (details as particularized in the Schedule to this motion).".";
	(c) in subrule (2), by adding "or (1A)" after "subrule (1)";
	(d) by adding -
	"(2A) Upon the moving of a motion under subrule (1A), debate shall be adjourned and the matter stated in the motion shall be referred to an investigation committee unless the Council, on a motion which may be moved without notice by any Member, otherwise orders. If the latter motion is agreed to by the Council, no further action shall be taken on the motion moved under subrule (1A).";
	(e) in subrule (3), by adding "or (1A)" after "subrule (1)";
	(f) in subrule (4), by adding "or to censure a Member" after "duties";
	(11) in Rule 51 -
	(a) in subrule (3), by repealing "由立法會議員個別或聯名提出的 法案，如經立法會主席裁定為涉及公共開支或政治體制或政 府運作者，" and substituting "立法會主席如認為任何由立法會 議員個別或聯名提出的法案涉及公共開支或政治體制或政府 運作，該法案即";
	(b) in subrule (4), by repealing "relating" and substituting "which, in the opinion of the President, relates";
	(12) in Rule 57(6), by repealing "任何修正案，如其目的或效力 經立法會主席或全體委員會主席裁定為" and substituting "立法 會主席或全體委員會主席如認為任何修正案的目的或效力";
	(13) by repealing Rule 71(3);
	(14) by adding -
	"73A. Investigation Committee
	(1) An investigation committee required to be established under Rule 49B(2A) (Disqualification of Member from Office) shall consist of a chairman, a deputy chairman and 5 members who shall be Members appointed by the President in accordance with an election procedure determined by the House Committee. The mover of the motion under Rule 49B(1A), the Members jointly signing the motion, and the Member who is the subject of the motion shall not be appointed to the committee.
	(2) The committee shall be responsible for establishing the facts stated in the motion moved under Rule 49B(1A) (Disqualification of Member from Office), and giving its views on whether or not the facts as established constitute grounds for the censure.
	(3) The quorum of the committee shall be 5 members including the chairman.
	(4) Subject to subrule (5), all meetings of an investigation committee shall be held in camera.
	(5) (a) Upon an election made by the Member who is the subject of the motion under Rule 49B(1A) (Disqualification of Member from Office), meetings at which a witness or witnesses appear shall be held in public, provided that such election is made before the first of such meetings.
	(b) Notwithstanding an election made under paragraph (a), the committee may decide on sufficient reason, upon a request made by a member of the committee or an application made by a witness, to hold any such meetings or any part thereof in camera.
	(6) In the event of the temporary absence of the chairman and deputy chairman the committee may elect a chairman to act during such absence.
	(7) The clerk to the committee appointed under Rule 6(7) (Duties of the Clerk) shall attend meetings of the committee and shall keep the minutes of proceedings of the committee.
	(8) Divisions in an investigation committee shall be taken by the clerk to the committee who shall ask each member of the committee separately how he wishes to vote and record the votes accordingly.
	(9) Neither the chairman nor any other member presiding shall vote, unless the votes of the other members are equally divided in which case he shall have a casting vote.
	(10) (a) A member of an investigation committee may bring a report for the committee's consideration. When all the reports have been brought up the chairman shall propose the reports in order until one is accepted as a basis for discussion, beginning with his own report and proceeding with the remainder in the order in which they were brought up. The question to be proposed by the chairman on a report shall be that the chairman's (or Mr. ......'s) report be read a second time paragraph by paragraph. When this question has been agreed to, it shall not be proposed on further reports but portions thereof may be offered as amendments to the report under consideration if they are relevant to it.
	(b) The committee shall then go through the report paragraph by paragraph and when concluded, the chairman shall put the question that this report be the report of the committee to the Council.
	(11) The minutes of proceedings of the committee shall record all proceedings on consideration of a report with a note of divisions, if divisions were taken in the committee, showing the names of members voting in the division or declining to vote.
	(12) An investigation committee shall, as soon as it has completed investigation of the matter referred to it, report to the Council thereon and the committee shall be dissolved accordingly. The investigation committee may be revived to deal with any further matters arising therefrom by resolution of the Council.
	(13) Subject to these Rules of Procedure, the practice and procedure of the investigation committee shall be determined by the committee.";
	(15) by repealing Rule 75(3);
	(16) in Rule 76, by adding -
	"(1A) The members of a Bills Committee shall be those Members (other than the President) who signify membership in accordance with procedural rules (which shall provide only for the manner and timing of such signification) decided by the House Committee.";
	(17) in Rule 78 -
	(a) in subrule (1), by repealing "in each session";
	(b) in subrule (4), by repealing "the session" and substituting "a term";
	(c) in subrule (5), by repealing "the session" and substituting "a term";
	(18) in Rule 80(b), by repealing "or select committee(s)" and substituting ", select committee(s) or investigation committee(s)";
	(19) in Rule 81(1), by repealing "select committee" and substituting "committee under Rule 80 (Attendance of Witness)";
	(20) in Rule 83 -
	(a) in subrule (1), by repealing "the date specified by resolution made and passed by the Legislative Council" and substituting "the first meeting of each term";
	(b) in subrule (5)(d) -
	(i) by renumbering it as subrule (5)(d)(ii);
	(ii) by adding -
	"(i) all donations, as a candidate in the Legislative Council election in which the Member was elected as a Member of the Council, received by the Member of any person on his behalf for the purpose of meeting the Member's election expenses in the election; or";
	(21) in Rule 84 -
	(a) in subrule (1), by adding "except where his interest is in common with the rest of the population of Hong Kong or a sector thereof or his vote is given on a matter of Government policy. Where there is such a direct pecuniary interest on a question to be voted on in the Council or a committee of the whole Council, the Member concerned shall withdraw therefrom when the vote is taken" after "interest";
	(b) in subrule (3) -
	(i) by repealing "In" and substituting "A Member speaking in";
	(ii) by repealing "at which a Member is present he";
	(c) by adding -
	"(3A) A motion for the withdrawal of a Member on the ground of his direct pecuniary interest under subrule (1) may be moved without notice by any Member after the President or Chairman has put the question on the original motion but before the vote is taken.";
	(d) in subrule (4) -
	(i) by repealing "of the numbers voting in the division";
	(ii) by repealing ", but not otherwise" and substituting "of his judgment on whether there is a required majority or, if a division has been ordered, upon his statement of the numbers of Members recorded in the division";
	(e) in subrule (5) -
	(i) by adding "the" after "chairman shall have";
	(ii) by repealing "such a motion" and substituting "a motion under subrule (3A) or (4)";
	(iii) by repealing "was taken" and substituting "is taken";
	(iv) by adding "presence or" before "vote is challenged";
	(v) by repealing "inhabitants of Hong Kong and whether his vote was given on a matter of state policy" and substituting "population of Hong Kong or a sector thereof and whether the vote is on a matter of Government policy";
	(f) by adding -
	"(5A) If the question for the withdrawal of a Member is proposed, the Member concerned may be heard in his place but he shall then withdraw from the Council or a committee of the whole Council for the duration of any vote on the question. If the motion is agreed to, the Member shall withdraw or continue to withdraw from the Council or the committee of the whole Council when the original question is put and voted upon.";
	(g) by repealing subrules (6) and (7) and substituting -
	"(6) If the question for the disallowance of a Member's vote is proposed, the Member concerned may be heard in his place but he shall then withdraw from the Council, a committee of the whole Council, a committee or subcommittee for the duration of any vote on the question. If the motion is agreed to, the President, Chairman of a committee of the whole Council or chairman shall state anew his judgment on whether there is a required majority in this original question or, in the case of a division, direct the Clerk to the Legislative Council or the clerk to alter the numbers voting and, in the case of the Council or a committee of the whole Council, the effect of the presence of the Member in the original division accordingly.";
	(22) in the Schedule -
	(a) in the heading before paragraph 6, by repealing "of Presiding Member";
	(b) by repealing paragraph 6 and substituting -
	"6. The Member present who has the longest continuous service in the Council as determined in accordance with Rule 1A shall preside at the election of the President.";
	(c) by repealing paragraph 7 and substituting -
	"7. If the Member who has the longest continuous service under paragraph 6 above is being nominated for the office of President, the Member who is next in the order of precedence of Members and who is not being nominated for the office shall be the presiding Member.";
	(d) by repealing paragraphs 8, 9, 10, 11, 12, 13 and 14;
	(e) by repealing the heading before paragraph 15;
	(f) in paragraph 15 -
	(i) by renumbering it as paragraph 8;
	(ii) by repealing "The presiding Member shall then assume the chair and" and substituting "Upon the presiding Member assuming the chair,";
	(iii) by repealing "commences" and substituting "shall commence";
	(g) by renumbering paragraph 16 as paragraph 9;
	(h) in paragraph 17 -
	(i) by renumbering it as paragraph 10;
	(ii) by repealing "III" and substituting "II";
	(i) by renumbering paragraph 18 as paragraph 11;
	(j) by renumbering paragraph 19 as paragraph 12;
	(k) by renumbering paragraph 20 as paragraph 13;
	(l) in paragraph 21 -
	(i) by renumbering it as paragraph 14;
	(ii) by repealing "paragraphs 17 to 20" and substituting "paragraphs 10 to 13";
	(m) by renumbering paragraph 22 as paragraph 15;
	(n) by renumbering paragraph 23 as paragraph 16;
	(o) by renumbering paragraph 24 as paragraph 17;
	(p) by repealing Annex II;
	(q) by renumbering Annex III as Annex II."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mrs Selina CHOW, as set out in the Appendix to the Agenda, be passed.

CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): Madam President, with this resolution, the Honourable Mrs Selina CHOW seeks to amend certain rules of the Rules of Procedure. We consider some of the proposals to be in contravention of the Basic Law.

The Basic Law has established a new constitutional framework for the Special Administrative Region (SAR). We and the Legislative Council hold different views regarding the application of the provisions of the Basic Law to the operation of the Legislative Council. Therefore, I wish to take this opportunity to repeat our stand to Members.

We fully understand that in accordance with Article 75 of the Basic Law, the Rules of Procedure of the Legislative Council shall be made by the Council on its own. However, we must ensure that the Rules of Procedure are consistent with the Basic Law to guarantee the legality of the legislative procedures.

However, two items of the resolution proposed by Mrs Selina CHOW are at odds with our understanding of the relevant provisions of the Basic Law. They concern the amendment to Rule 51(4) and the newly added Rule 46(4). We must reiterate that since the meeting of the Administration with the Committee on Rules of Procedure last year, its stand has not changed. With regard to the relevant details, we submitted papers to the Committee on Rules of Procedure last September and explained our views to the Committee in the meeting. I will not repeat them here.

The resolution also proposes to add (1A) to Rule 13 stating that the Chief Executive shall deliver a policy address to the Council, if he so wishes, at the first meeting of a Session. This rule appears to be asking the Chief Executive to fulfil an obligation, while pointing out that he can do as he wishes. As Mrs Selina CHOW has explained to us, the proposed rule does not rigidly lays down that the Chief Executive can only deliver a policy address at the first meeting of a Session and not at any other time. Nor is the proposed new rule intended to impose any obligation on the Chief Executive. Notwithstanding this, we do not think it necessary for Members to amend the Rules of Procedure to endow the Chief Executive with this discretion. It would be best to retain the flexible mechanism in the existing Rules of Procedure. We consider that the proposed addition of Rule 13(1A) in the resolution is neither necessary, nor does it have any legal effect.

Madam President, for the above reasons, I have reservations about Rule 13(1A), Rule 46(4) and Rule 51(4) in the resolution proposed by Mrs Selina CHOW.

Thank you, Madam President.

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

MISS EMILY LAU (in Cantonese): Madam President, I speak to support the motion moved by Mrs Selina CHOW. I would talk briefly on my own views. First of all, I wish to respond to the argument put forward by the Chief Secretary for Administration, in particular her point that Rules 51(4) and 46(4) are in contravention of the Basic Law. Madam President, we have discussed this issue many times.

Just now Mrs Selina CHOW has advanced her arguments. I wish to declare interest first because I am a member of the Committee on Rules of Procedure. We have written to the Government, requesting it to explain its grounds to us because we want to know what these grounds are. However, as Mrs Selina CHOW has said just now, we have not received any reply to date. We hope that the Chief Secretary for Administration will answer our question when she speaks again.

Madam President, I believe you are aware that we have hired a lawyer from outside to give us some independent legal advice. Our arguments are not based on our own views or those of the Legal Adviser of the Legislative Council. The legal advice we have is that these proposals are sound. Perhaps I should like to ask the Chief Secretary for Administration whether or not the Government has sought outside independent legal advice as well. If so, what are the views obtained? Can a reply be given to the questions we raised in our letter to the Administration many months ago? I think that is very important.

Besides, Madam President, I think some officials have said before that the Government might initiate legal proceedings against us. I am happy not to have heard that from the Chief Secretary for Administration just now. Is it because the Government is leaving this idea aside? Even if there will not be any lawsuits, the Chief Secretary for Administration still holds different opinions from us. In fact, if the executive authorities and the legislature both holds such different views on this important issue, I think the public will be very puzzled indeed. Madam President, should the Rules of Procedure which we have compiled prove to be contravening the Basic Law in the future, then I think the consequences will be very grave indeed. Looking at the matter from my own view or from that of Hong Kong, I think the matter must be handled as soon as possible. We must look for proper means to solve the problem, or to let it run its course. Although the executive authorities have been insisting that we are violating the Basic Law, we would pay no attention to that. Now we are amending the Rules of Procedure. I have no idea what the Chief Secretary for Administration has in mind. Will she insist that the matter be brought to the courts in due course?

Madam President, I wish to point out one other thing, that is, about the problem of misbehaviour of Members of the Legislative Council as provided in Article 79(7) of the Basic Law. Madam President, I think you will still remember (or maybe you were not in this Chamber then) that in a meeting of the Committee on Members' Interests in 1995-96, we held two discussion sessions on the motion proposed by Mrs Miriam LAU on increasing the power of the Committee in investigating the misbehaviour of Members. At that time, I was a member of the Committee and Mrs Miriam LAU was the chairman. The two discussions were highly charged and Mrs LAU was on the verge of slamming the desk and rebuking people. The motion was subsequently voted down. Maybe there would not be such a scene in this Council later because even if Members would not agree to it, there are already provisions in Article 79(7) of the Basic Law. I do not know why, but if Members do not agree to it in principle, Madam President, please let me go on, even if there are provisions in the Basic Law, we should oppose to the Basic Law. We should amend the Basic Law. But I think there should be such a provision, so in the 1995-96 debate, I was in support of Mrs LAU's motion. At that time, Members had a lot of reasons to support Article 79(7) of the Basic Law. I do not know if they would put these forward again. At that time, I was in support of it but I failed. I think we should have these rules. Madam President, as Members of the Council, we need to tell the public that we abide by the rules. Members should be punished if they break the rules. And the procedures are fair, just and open. It is regrettable that most of the Members do not think there is a need to lay down these definitions. They think that the Council would deal with the case in the procedures as proposed by Mrs Selina CHOW just now if any Member is found to have misbehaviour or breach of oath. But we cannot tell the public what is meant by breach of oath or misbehaviour. Many Honourable colleagues can indeed say a lot on that but it is very difficult to come to any conclusions. I think at least we should model on the practice in the parliamentary assemblies in other countries to define that as any behaviour which brings the assembly or the whole of Hong Kong into disrespute.

Madam President, I am a person who knows how to behave in a delicate situation. I will not put forward anything if I know that it will not succeed. So I did not propose any amendments. If the Legislative Council passes these requirements, the public would question what is meant by misbehaviour. Can we tell them that we are unable to tell them now but that they will know when they see it?

Just now Mrs Selina CHOW said that we had a set of procedures to guard against frivolous accusations. I take that point. But the mechanism itself has to be activated by the Members themselves. Would there be a situation whereby the mechanism is not activated even if the community thinks that there is something wrong but no Members are willing to raise that as an issue? I think we must be accountable to the public. The Members have themselves should discuss the matter if it has become one of public concern. It would be ridiculous if there is massive public outrage and that it is thought that some Members have misbehaved themselves or have breached their oath, but the 60 of us are unaware of any misbehaviour or breach of oath of any of our colleagues. Madam President, it is a fact that if no one brings up the matter, then the mechanism cannot be activated. I hope we can send a message loud and clear to the public that the Legislative Council will enforce such requirements most stringently and we will not condone any wrongs. Madam President, we will deal with it in a fair and just manner. I support what Mrs Selina CHOW has said and I hope that the Chief Secretary can respond to it as well to answer our questions for there are things in the Chief Secretary for Administration's speech just now that have not been explained satisfactorily. Thank you, Madam President.

MR ANDREW WONG (in Cantonese): Madam President, I wish to talk briefly on the amendment to Rule 46 and the amendment to Rule 51.

On the amendment to Rule 46. I think we all know that the heading of Rule 46 of the Rules of Procedure is "Decision on Motions", that is, how a decision is made. We know that before the Basic Law comes into effect, a decision is made according to the majority of Members present and those who take part in the voting, and whether they are in favour of or against the motion. But as Annex II to the Basic Law has phrases like "a simple majority vote of the members of the Legislative Council present", they have been used as the wording about how decision is made as provided in Rule 46 of the Rules of Procedure. In this way the method to arrive at a decision is made very clear. There is some argument between the Government and us, but it is more than these rather trivial matters. It is about motions introduced by Members should be passed by voting of two groups of Members present. But for motions introduced by the Government, there is no such a requirement. What is more, in Annex II to the Basic Law, the provision on the passage of motions introduced by the Government has an extra word "piao"﹝“票”﹞which means vote or ballot in the Chinese phrase for "a simple majority vote". But there is no such extra word in the Chinese phrase for motions introduced by Members. This is the cause of disputes. I hope we all remember that we had a lengthy debate on that and we thought that there could be a big difference or not a big difference between the existence or absence of that single word. Mr JI Pengfei said on the Third Session of the Seventh Plenary Session of the National People's Congress, "For bills introduced by the Government, they are passed if they have a majority vote of the Members present. For bills, motions and amendments to bills introduced by the Government which are proposed by the Members, they must be passed by a majority vote of each of the two groups of Members present, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections and by the Election Committee." In both cases, the word "piao" is used. We do not know what exactly was intended. In order to be prudent, it seems we should disregard the word "piao". Of course, if we think that the word "piao" is not important, or if we take into account the legislative intent and think that the word "piao" is only an inadvertent error, then we can go back to the former way to make decisions by voting. That may even be better. As Mr Denis CHANG, S.C., said, that point was not considered and so there was no intention to amend this voting method.

As for Rule 51, that involves your judgment, Madam President. If the Government or a Member introduces a bill on a certain matter, and if that matter meets the requirement of the Rules of Procedure, then who is going to make the judgment? From the angle of the parliamentary assembly, that should be made by the speaker or the President. But the Government may think that since the subject of discussion is a policy issue and since the policies are formulated by the Government, and so it would be most fitting if it will make the judgment. But in fact, that is a very foolish idea. Why? For if the matter belongs to a policy area, and if the President makes an inadvertent move and makes a ruling that the motion can be introduced, when the motion is passed but the Government is not satisfied with the results, then the case can be brought to the Court. The Court can decide that the ruling was wrong and the decision made at that time was ultra vires and it was null and void from the very beginning. That is certainly a decision which can be made by the Court. If from the outset it is the Chief Executive who makes the decision, then if after the ruling, the mover of the motion and most of the Members think that the Chief Executive has made a wrong decision, then before the topic is discussed in a meeting, the case can be brought to the Court. The Court will decide whether the Chief Executive is right or wrong. But since this does not happen after the matter is over, then it would cause greater disputes. From the perspective of institutional arrangements, if the Government insists that the matter should be decided by the Chief Executive, then it would really be an improper arrangement. I hope that the Government can give serious thoughts to it.

Madam President, may I call upon the Government to withdraw even those ideas which it has reservations on, or if after consideration, it can occur to it in the next meeting that Mr Andrew WONG was really right. (Laughter) Thank you, Madam President.

PRESIDENT (in Cantonese): Mrs Selina CHOW, do you wish to reply?

(Mrs Selina CHOW indicated that she did not wish to reply)

CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): Madam President, I would like to make two simple responses to the views expressed by Members just now.

With regard to the amendment to Rule 51(4), that is, about the President of the Legislative Council deciding whether a bill relates to government policies, Article 74 of the Basic Law stipulates that the consent of the Chief Executive shall be required before bills relating to government policies are introduced by Members. Although Article 74 of the Basic Law does not specify who should decide whether bills relate to government policies, its clear implication is that the power to decide whether the relevant bills relate to government policies under Article 74 of the Basic Law rests with the Chief Executive. Besides, only the Administration which makes government policies is in the best position to judge whether a bill relates to its policies. Moreover, Article 48(4) of the Basic Law clearly states that one of the powers of the Chief Executive is to decide on government policies. For the above reasons, we consider that the Chief Executive is the most appropriate person to decide on this issue. We do not think it is appropriate to leave the decision to the President of the Legislative Council as proposed in the resolution.

Second, with regard to the newly added Rule 46(4) on the counting of votes in voting, we consider that in accordance with Annex II to the Basic Law, as far as voting on bills introduced by the Government is concerned, abstentions should not be counted. The newly added Rule 46(4) proposed in the resolution does not specify the voting arrangements with regard to government bills. Therefore, we do not think that this subrule should be added to the Rules of Procedure.

Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mrs Selina CHOW, as set out in the Appendix to the Agenda, be passed. 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): While the division bell is ringing, I would like to remind Members again that the question put is: That the motion moved by Mrs Selina CHOW, as set out in the Appendix to the Agenda, be passed.

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

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

Functional Constituencies:

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Mr Michael HO, Dr Raymond HO, Mr Eric LI, Mr LEE Kai-ming, Dr LUI Ming-wah, Miss Margaret NG, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr CHEUNG Man-kwong, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr SIN Chung-kai, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU, Mr Timothy FOK, Mr LAW Chi-kwong, Mr FUNG Chi-kin and Dr TANG Siu-tong voted for the motion.

Dr Philip WONG voted against the motion.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Andrew WONG, Mr Jasper TSANG, Dr YEUNG Sum, Mr LAU Chin-shek, Mr LAU Kong-wah, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung voted for the motion.

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

THE PRESIDENT announced that among the Members returned by functional constituencies, 27 were present, 26 were in favour of the motion and one against it; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 26 were present and 25 were in favour of the motion. Since the question was agreed by a majority of each of the two groups of Members present, she therefore declared that the motion was carried.

PRESIDENT (in Cantonese): Two motions with no legal effect. I have accepted the recommendations of the House Committee as to the time limits on speeches for the motion debates. The movers of the motions will each have up to 15 minutes for their speeches including their replies, and another five minutes to speak on the amendments. The movers of amendments will each have up to 10 minutes to speak. Other Members will each have up to seven minutes for their speeches.

First motion: New arrivals from the Mainland.

NEW ARRIVALS FROM THE MAINLAND

MR LAW CHI-KWONG (in Cantonese): Madam President, I move that the motion as set out on the Agenda be passed.

Two days ago, I gave each of the Honourable colleagues in this Council an opinion paper on the arrangements and adaptation of the new arrivals from the Mainland. After the debate is over, I would make some amendments to it and will submit it to the Government. In this speech, I will not discuss the details of the motion, but I would like to talk about some of the ideas behind it.

In January this year when the Court of Final Appeal (CFA) made its judgment, I had had sort of quite a few quarrels with the media. The reason is that they kept on asking me, this question: If there is a huge influx of new arrivals from the Mainland, would that incur social welfare expenses which are too much for Hong Kong to bear? Usually I would not answer these questions. If they ask me what kind of methods would help Hong Kong face this problem of a sudden surge of population, or what can be done to help these new arrivals adapt to the life in Hong Kong so that they too can contribute to the construction of Hong Kong, then I would be delighted to offer my views.

I hope that we can discuss this issue in a positive manner. We all know that there may be a sudden surge of population, but that is not the most important question. The question is how the Government is going to deal with it. So, do not ask how big the problem is, but how it can be handled. In this regard, I hope that the Government will have a similar attitude to this problem. For if we are to talk about this problem without talking about its solutions, this will only serve to increase the resistance of the public against people in the Mainland holding the right of abode in Hong Kong. It will also create conflict and division between the current residents and the new arrivals. This will not be beneficial to the harmony of Hong Kong as a whole and the future development of the territory. I expect that the Government will release some initial estimates later. I can see that the Commissioner for Census and Statistics is sitting here. Will the initial figures be 400 000, 800 000 or more than 1 million?

No matter what the number is, I think we should think about it, especially those reporters sitting in the public gallery. I hope after today, the public will no longer be under the impression that these hundreds of thousands of people will come to Hong Kong in a couple of days. There is a procedure to every application and there is no way that the Government can finish vetting and approving the applications from these hundreds of thousands of people in just one or two days. So these people will definitely not be coming into Hong Kong all at the same time. The judgment of the CFA requires the Government to use a reasonable amount of time to engage in vetting and approval. What is reasonable? I think we all have some idea. If the number of these eligible people is only a few dozen thousand or 80 000 to 100 000, then a reasonable amount of time will be one or two years. Three or four years cannot be said to be too slow. But if the number of people is 800 000 or more than a million, then three to five years cannot be considered unreasonable at all. So the gravity of the problem depends on how big the number of people there really is. The Secretary for Security said that the Government can vet and approve 500 applications every day. Although there is no magic to the number of applications processed every day, the number of staff in the departments concerned will have to be doubled at least to meet the target. So no matter how we look at the problem, the number of people coming into Hong Kong every day will be limited rather than unlimited, and it will not be thousands or tens of thousands a day.

Apart from this, I would like to point out that there are some people who misunderstand the motion I propose and some of the suggestions I make. I propose in my motion that arrangements can be made for persons with the right of abode, without prejudice to the exercise of their right, to decide for themselves whether or when to settle in Hong Kong after being issued with the Certificate of Entitlement. Many people criticized that this would cause a huge influx of new arrivals into Hong Kong and create havoc here. They think that giving them a choice of deciding whether or when to settle in Hong Kong would trigger off chaos and disorder. As I have said, the number of approvals given each day is limited. It cannot be thousands and tens of thousands. So if these people will come to Hong Kong later, then the actual number of people entering the territory will only be less, not more than the number of approvals given. There will certainly not be a question of a huge influx.

According to the practice with the One-way Permits (OWP), the applicants must leave their present place of residence and come to Hong Kong within two weeks after being informed of their successful application. Otherwise they will have to forfeit their chance forever. Under such circumstances, many people have to come to Hong Kong without any choice. This is in fact no good for them. Therefore, I suggest giving these eligible people a longer grace period so that students can complete a school term or a school year, or they can wait until their parents in Hong Kong have found a school for them. Also, for those people who are employed in the Mainland, such as engineers and professors, if they are to come here all of a sudden, they will not be able to get a decent job. A professor may end up teaching Putonghua in a tutorial school and an engineer may end up sweeping the floor of a nursery. It will not do them any good. And it will not bring any good to Hong Kong either. If we can give them a longer grace period so that they can come here after finding a job, then it will do them and Hong Kong good. I know that in reality this is a very difficult thing to do, because it involves the issue of household registration policies in the Mainland. But as the Chief Executive says, things good for Hong Kong will be equally good for China. If this arrangement is beneficial to them as well as to Hong Kong and the public at large, then why do we not strive for a more flexible arrangement to allow these people to come here to settle after they have made the necessary housing or other arrangements?

Besides, I also want to discuss whether this arrangement will create any conflict with the existing exit permit in the Mainland because it is the subject of concern for many people. I hope Members will understand that if the Government proposes this idea of an exit permit when it discusses the issue with the mainland authorities, and if this idea of exit permits is not different from the OWP in the past, then it would only give rise to some so-called judicial proceedings and in the end no solution can be found. The problem is only deferred until the onset of another crisis. So I think when we are to think about this issue, we should think about ways to help these people, then this would not only lessen the pressure we face but also minimize polarization in society and turn the crisis into an opportunity. It will enable these people who will come to Hong Kong to contribute to its development like the rest of the people of Hong Kong are doing and what our last generation has done.

I would like to pause here for a while and listen to your views. I will talk more about this when I give the concluding reply later.

Mr LAW Chi-kwong moved the following motion:

"That, in anticipation of the arrival of hundreds of thousands of eligible persons from the Mainland to settle in Hong Kong following the judgment of the Court of Final Appeal (CFA), which was made according to the provisions in the Basic Law, this Council urges the Government:

(a) to collaborate with the mainland authorities to expeditiously formulate and promulgate the new procedure for vetting and approving Certificate of Entitlement (C of E) applications in accordance with the judgment of the CFA and the spirit of the Basic Law, verify the status of C of E applicants and issue the C of E within a reasonable period of time, so as to discourage those persons who have the right of abode (ROA) in Hong Kong but whose status has not been verified from entering Hong Kong illegally;

(b) to make arrangements for persons with the ROA, without prejudice to the exercise of their right, to decide for themselves whether or when to settle in Hong Kong after being issued with the C of E; and

(c) to give new arrivals the right to enjoy social welfare in accordance with the law, assist them in becoming self-dependent and integrating into the community as soon as possible, and adopt measures to eliminate any possible discrimination and misunderstanding towards them."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr LAW Chi-kwong, as set out on the Agenda, be passed.

Mrs Selina CHOW will move an amendment to this motion, as printed on the Agenda. In accordance with the Rules of Procedure, the motion and the amendment will now be debated together in a joint debate.

I now call upon Mrs Selina CHOW to speak and to move her amendment.

MRS SELINA CHOW (in Cantonese): With respect to the issue of new immigrants, the Liberal Party maintains that a proper balance must be struck. On the one hand, we must ensure that the stability and overall interests of Hong Kong are adequately protected, and, on the other, we must also make sure that mainland citizens who are entitled to the ROA in Hong Kong can be allowed to come here legally under orderly arrangements. While we are concerned about how the Government is going to implement the ruling of the Court of Final Appeal (CFA), we are equally concerned about the impacts which new immigrants will produce on Hong Kong. A proper balance must be struck between the interests of Hong Kong and new immigrants. In other words, while we must allow those entitled to the ROA to come here legally, we must make sure that Hong Kong can bear the pressure exerted by the resultant population increase.

The ruling of the CFA will not only directly affect hundreds and thousands of mainland citizens who are entitled to the ROA in Hong Kong, but will also affect the interests and well-being of Hong Kong as a whole. So, when we look at the issue of new immigrants from the Mainland, we should not focus only on their position and interests; we should not talk only about how we should assist them in exercising their ROA. We must at the same time bear in mind the problems which Hong Kong as a whole will have to face, so as to ensure that our society will not be seriously hit by any huge influx of new immigrants, because the resultant impacts will not only hinder our social development, but will also adversely affect the interests of the Hong Kong people and even those of the new immigrants themselves.

The motion moved by Mr LAW Chi-kwong today focuses only on the interests of those who are entitled to the ROA, and totally disregards the well-being of the people of Hong Kong. According to Mr LAW, the Governments of the Mainland and Hong Kong must draw up and announce a new set of vetting procedures as soon as possible. He further urges that C of E should be issued within a reasonable period of time, and that the Government of the Special Administrative Region (SAR) should allow newly arrived citizens to enjoy all the social welfare benefits to which they are entitled under the law. But he is silent on the urgent need to find out the number of eligible persons and to assess the resultant impacts on our society. Mr LAW said that we should not talk about figures, but I must say that as a responsible society and as a responsible government, we have no choice but to talk about figures. We must talk about figures. If not, we will simply fail to see the dimensions of the problems. When we fail to do so, we will not be able to work out solutions to resultant problems and difficulties. For this reason, we cannot support the biased direction of the original motion.

In particular we are most strongly against the second point in the motion. As suggested by Mr LAW, once a mainland citizen is issued a C of E, he should be allowed to choose whether or when they would come to Hong Kong. This proposal will in effect enable the C of E holder to bypass the exit procedures now applied in the Mainland, because once his entitlement is verified and confirmed, he can then decide for himself when he will come to Hong Kong. I actually think that the scenario which Mr LAW described to us a moment ago is nothing but his own subjective hope. He hopes that once given an option, some eligible people may well choose not to come here immediately. But this is rather different from what we think, and facts in the past can actually tell us that this will not be the case in reality. As we all know, the mainland citizens concerned are actually very, very keen to come to Hong Kong, and it is highly likely that they will all come here as soon as they are allowed to do so. That being the case, it will be impossible to make any arrangements for their orderly arrival. Besides, under the laws of the Mainland, all the Chinese citizens there are required to obtain exit permits before they can leave the country. That being the case, by making such a proposal, is Mr LAW saying that the C of E issued by Hong Kong can actually enable mainland citizens to ignore the national laws and do whatever they like?

My colleagues in the Liberal Party will say more on this point later on. I think the most pressing task facing the Governments of Hong Kong and the Mainland now is that they must find out the number of eligible persons as soon as possible. As I pointed out a moment ago, the Government has to make corresponding arrangements on the basis of such a number, and it also has to adjust its public policies appropriately, so as to cope with the surge in population. The newspapers today report that the Government seems to have complied some relevant figures, and these were quoted also by Mr LAW just now. Well, if my amendment can really induce the Government to give a clear picture of the implications of these figures, then whether or not my amendment can be passed, I would still consider my objective partially achieved.

Concerning the arrangements for eligible mainland citizens to come and live in Hong Kong, in addition to aiming at their phased and orderly arrival, we must also make sure that both Hong Kong and the Mainland can come up with a mutually acceptable procedure and timetable under the principle of equity and fairness. The mainland Government should also make more publicity efforts on clarifying and explaining the relevant arrangements and details. That way, eligible mainland citizens will have more confidence in their future life in Hong Kong, and they will also be able to adapt themselves more easily to the things in Hong Kong. When the Government plans its various public policies, it has to rely on realistic and reasonably accurate population projections. We hope that the new arrivals to be brought about the ruling of the CFA will not upset the planning and preparation of the Government. And, of course, we all very much hope that the Government can make very good planning and preparation. For this reason, we really need to conduct a full-scale review of all public policies as soon as possible, so as to make the adjustments required.

Actually, since 1994, I have repeatedly raised this point in the relevant Panel, asking the Government to take steps to address this problem. Let me give one example. One major reason why many mainland citizens want to come to Hong Kong is that they are concerned about the education of their children; and, as far as I know, many of them like the system of education in Hong Kong. So, the Government should negotiate with the mainland authorities to see if it is possible to reach a compromise of some kind, one under which schools based on the system of education in Hong Kong are operated in some specific localities for those mainland children entitled to the ROA in Hong Kong. It is hoped that this can enable them to make their own choices on whether or not they would really come to Hong Kong. Besides, as far as possible, the Government should provide training for newly arrived citizens from the Mainland, so as to enable them to integrate into our society. Such training should include formal school education for children. Moreover, on-the-job training should also be offered to adults to enable them to join our workforce as soon as possible. The Mainland and Hong Kong are after all quite different in terms of their systems of education and in many other aspects. So, if we really want to make newly arrived citizens from the Mainland feel that they do have a future in Hong Kong, we will have to give them the greatest assistance possible. Our attitude towards new immigrants is absolutely positive, and we see them as a huge source of manpower for Hong Kong. With their arrival, we hope that our workforce can become more balanced in structure. We also hope that they can produce a positive effect on our wage adjustments, thus enhancing our competitiveness and providing genuine assistance to our economic development.

With these remarks, Madam President, I urge Members to support my amendment.

Mrs Selina CHOW moved the following amendment:

"To delete "collaborate" after "(a) to" and substitute with "discuss"; to delete "to" after "Mainland authorities" and substitute with "and"; to delete "formulate and promulgate the new procedure for vetting and approving Certificate of Entitlement (C of E) applications" after "expeditiously" and substitute with "ascertain the number of persons in the Mainland eligible for settling in Hong Kong"; to add "the Basic Law," after "in accordance with"; to delete "spirit of the Basic Law, verify the status of C of E applicants and issue the C of E within a reasonable period of time, so as to discourage those persons who have the right of abode (ROA) in Hong Kong but whose status has not been verified from entering Hong Kong illegally" after "the judgment of the CFA and the" and substitute with "relevant provisions of the local legislation, and make corresponding arrangements for such persons to come to Hong Kong in batches and in an orderly manner, thereby preventing an influx of illegal immigrants and undesirable impacts on Hong Kong"; to delete "make arrangements for persons with the ROA, without prejudice to the exercise of their right, to decide for themselves whether or when to settle in Hong Kong after being issued with the C of E" after "(b) to" and substitute with "comprehensively review and adjust the various public policies so as to cater for the new population trends and avoid the emergence of conflicts within Hong Kong"; and to delete "give new arrivals the right to enjoy social welfare in accordance with the law, assist them in becoming self-dependent and integrating into the community as soon as possible, and adopt measures to eliminate any possible discrimination and misunderstanding towards them" after "(c) to" and substitute with "formulate measures to absorb and train these new arrivals from the Mainland with a view to developing them into a new driving force for Hong Kong's economic development"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Mrs Selina CHOW be made to Mr LAW Chi-kwong's motion.

SECRETARY FOR SECURITY (in Cantonese): Madam President, the Honourable LAW Chi-kwong's motion and the Honourable Mrs Selina CHOW's amendment have reflected the deep concern of Members about the ways to implement the judgment of the Court of Final Appeal (CFA) and to absorb the additional number of persons eligible for the ROA, which is likely to be considerable. Before Members give their views, I wish to make a statement on the issue raised in the motion and the amendment.

Let me first of all recapitulate the judgment of the CFA made on 29 January. The judgment has brought about major changes in the number of persons eligible for the ROA under Article 24 of the Basic Law as well as the procedures for their entry to Hong Kong. The main features of the judgment are as follows:

(1) The Certificate of Entitlement (C of E) Scheme is consistent with the Basic Law. In other words, those who claim the right of abode under Article 24 para 2(3) of the Basic Law can only have their status as a permanent resident of the Hong Kong Special Administrative Region established by holding a C of E;

(2) They must remain in the Mainland to apply for a C of E;

(3) The C of E need not be affixed to the One-way Permit (OWP). In other words, the issue of the C of E is no longer linked to the issue of the OWP;

(4) Children born in places outside Hong Kong (including the Mainland) to parents, either of whom was not a Hong Kong permanent resident at the time of their birth but subsequently became one, are also entitled to the ROA; and

(5) These children include those born out of wedlock to a father who is a permanent resident of Hong Kong.

As a result of (4) and (5), the number of persons eligible for the right of abode under Article 24 para 2(3) of the Basic Law has increased substantially. During the past three months, the Administration was repeatedly urged by the Legislative Council to ascertain at an early date the exact number of these persons. In fact, the issue had been actively studied in the past three months by a task force led by the Chief Secretary for Administration, which instructed the Census and Statistics Department to conduct the assessment through a survey. As at mid-April, the Census and Statistics Department had completed half of the survey. Although the survey is still underway, the figures derived from the analysis made in the past month have stabilized. It is believed that upon completion, the final figures will not vary much from the mid-term ones. Based on the findings of the survey as at mid-April, the number of persons in the Mainland with the ROA in Hong Kong as a result of the judgment of the CFA reaches 1 675 000, of which 692 000 are eligible children of the first generation while 983 000 are eligible children of the second generation.

We divide the eligible persons into two categories as children born within wedlock and children born out of wedlock. The breakdown is as follows: the additional number of eligible children of the first generation who are born within wedlock is 172 000. After this batch of persons have resided in Hong Kong for seven years, their children born in the Mainland will also be eligible for the ROA. We estimate that the second generation of these 172 000 persons, that is, their children born in the Mainland who become eligible when they have resided in Hong Kong for seven years, will number to 338 000. The first and second generations of eligible children born within the wedlock will add up to 510 000. For the eligible children born out of registered marriage, the first generation of them number to 520 000 and the number of these persons' children born in the Mainland is estimated to be 645 000. These children will also become eligible seven years after this first generation of 520 000 persons have resided in Hong Kong. The first generation of eligible children born out of registered marriage and their second generation will add up to 1 165 000. These persons total to 1 675 000 altogether, out of whom the first generation, that is, those who are immediately eligible number to 692 000. After they have resided in Hong Kong for seven years, their children born in the Mainland, whose number estimated to be 983 000, will enjoy the ROA in Hong Kong. I must first explain why there is such an enormous number of children born out of registered marriage. We do not believe that these 520 000 persons are entirely born to mistresses or extra-marital relationship. We believe that the figure in fact covers a considerable number of those children born to the so-called "de facto marriage" in the Mainland. We understand until the early '90s, many people on the Mainland gave birth to children without having their marriage officially registered. Therefore, we believe that these 520 000 children born out of wedlock should include children born to Hong Kong residents under "de facto marriage" in the Mainland, who eventually came to Hong Kong for settlement, leaving their children behind, while others came to Hong Kong without their spouses and set up another family after arrival.

Moreover, I need to stress another point. The above projection, that is, the first generation of the 692 000 persons who are eligible to reside in Hong Kong immediately, together with the second generation of eligible persons, totalling to 1 675 000, might be an underestimation of the total number of eligible persons, as there are two types of persons not covered because of their parents are not available for the survey. They are: first, mainland children of former Hong Kong permanent residents who have passed away; and second, mainland children of former Hong Kong permanent residents who have migrated. We must also note that many Hong Kong residents still have spouses living in the Mainland and they will continue to give birth to children, and the number of persons eligible for the ROA by virtue of their seven years' residence will keep growing. If we conduct a survey again on the number of persons eligible for the ROA by virtue of their seven years' residence a week from now, the figure is bound to have grown, as for every passing day, more persons will become eligible and so more will gain the ROA through their parents. We believe that the above figures are merely a reflection of the present situation and probably an underestimation of the actual situation.

As for the Mainland, surveys have been conducted in three cities in Guangdong, namely, Dongguan, Zhaoqing and Maoming, and Quanzhou in Fujian to assess the number of children born to Hong Kong residents in the Mainland. Last week, a representative of the Security Bureau paid a visit to Beijing with representatives of the Immigration Department and the Census and Statistics Department to find out the situation and learned that the surveys had been smoothly carried out. The findings are expected to be released shortly.

In light of the latest statistics provided by the Census and Statistics Department, a thorough assessment is being made by the policy secretaries concerned under the task force headed by the Chief Secretary for Administration. The assessment is to gauge the impact of the CFA judgment on the overall economy, employment, and various services and facilities, including housing, education, medical and health services, welfare services and the cost of the Comprehensive Social Security Assistance (CSSA) Scheme. The assessment is expected to be complete next week. We will be ready then to give a full account to this Council of the interim survey report prepared by the Census and Statistics Department, and of the assessment made by the Policy Bureaux in respect of the economy, employment, and supply of and demand of services and facilities.

Even before detailed reports are submitted by the Policy Bureaux, I can point out that the number of people to be absorbed by Hong Kong as a result of the CFA judgment, that is, some 1.6 million people, is likely to pose a very heavy (and even unbearable) burden to Hong Kong because:

First, under the provision of the Basic Law, once these people with the ROA have lived lawfully in Hong Kong for seven years, their children born in the Mainland will also be entitled to the ROA. And once these children have lived in Hong Kong for seven years, their children born in the Mainland in turn will be eligible for the ROA, with the right passing onto the future generations indefinitely.

Second, the CFA ruled that the link between the issue of the C of E and the issue of the OWP should be severed. In other words, the Government cannot control the arrival rate of mainland residents who are eligible for the ROA through the mechanism which limits the daily entry to only 150 under the OWP scheme. The CFA also decided that the C of E Scheme must be implemented in a "reasonable and fair" manner, that is, all C of E applications must be processed at a reasonable speed and the issuing process must not be delayed by administrative measures. Mr LAW has also commented on the definition of "reasonable" earlier and said that if the number of applicants was too big, it might still be reasonable for the process to take more than three or five years. I think that the definition of "reasonable" is highly controversial because according to our legal advisers, ultimately each applicant is the most eligible to decide how long is "reasonable" to him. To the applicants, such as those staging a sit-in outside this building requesting for permission to stay, as they have been separated with their families for so long, it would already be unreasonable for them to even wait for one more day. So, everyone has his own view on the question of "reasonableness". We, as the Government, would also find it hard to convince them that waiting for 10 years is still reasonable. If we continued to admit only 150 persons each day, C of E applicants would have to wait for 10 years or more. Under such circumstances, it is inevitable that the applicants would consider the wait unreasonable, and come to Hong Kong illegally, overstay or seek settlement in Hong Kong through legal proceedings. If we plan to admit all of the 700 000 eligible persons of the first generation within three years, we will need to admit, on average, 640 OWP holders each day. This figure, in fact, has not included the 150 OWP holders admitted to Hong Kong each day under the present arrangement, spouses of this first generation and spouses of the parents of this first generation in the Mainland. The survey conducted by the Census and Statistics Department found, after interviewing some 200 000 Hong Kong residents who have children in the Mainland, that about 100 000 spouses of these people are still living in the Mainland. In other words, allowing this first generation settlement in Hong Kong, the spouses of these Hong Kong residents and the spouses of this first generation can consider themselves eligible for settlement in Hong Kong under the law and policies of the Mainland and will keep pressing us for it. Hence, we may need to increase the daily quota for OWP to 1 000 in order to meet the various demands.

Third, if the first batch of 700 000 persons of the first generation and their spouses are fully absorbed within three years, the situation will be that after they have lived in Hong Kong for seven years, their children born in the Mainland, whose number is estimated to be about 920 000, in turn will be eligible for entry to Hong Kong. It means that we need to accommodate over 1 600 000 new arrivals (not including the spouses) within 10 to 13 years.

Today, the population of Hong Kong is almost 7 million and our economic structure has already changed from labour-intensive to service-oriented and knowledge-based. We are now actively developing high technology and high value-added industries to seek economic revival, which, in the long run, can improve our living standard. In face of keen competition from our neighbours in Asia, the Government's fiscal restraints and the economic downturn, it is very difficult for us to absorb a large number of persons with the ROA. The provision of adequate social services and facilities for these people, over one million in number, requires not only money but also vast land and human resources for the construction of public housing, hospitals and schools. Doctors, nurses and teachers are also required. A large number of job opportunities are also needed so that the arrival of these people will not worsen our employment problem and cause a heavy burden to the CSSA Scheme. These are all severe problems and it is not easy for the Government to find solutions.

Here I would like to respond to the first part of Mr LAW Chi-kwong's motion, which urges the Government to collaborate with the mainland authorities to expeditiously formulate and promulgate the new procedure for vetting and approving C of E applications in accordance with the judgment of the CFA within a reasonable period of time, so as to discourage those who have the right of abode in Hong Kong but whose status has not been verified and C of E not issued from entering Hong Kong illegally.

We fully respect the CFA judgment and hope to formulate the procedure for C of E applications as early as possible. In this connection, the Director of Immigration met with the Director of the Bureau of Exit-entry Administration (BEEA) of the Ministry of Public Security three times on 1 February, 10 February and 26 March respectively. I also met with the Director of the BEEA to discuss the procedures for accepting and vetting new applications for C of E, verifying the status of children born out of wedlock, and arranging for C of E holders to enter Hong Kong legally and orderly.

As we have explained, we hope the BEEA can act as the agent for the Director of Immigration in accepting applications and carrying out part of the verification on our behalf. The BEEA has offices in various cities and provinces in the Mainland. If it is appointed as the agent, it will be convenient for eligible persons living in different places, especially those who have no relatives in Hong Kong, to submit applications and documentary proofs, or make enquiries about the application procedures and progress at the nearest offices. However, after a series of discussions between the Director of Immigration and the mainland authorities, it is found that the mainland public security authorities will have much difficulty in helping us implement the above application procedures because of the following reasons:

Firstly, the Ministry of Public Security needs to know the number of persons involved before determining the demand for additional resources and the deployment of manpower. Hence, it too has carried out a study for ascertaining the number of eligible persons.

Secondly, the Ministry of Public Security has to consider how C of E holders may come to Hong Kong legally. Under the law in the Mainland, mainland residents have to seek exit approval from the mainland authorities for entering Hong Kong. While the CFA judgment of 29 January ruled against the requirement that a C of E must be affixed to an OWP, it admitted that it could not overrule the mainland requirement of mainland residents to seek exit approval for entering Hong Kong for settlement. Article 5 of the "Interim Measures for the Control of Chinese Citizens Travelling on Private Business to or from the Regions of Hong Kong to Macao" stipulates that with respect to mainland residents going to Hong Kong for settlement, the quota procedures for examination and approval shall be implemented in order to facilitate the safeguarding and maintaining of the economic prosperity and social stability of Hong Kong. Besides, Article 3 of the Interim Measures also stipulates that mainland residents travelling to Hong Kong should obtain exit permits issued by mainland public security authorities and leave the Mainland through the designated ports. Therefore the BEEA is facing great difficulties in arranging for mainland residents to come to Hong Kong legally, I repeat, legally, after the severance of the C of E Scheme and the OWP Scheme.

Thirdly, Article 7 of the Interim Measures provides that only five categories of people, such as spouses seeking reunion, and dependent children and elderly seeking support from their relatives in Hong Kong, may apply for the permission to settle in Hong Kong. Although under the CFA judgment, some of the people falling outside these categories become eligible for the right of abode, the BEEA is still obliged to arrange for their entry to Hong Kong for settlement in accordance with the law, otherwise it might give rise to public discontent or even lawsuits. Solving all these operational problems is therefore no easy task.

As for the first part of Mrs Selina CHOW's amendment which urges the Government to make corresponding arrangements for eligible persons to come to Hong Kong in an orderly manner, thereby preventing an influx of illegal immigrants and division within the local community, I fully understand the motive of Mrs Selina CHOW's amendment, which is in the hope of alleviating the impact on Hong Kong in allowing the eligible persons to settle here. Yet I must point out that the CFA judgment has clearly indicated that in processing C of E applications, the Immigration Department must not exercise unreasonable delay. In such circumstances, even when the Immigration Department receives a large number of applications, it has to allocate as much resources as possible, as required by law, to process them speedily without any delay. Thus, strictly speaking, conflict exists between verifying applications of eligible persons within a "reasonable period of time" and approving their entry to Hong Kong to satisfy their demand, and making arrangements for such persons to come to Hong Kong "in an orderly manner".

The second part of Mr LAW Chi-kwong's motion urges the Government to make arrangements for persons with the ROA, without prejudice to the exercise of their right, to decide for themselves when to settle in Hong Kong after being issued with the C of E. Concerning this, I have also said before that under mainland laws, mainland residents are required to come to Hong Kong within a set period of time after they are issued with the OWP. In fact, after the CFA delivered its judgment, we have reflected to the mainland authorities the same view that Mr LAW Chi-kwong has. However, the mainland authorities regard this suggestion as not in compliance with mainland laws and policy. Moreover, if a large number of persons are eligible for the ROA, allowing them to decide when to have their household records cancelled and when to leave for Hong Kong would disrupt the order of Mainland's exit-entry regulation system, so they find this unacceptable.

Also, I would like to point out that, as Mrs Selina CHOW has said, although subjectively, we may wish those with the ROA would delay their coming to Hong Kong after obtaining the proof of their ROA, in fact, according to our experience in handling so many cases and petitions, most of these applicants, who have waited for a considerable length of time, wish to come to Hong Kong as soon as possible after being granted the OWP to start schooling, look for jobs or take care of their ailing relatives. Therefore, I believe that this suggestion is hardly feasible.

Lastly, the third paragraphs of both Mr LAW Chi-kwong's motion and Mrs Selina CHOW's amendment urges the Government to help new arrivals from the Mainland to integrate into the community. While Mr LAW Chi-kwong's motion seems more focused on their right to enjoy social welfare, Mrs Selina CHOW's amendment emphasizes more on formulating measures to absorb and train these new arrivals with a view to developing them into a new driving force for Hong Kong's economic development. Both of them are of good intention, but the number of people involved is enormous, as we might have to absorb the first generation of 700 000 eligible persons within three years, and after these persons have settled in Hong Kong for seven years, their children will also obtain the ROA. If we have to absorb this second generation of eligible children who number to 900 000 within three years, we will have to absorb a total of 1 600 000 eligible children in 10 to 13 years. This does not include their spouses and I believe that after these children have settled in Hong Kong, their spouses will certainly have a strong urge to come to Hong Kong as well. This will create a heavy burden on Hong Kong, because even if the Government can cope with the demand for various services financially, manpower and land resources may not be able to do so. Hundreds of thousands of mainland residents settling in Hong Kong will cause a rapid surge in our population and unemployment rate, a more crowded living environment; the hillside squatters problem may re-appear; education and medical facilities may not be able to meet the demand caused by a sudden, large increase in population. Moreover, there is a possibility that our environment and the present fragile ecological balance may be badly affected too. Because of all these questions, the Government has to carefully consider the far-reaching impacts on the entire community before deciding how to deal with the requests made by the two legislators in this respect. Thank you, Madam President.

PRESIDENT (in Cantonese): We now proceed to the debate.

MR FUNG CHI-KIN (in Cantonese): Madam President, before the CFA gave its judgment at the end of January this year, children of Hong Kong people must obtain a C of E if they want to settle in Hong Kong. And this C of E will have to be affixed to the OWP. Subsequent to the making of the CFA judgement, children of Hong Kong people must obtain a C of E if they want to settle in Hong Kong to prove that they have the ROA. But they do not need to affix their C of E to their OWP. The CFA stated that the Government must verify the status of the applicants for C of E within a reasonable period of time and issue the C of E to them so that they can exercise their ROA.

Therefore, if any person in the Mainland holds a C of E, it will not matter if he comes to Hong Kong through legal or illegal means, for once he is in Hong Kong, he would enjoy the ROA. The Government may not have the authority to send him back.

The original motion today calls for the Government to verify the status of the applicants for C of E and issue them with the Certificates within a reasonable period of time. It is thought that such a practice would minimize the number of people holding the ROA but have not been verified of their status to come to Hong Kong through illegal means. As for the reasonable period of time mentioned in the motion, the legal advice is that this is about three years. If the number of people holding a C of E is only about 200 000 to 300 000, the Government can of course permit these people to come to Hong Kong within a reasonable period of time.

But from the statement given by the Secretary, we know that the initial figures show that those who are eligible to come here now would be as much as 700 000 people. It will be 1.7 million if we add the second generation of these people. And this is very likely to be an underestimated figure as well. If we put in other related people, the total number would be a few millions.

The Hong Kong Progressive Alliance (HKPA) is very much concerned that these people who hold a C of E may grow tired of waiting and choose to enter Hong Kong illegally. What can Hong Kong do if these people enter Hong Kong illegally and if the Government does not have the authority to send them back?

Madam President, it is indeed a very complicated issue to make arrangements to let these people with a the ROA to settle here. And on this issue the Secretary has made many clear explanations. The HKPA thinks that the most urgent task that needs to be done is to work out the number of people in the Mainland who are eligible for the ROA in a manner as accurate as possible. At the same time, the Government should seek more legal advice and to study carefully the meaning of the reasonable period of time in the legal context to see whether it is absolute or that any appropriate adjustment can be made to suit the practical needs.

The HKPA hopes that the Government can co-operate closely with the mainland authorities on this issue. We hope that they can give serious thoughts to it and work out a feasible course of action to solve the problem at hand. It is with this consideration that the HKPA has reservations on the motion and the amendment.

Madam President, I so submit.

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

MR CHAN KAM-LAM (in Cantonese): Mr Deputy, the beginning part of Mr LAW Chi-kwong's motion reads: "That, in anticipation of the arrival of hundreds and thousands of eligible persons from the Mainland to settle in Hong Kong following the judgement of the Court of Final Appeal (CFA), ......". With such an anticipation, he goes on to urge the Government to expeditiously formulate and promulgate a new procedure for vetting and approving C of E applications; to make arrangements for persons with the ROA to decide for themselves whether or when to settle in Hong Kong after being issued with theC of E; to assist them in integrating into the community; and to adopt measures to eliminate any discrimination against them.

The amendment of Mrs Selina CHOW to Mr LAW Chi-kwong's motion does not seek to change the premise that we should allow "hundreds and thousands of" eligible mainland persons to settle in Hong Kong. The only difference between the amendment and the original motion lies in their proposals on how we should deal with the resultant social problems.

Actually, the measures proposed by these two Members are nothing new at all. And, more importantly, if hundreds and thousands of mainland persons are really allowed to settle in Hong Kong within a short period, even the measures proposed by these two Members will not possibly help to any great extent. First, these measures cannot make the hundreds and thousands of eligible mainland persons give up their right or defer the exercise of their entitlement voluntarily. Second, these measures will not be able to ease the pressure exerted by population expansion on our social services. So, the quality of living in Hong Kong will inevitably drop.

All of a sudden, we are told that hundreds and thousands of people more are entitled to the ROA and that these people can come to settle in Hong Kong whenever they like. Is this really a fait accompli which we the people of Hong Kong must accept? This should precisely be the question which we must consider before everything else.

The judgment of the CFA is of course law. Under our existing judicial system, once the judges of the CFA have interpreted the relevant provisions of the Basic Law and made their ruling, nobody can challenge their judgment. Once the CFA rules that some people are entitled to the ROA, and that they can exercise their entitlement under some specified procedures, its judgment will become part of the law. Before, the law is altered, we must obey it, or else we will be breaking the rule of law. This is a point which is beyond any doubt.

But laws can be changed, including those originating from Court rulings. The judgment of the CFA in relation to the ROA is not in line with the long-term interests of Hong Kong as a whole, and this is the consensus among most people in Hong Kong. And, we also have reasons to believe that the ways in which the CFA defines "permanent residents of Hong Kong" are not in line with the original intent of both the Sino-British Joint Declaration and the Basic Law. The drafters of these documents did have very definite ideas on who should have the ROA; but because of some unforeseen factors (such as technical problems of law drafting), when the Court interpreted the Basic Law, it eventually came up with a scope of eligibility far larger than that which the law drafters had in mind. Immense pressure on the community has thus resulted. As pointed out by the Secretary for Security a moment ago, the arrival of nearly 1 million eligible persons at Hong Kong within a short period of time will create many problems for our community in terms of housing, education, medical care, employment, social welfare services and so on. These problems will exert very heavy pressure on Hong Kong. The dimensions of these problems will certainly not be as small as described by Mr LAW Chi-kwong, who remarked that "only a very limited number of applications would be approved every day." The Democratic Alliance for the Betterment of Hong Kong (DAB) is deeply worried about this problem.

Under such circumstances, the SAR Government simply should not stick to the judgment of the Court as if it were a piece of eternal truth; it simply should not adhere blindly to the judgment regardless of all the social consequences. To sum up, as a responsible government, the SAR Government should act proactively and seek to change the laws made by the Court, so as to avoid the harmful consequences resulting from any unreasonable policies.

The DAB will support neither the original motion nor the amendment.

Thank you, Mr Deputy.

MR HUI CHEUNG-CHING (in Cantonese): Mr Deputy, over the past few months, following the judgment of the CFA on the ROA of mainland children born to Hong Kong residents, there have been heated and extensive discussions in the community. The various sectors of the community are worried that the judgment may impose a heavy burden on Hong Kong in the areas of education, medical care, social welfare services and so on. Such a worry is easy to understand, and, frankly speaking, this is really a problem which we must all seek to tackle. I think the most pressing task facing the Government is that it must, as soon as possible, explore ways of allowing those eligible mainland citizens to come here in an orderly manner, so as to prevent our established policies from being upset by a sudden population expansion.

Initially, the Government estimated on the basis of a survey conducted in 1996 that the number of children born to Hong Kong residents in the Mainland was about 400 000. This estimation was immediately queried by many people who believed that the number should be much greater, reaching 500 000 or even 800 000 ─ and, please do not forget, children born out of wedlock are not counted. The interim survey findings released by the Census and Statistics Department yesterday show that as many as 800 000 mainland citizens may come to Hong Kong immediately, and today, the Security Bureau gave the figure of 692 000. If the second and third generations of eligible mainland citizens are also counted, the number may be well over 1 million. The figure given by the Security Bureau today is 1 675 000. If all these new immigrants are to come to Hong Kong within a reasonable period of five years as suggested by the Security Bureau earlier on, there will be an annual influx of 200 000 new immigrants into Hong Kong over the five-year period. Can Hong Kong accommodate such large numbers of newcomers?

Before deciding how many new immigrants we can accept annually, the Government must carefully assess our public facilities, financial situation, future development and current economic conditions. Besides, it must let all those verified to be eligible know how long they will have to wait before they can come to Hong Kong. This is very important, since the CFA judgment has ruled that both legitimate and illegitimate children should enjoy the ROA; with this judgement, the already difficult task of verification will be made even more difficult by the numerous births every year.

Mr Deputy, the drawing up of arrangements for eligible mainland people to come to Hong Kong is a highly important issue, because it will not only directly affect our allocation of public resources in the future, but may also produce impacts on our economy as a whole.

Under the current policy of the Central People's Government, once a OWP is issued to an applicant, he will have no choice but to come to Hong Kong immediately. The point is that the children of many Hong Kong residents in the Mainland do not actually want so much to come to Hong Kong immediately, because they are probably a lot happier in the Mainland where they can enjoy family care and the company of classmates and friends. But under the existing policy, they are somewhat forced to come to Hong Kong, for the fear that if they do not come to Hong Kong immediately they may well lose their entitlement. I therefore think that as a long-term measure, the Government should really encourage these children to continue to live in the Mainland. This may well be much more feasible, much more realistic, as a solution to the problem.

In the case of Germany, its reunification once led to a huge influx of new immigrants and imposed on it a very heavy social burden. The German Government was thus forced to increase taxes. Later on, however, the German Government was able to work out an expedient measure to deal with the situation. By means of a series of diplomatic manoeuvres, it managed to increase its industrial investments in overseas ethnic German communities and improve the provision of medical care and education there. That way, ethnic Germans living overseas are able to enjoy a living standard comparable to that found in Germany itself. The number of ethnic German immigrants into the country has since dropped. We should perhaps learn from this experience.

It is of course up to the Government to conduct further studies on the feasibility or otherwise of my above proposal. But I hope that when making arrangements for the orderly arrival of eligible mainland children, the Government can consider the idea of encouraging them to stay in the Mainland. This is the only "win-win-win" solution for the Government, the people of Hong Kong and eligible mainland children.

Mr Deputy, I so submit.

MR CHEUNG MAN-KWONG (in Cantonese): Mr Deputy, since the CFA has ruled that children born to Hong Kong residents in the Mainland should have the ROA in Hong Kong, huge numbers of school-age new immigrants will probably come to Hong Kong. For this reason, besides making positive arrangements for the orderly arrival of the eligible mainland children of Hong Kong residents, we must also ensure that all school-age new immigrants can receive proper schooling here, in very much the same way as the children of all other Hong Kong residents.

The provision of education in Hong Kong is based on the principle of equality for all. The children of all Hong Kong residents are thus all entitled to proper schooling, whether they were born locally or in the Mainland. In the past, some Hong Kong people, and indeed some individual educators, were no doubt rather negative towards new immigrant school children. By now, however, more and more people have come to realize that it is very narrow-minded and myopic for anyone to reject new immigrant school children. Hong Kong used to be an immigrant society, and our elder generations were themselves once new immigrants. How can we possibly reject new immigrants now? Hence, we should really work positively to enable new immigrants to integrate into our society, so that they can in time become our reinforcement in the process of development. To achieve this goal, we must start with education.

I must of course add that we must consider the capacity of our education system. As tentatively estimated by the Government, there are now as many as 320 000 legitimate children of Hong Kong residents in the Mainland. Even if we assume that only one third of these children are of school age, the figure will still be as large as 100 000. Such a number of school-age children is far bigger than the number of vacant school places in Hong Kong. So, if we do not construct a large number of schools now, we will have to squeeze these school children into our already over-crowded classrooms, thus boosting the class size from 40 students to 45 students. Our classrooms will then be turned into "concentration camps", and the quality of our education will suffer. Worse still, the local people may well reject new immigrants and look upon them with hatred and discrimination, thus sowing the seeds of division and crisis in our community. This will be harmful, and most unfortunate, to Hong Kong in the long run.

Mr Deputy, the arrival of new immigrant school children is already a very pressing problem, and we can no longer afford any delay in increasing our available school places. The Education Department should discard its age-old mentality and approach; it should stop thinking that it can solve the problem easily just by building a few new schools on some scattered and isolated pieces of land. A couple of days ago, Mr SIN Chung-kai and I raised a proposal on constructing "School Estates" on some large sites on Hong Kong Island, the Kowloon Peninsular and the New Territories, where large numbers of additional school places can be provided to cater for the needs of new immigrant school children and to ease the existing problem of over-sized classes in our primary and secondary schools. This proposal can actually kill two birds with just one stone. So, I urge the Government to make up its mind now and to launch the construction works immediately. Any procrastination on its part is tantamount to dereliction of duty, punishable by 50 or even 100 strokes of the cane.

When I discussed the matter with the Planning, Environment and Lands Bureau, I raised the point that the old airport site and the Kowloon West Reclamation in Kowloon, the Green Island Reclamation in Hong Kong and Tin Shui Wai in the New Territories were all suitable for the construction of school estates. Suppose 10 to 20 schools are to be constructed in one school estate, several dozen thousand additional school places can be created to address our immediate problem. The concept of a school estate is much more than a means to create new school places; it is also an innovation in school construction. It aims not only to serve new immigrant school children, but also the entire student population in Hong Kong. In a typical school estate, there will be many schools each with its own independent and standard premises. There will also be some common education facilities such as gymnasiums, joint school libraries, canteens and teaching resource centres. These facilities can be used by all the schools in the school estate and many other schools in the vicinity. So, in a way, a school estate will in effect become a centre of education in its respective neighbourhood.

Mr Deputy, the arrival of huge numbers of mainland children born to Hong Kong residents will inevitably reduce their mothers' chances of coming. In the past, we witnessed just too many tragedies resulting from the separation of mothers and their children. That is why some have suggested that we should either set up Hong Kong-style schools in places like Zhuhai and Shenzhen or buy school places in the Mainland, so that eligible mainland children who do not wish to leave their mothers can receive Hong Kong-style education without having to leave the Mainland. But my personal view is that after all, Hong Kong-style education is not what the Hong Kong culture and lifestyle are all about, and even after receiving Hong Kong-style education, mainland school children may still face other obstacles when trying to integrate into the society of Hong Kong. Hence, I maintain that the provision of Hong Kong-style education in Zhuhai and Shenzhen should at best be regarded as a stop-gap measure only. In the long run, mothers and children should all be allowed to come to Hong Kong together, to live here, to work here and to go to school here. As I pointed out a moment ago, Hong Kong itself is an immigrant society. Therefore, all in Hong Kong should be treated as Hong Kong people regardless of when they arrived. New immigrants should not be regarded as a burden; instead, we should create an environment conducive to their prompt integration into the community, so that they can also contribute to the development of Hong Kong.

Mr Deputy, as far as the schooling for new immigrant children is concerned, school premises are the "hardware", and the "software" should be teachers. Given the current economic recession, it will not be difficult to employ enough teachers. What poses a problem is instead teachers' training. I know that the Education Department is already trying very hard to provide some essential assistance to new immigrant school children, one example being pre-admission classes on Chinese and English. I also know that many schools have become increasingly aware of the good qualities of new immigrant school children; many of them are well-behaved and eager to learn, and some of them have even won the liking of their teachers and fellow students because of their outstanding performance in academic work and sports. Provided that we can give all these children the kind of education and opportunities required, they too will be able to make a mark in our community, in very much the same way as our own children.

Mr Deputy, I so submit.

MR HOWARD YOUNG (in Cantonese): Mr Deputy, if we look at the original motion moved by Mr LAW Chi-kwong of the Democratic Party (especially its second part) and the amendment moved by Mrs Selina CHOW of the Liberal Party, we will see that their major difference actually lies in what arrangements we should make in order to allow eligible mainland citizens to come to Hong Kong. According to the original motion, mainland people issued with the C of E should be allowed to choose whether or when to come. But this is obviously not in line with the OWP system practised by Hong Kong and the Mainland over the years.

We must note that mainland citizens wanting to leave the country are required by clear and specific legal provisions to apply to the relevant authorities for exit documents. This has been a long-established policy of our country, certainly not anything new. I can still remember that at one time during the 1970s, before the policy of reform and opening was implemented, such a requirement was not applied to mainland citizens only, because even foreigners coming to our country for sight-seeing or on business also had to submit their exit applications despite their visas. In the very early days, before the days of Home Visit Permit, visitors wishing to leave the country had to have their home visit recommendations chopped at their hotels or local police stations before they could leave. The situation has of course improved greatly now, and the mainland Government has already abolished such a requirement. Such requirements are not found in China only; as people working in the tourism industry may still remember, some years ago, Hong Kong residents visiting Taiwan on Taiwan Entry Permit also had to report to the relevant authorities before they could check out at the airport for departure. So, it can be seen that different places do impose their own legal requirements on the exit of people, whether they are their own nationals or aliens. Maybe such requirements are indeed not quite in line with the freedom enjoyed by the people of Hong Kong and we may well disagree to them, but we still have to obey them, because they are all laws of the places concerned. From this perspective, it can be said that if people leave the Mainland without obtaining any exit documents from the relevant authorities, they will be breaking the laws there.

Concerning the flow of people between Hong Kong and the Mainland, we have to note that the treaty signed in the last century under which the Manchu government ceded Hong Kong to Britain actually stipulated very clearly that mainland people should have the right to enter and leave Hong Kong. Therefore, theoretically, mainland people do have the right to enter Hong Kong (which is under Chinese sovereignty) at anytime they like and without any restrictions whatsoever. The OWP system is in fact a means to regulate the flow of mainland citizens into Hong Kong for permanent settlement, and it is also an important measure which has ensured the overall stability of Hong Kong. Hence, over the years, both the former colonial administration and the mainland Government adhered strictly to the rules of the game. And, from an objective perspective, the OWP system has indeed played a very positive role in ensuring the stability of Hong Kong and regulating its population growth.

We understand that the need to apply for the C of E before they can apply for the OWP from the mainland Government has indeed caused mainland citizens a lot of inconvenience. But if we do not adopt such an arrangement, we will not be able to regulate the number of mainland citizens moving into Hong Kong, nor will we be able to maintain the social stability of Hong Kong. After weighing the pros and cons, we find ourselves forced to adopt such an arrangement, which is the only way to protect the interests of our community as a whole.

The proposal of Mr LAW Chi-kwong will in effect overturn the existing system, because it deprives the mainland authorities of any say and enables the applicant to decide for himself when he should come. In the end, the system of orderly arrival will be completely shattered, and hundreds and thousands of mainland citizens may come to Hong Kong within a very short period of time. He said a moment ago that it will take time to vet and approve the applications. But even if eligible mainland people really come at a later time ...... well, the arrival of a whole batch of people, even at a later time, will be worse than their orderly arrival. If applicants are really allowed to defer their coming to Hong Kong as proposed by Mr LAW ...... well, if they do not come during the first two years but all rush here two years later, they will still produce a great impact on Hong Kong.

The need for orderly movements of population is not unique to Hong Kong, nor is it unique to the Mainland, though, of course, I must add that the coming of mainland citizens to Hong Kong should not be compared with immigration. But as far as I know, when foreign countries process the immigration applications from Hong Kong residents, once approval is granted, the applicant will be required to land before a specified deadline, and this applies to all applicants regardless of their application status. If the applicant fails to comply, he will lose his entitlement. I am sure that this point will be considered whenever any place considers the acceptance of incoming population. Therefore, the Liberal Party wants to reiterate that when we make any arrangements for the coming of those mainland citizens judged by the CFA to be entitled to the ROA in Hong Kong, we must first comply with the entry and exit laws of the Mainland, and second adhere to the time-tested OWP system, or a similar, viable alternative. Departure from these two principles will lead to very serious consequences.

With these remarks, Mr Deputy, I oppose the original motion.

MR MICHAEL HO (in Cantonese): Mr Deputy, although the Government has all along claimed that it wants to assist newly arrived citizens in integrating into the community, it has not actually made any obvious achievements. The findings of a recent survey conducted by the Hong Kong Association of Women show that of the 113 women interviewed, more than 80% claim that they have to bear the sole responsibility for looking after their families; 60% say that they are worried about the upbringing of their children; and 80% say that they will not seek assistance from others. Besides, 40% of them say that they have frequent headaches; 30% say that they have emotional disturbances and suffer from frustrations and lack of self-confidence. And, 40% claim that they always suffer from nervous tension, but more than 50% of these women have never sought any medical advice in Hong Kong. What does all this tell us? This tells us that many newly-arrived citizens are suffering from various difficulties and health problems, but they will not seek any assistance. So, the Government really needs to do more, both in publicity and in reaching out for them.

Many adults who are entitled to the ROA in Hong Kong have stable jobs in the Mainland, and many of them have attained a certain education standard. For example, in the survey of the Hong Kong Association of Women, it is found that more than 80% of the respondents have received either primary or secondary education. But 70% of these women do not have any full-time jobs. What is more important to note is that more than 60% of the respondents say that they will rely only on themselves to look for jobs, and the remaining 40% say that they will seek assistance from their friends and relatives. None of these woman respondents, who have all recently arrived from the Mainland, say that they are going to seek employment assistance from the Labour Department of the Government.

When planning and arranging adaptation courses for newly arrived citizens, the Government should also consider the possibility of including people such as housewives, who are already past school age. And, the Government should also consider ways of enhancing adult education and the retraining for newly arrived citizens; it should at the same time provide vocational training for women, so as to assist them in earning their own living. What is more, since many newly arrived citizens possess professional qualifications, the Government should consider the setting up of some kind of qualifications accreditation mechanism, or it may also give them some assistance and additional training, so that they can acquire the relevant professional qualifications recognized in Hong Kong.

Finally, I wish to point out that the Government should allow the people concerned to retain their household registrations in the Mainland for a period of time after they are issued with the OWP. I am of course aware of the point relating to mainland laws. But things can always change. We have noticed some problems today, and we think tentatively that some laws in the Mainland may have to be revised. Since we have noticed these problems, should we not conduct more studies and do more work in this respect?

Let me now turn to medical care. Most of the newly arrived citizens are relatively young, and, probably, they will not exert any immediate pressure on our medical care services. But I am sure that as our population expands, there is bound to be some proportionate increase in the pressure which we face. What is most important is that we should enhance the various segments in our primary health care system, an example being the provision of inoculation. As we all know, the primary health care system in Hong Kong is different from that in the Mainland, and I think we should really act now to enhance our preparation in this particular respect.

Finally, I wish to comment on the remarks made by Mr CHAN Kam-lam just now. Mr Chan questioned whether we should force ourselves to accept the consequences brought about the judgment of the CFA, and he urged the Government to make some appropriate arrangements. I very much hope that Honourable colleagues belonging to the Democratic Alliance for the Betterment of Hong Kong can state their position clearly. What actually do they want the Government to do? Do they want the Government to initiate a request for the amendment of the Basic Law? Do they want the Government to ask the Standing Committee of the National People's Congress to overrule the judgment of the CFA? Or, do they have any other solutions in mind? If they really just mean what they say, that is, if they only want the Government to do what is appropriate, then I think they are simply making no suggestion at all. I do not think that we can carry on the debate in such a manner.

Thank you, Mr Deputy.

MR TAM YIU-CHUNG (in Cantonese): Mr Deputy, since we are holding a motion debate on newly arrived citizens from the Mainland, I think we have to take a look at the legislative process in the past 20 years on the ROA, in particular the views put forward during the drafting of the Basic Law, and those discussed in the Basic Law Drafting Committee, the Preliminary Working Committee and the Preparatory Committee for the preparation of the Special Administrative Region Government. The definition of "permanent residents" was established after long discussions and through explanatory memoranda, and the purpose is to protect the interests of those who are entitled to the ROA on the one hand and to maintain the long-standing immigration and ROA policy of Hong Kong on the other, so as to prevent any huge influx of population into the SAR after its establishment, because this may deal a heavy blow to the stability and prosperity of Hong Kong.

Article 24 para 2 of the Basic Law sets out the definition of permanent residents, and Article 24 para 2(3) specifies the conditions under which children of Chinese nationality can become permanent residents of Hong Kong: they must be born of those Chinese citizens born in Hong Kong before or after the establishment of the SAR; or they must be born of those Chinese residents who have ordinarily resided in Hong Kong for a continuous period of not less than seven years before or after the establishment of the SAR. Whether under the immigration policy of the British Hong Kong Administration before the promulgation of the Basic Law, or in accordance with the intent of the Basic Law, or according to the explanatory memoranda of the Preparatory Committee, if a person wants to become a permanent resident of Hong Kong, he must satisfy two specific conditions. First, at the time of his birth, his parents, or either one of them, must be a Chinese citizen with the ROA in Hong Kong. Second, at the time of his birth, if only his father was a Chinese citizen with the ROA in Hong Kong, then he must be the legitimate child of his father, or a child born out of wedlock with due legal recognition. The judgment of the CFA obviously runs counter to these two principles.

Having looked at the legislative history in the past 20 years, we can see more clearly the legal origin and justifications of these two conditions. Before the signing of the Sino-British Joint Declaration, the concepts of "permanent residents" and "ROA " were not found in the laws of Hong Kong. At that time, the Immigration Ordinance gave the ROA to the "Hong Kong belongers", "Chinese residents", "resident British subjects" and "resident United Kingdom belongers". In order to cope with the changes brought about by the Joint Declaration, following discussions in the Joint Liaison Group in 1987, it was agreed that the British Hong Kong Administration should amend the relevant ordinances of Hong Kong, including the Immigration Ordinance, the Registration of Persons Ordinance and the Registration of Persons Regulations. Thereafter, the concepts of "permanent residents" and "right of abode" were introduced in Hong Kong. Following the above-mentioned amendments, people formerly referred to as "Hong Kong belongers" and "Chinese residents" have been given the status of permanent residents who enjoy the ROA.

Under the immigration legislation as amended by the British Hong Kong Administration, a person of Chinese descent can enjoy the ROA only if, at the time of his birth, both his parents or either one of them had the ROA in Hong Kong or the right to unconditional stay in Hong Kong. If, however, only his father had the ROA, that person must be a legitimate child of his father, or an illegitimate child of his father with legally recognized status.

In April 1990, the Basic Law of the Hong Kong Special Administrative Region was passed by the Seventh Plenary Session of the National People's Congress. Article 24 para 2 of the Basic law sets out the conditions under which people of different nationalities can become permanent residents of Hong Kong. The provisions of Article 24 para 2 are a departure from the Immigration Ordinance of the British Hong Kong Administration, which derived its authority from the Nationality Act of Britain and British colonial rule in Hong Kong, and which sought to define Hong Kong permanent residents as British Dependent Territories Citizens of Chinese descent. But as far as its legislative intent is concerned, the Basic Law is actually not different from the laws then existing, both in terms of the residency status and marital status of parents at the time of their children's birth.

On the question of whether or not persons of Chinese nationality born outside Hong Kong should have the ROA, the Sin-British Joint Liaison Group reached a "common understanding" in 1993: Any person of Chinese nationality born outside Hong Kong before or after the establishment of the Hong Kong Special Administrative Region shall have the ROA in Hong Kong if either one of his parents was a Chinese citizen with the ROA in Hong Kong at the time of that person's birth. This "common understanding" was later accepted by the Preparatory Committee as part of its "Opinions on the Implementation of Article 24 para 2 of the Basic Law", which was in turn passed by the Eight Plenary Session of the National People's Congress on 10 March 1997.

Mr Deputy, despite my respect for the CFA, I cannot agree to its judgment on the ROA issue. As a member of the Basic Law Drafting Committee, the Preliminary Working Committee and the Preparatory Committee, I must say that the judgment is actually a departure from the legislative intent of the Basic Law and a disrespect for the legal origin and basis of our immigration policy.

Besides, Article 158 of the Basic Law also requires that when the courts of Hong Kong deal with cases involving the relationship between the SAR and the Central Authorities, they must first seek an interpretation from the Standing Committee of the National People's Congress before reaching any final appeal judgment. The provisions of Article 24 and Article 22 of the Basic Law on the entry of people from other parts of China into the SAR are in fact closely related to such a relationship. Therefore, the issue of whether or not mainland children born to Hong Kong residents should enjoy the ROA naturally involves the relationship between the SAR and the Central Authorities. But the CFA has failed to seek an interpretation from the Standing Committee of the National People's Congress. So, I think the action of the CFA in this particular issue is indeed very much open to question.

Mr Deputy, however big a ship may be, its capacity is bound to be limited. So, I do not think that we can solve the problem by accepting all those who wish to come. Instead, we should seek to solve the problem once and for all by plugging the hole. This is far more important than anything else.

With these remarks, Mr Deputy, I oppose both the original motion and the amendment.

MISS EMILY LAU (in Cantonese): Mr Deputy, I rise to speak in support of Mr LAW Chi-kwong's motion. First, I am very much delighted by the Secretary's action to speak before we Members deliver our remarks. Mr Deputy, as you know, we have been negotiating with the Government for months, and for this reason, I think that it will be very useful if the relevant government official or Bureau Secretary can speak before this motion debate actually commences. The remarks made by the Secretary earlier will probably enable us to conduct a more meaningful debate. I hope that in the future, government officials and Bureau Secretaries will not wait until the end of a debate before they speak, and I also hope that this will not be the last time. I hope that in the future, Bureau Secretaries can speak before the commencement of motion debates, and then also give their responses at the end.

Mr Deputy, I support Mr LAW Chi-kwong's motion, but I cannot do the same for the amendment of Mrs Selina CHOW. I know that the remarks of the Secretary just now and the figures which she quoted, especially the figure of 1 675 000, will probably shock the whole community. This is indeed a very big figure, but I must also add that not all these people are going to arrive on one single day, because the Secretary said the figure for the first generation was 690 000, then there would be 170 000 and so on. Anyway, the figures will all be very big. Mr Deputy, this is an undeniable fact. But we must also remember that ours is a society which upholds the rule of law. What is meant by the rule of law? Does it mean that we are only going to implement those laws which we like, and bend the rest of all others which we do not like? Has it ever occurred to us that if we are to uphold the rule of law, we will inevitably face inconvenience, have hard feelings, or even experience real difficulties? And, insofar as the present issue is concerned, I do not think that we should necessarily look at it as something which is beyond our ability, which will plunge us into immense difficulties and which will "sink" our "boat".

Mr Deputy, as pointed out by the Secretary herself, if we look at the motion of Mr LAW Chi-kwong (especially part (a)) and the amendment of Mrs Selina CHOW, we will see that they are entirely mutually exclusive. The reason is that while Mr LAW urges the Government to formulate and announce a new procedure for vetting and approving C of E applications and to verify the applicants' identity within a reasonable period of time, Mrs Selina CHOW asks the Government to make corresponding arrangements for their orderly arrival in separate stages. And, I must say that what Mr LAW said is in fact very correct. As the Secretary explained, "a reasonable period of time" should mean that applications should be processed with a speed which is deemed to fair. Fair from whose perspective? From the applicant's perspective, I must say, because the authorities simply should not delay the processing of his application without any good reasons. Therefore, I myself and the Frontier cannot support the amendment of Mrs Selina CHOW, which deletes this particular part of Mr LAW's motion and replaces it with "to make arrangements". Actually, the proposals of Mrs Selina CHOW can be inserted into the original motion without leading to any conflicts. But then, she has proposed to delete a part in Mr LAW's motion, and this shows that she does not accept that particular part of the original motion. I cannot therefore support her proposal.

Mr Deputy, part (b) of the original motion advises the Government to discuss with the mainland authorities, to see if applicants can be allowed to decide the timing of their departure after being issued with the C of E. The Secretary also responded to this point just now, and I am sure that she has noted this proposal for a long time, because Mr LAW raised it a very long time ago. But the Secretary said that the mainland authorities would not accept such a proposal. Mr Deputy, I understand the Mainland does have its own laws and practices. But what part (a) of Mr LAW's motion suggests, and what I also suggest, is simply that the Government should ask for the co-operation of the mainland authorities. That is why I hope that the Secretary can continue to discuss with mainland officials. It is after all no big deal to give these people an option, and it may well be a good thing instead. Why force them to come to Hong Kong once they are issued with the C of E? No doubt, as the Secretary remarked, some, and indeed many, of these people will certainly come to Hong Kong. This is perfectly possible. But there may also be some who want to go back to the Mainland due to their dislike for the life here. As once pointed out by Mr LAW, this is precisely where the crux of the problem lies. Therefore, I hope that the Secretary can continue to discuss with the mainland authorities on part (b) as much as possible, to see if they can relax their requirements. Or, the Government should consider another suggestion made by Mr LAW and discuss with the mainland authorities, to see if it is possible to allow people who dislike the life here for one reason or another to go back to the Mainland and restore their household registrations. I know only too well that the Mainland has its own practices. But I also hope that the Secretary can still consider the matter from the perspective of these people. The implementation of this proposal will not only ease the pressure exerted on Hong Kong, but will also help these people, because they will be enabled to know whether they can go back if they do not like the life here. Mrs Selina CHOW has proposed to delete Mr LAW's proposal in its entirety, and replace it with a proposal on reviewing and adjusting our public policies. I do not think that this is proper. I agree that we should conduct a review and make adjustments. But I cannot support her proposal to delete Mr LAW's proposals.

Her amendment to part (c), that is, the third point in the original motion, is even more unacceptable to me. Mr LAW suggests that these people should be allowed to enjoy our social welfare benefits according to the law; he also suggests that they should be given assistance in earning their own living and integrating into our society. These are all very important suggestions. Why delete them all? Mr LAW also says that the Government should implement some measures to eliminate all possible discrimination and misunderstanding relating to these people. This is also an important proposal. Mr Deputy, as you also know, such discrimination and misunderstanding are really found in society. Why can we not ask the Government to take more steps to eliminate them? Why delete it all together? And, what has Mrs Selina CHOW suggested instead? She simply asks the Government to "formulate measures to absorb and train these new arrivals from the Mainland". What for? Well, the answer is "with a view to developing them into a new driving force for Hong Kong's economic development". This can of course be one of the objectives. But we simply should look upon these people as milch cows. Mr Deputy, during the Sino-British negotiations, when the transition period was discussed, mainland officials once remarked that the Mainland had decided to treat Hong Kong so well because it was a goose which could lay golden eggs. They further said that once this goose could not lay any golden eggs, once the people of Hong Kong could not serve any useful purpose, they would simply ignore their demands. Such remarks irritated us quite a great deal at that time. How can a government possibly tell its people that once they have lost their economic value, they will all be regarded as useless people? So, we certainly do not want these new arrivals, who are also members of our society, to have the feeling that we will not consider the needs of anyone who are not economically productive.

Finally, Mr Deputy, I wish to raise the point that it is all right for us to consider the possibility of amending the Basic Law, but I must add that all amendments should carry no retrospective effect. If we really think that illegitimate children and children born to non-permanent residents of Hong Kong should not enjoy the ROA, we can always proceed along this direction. And, this will probably prevent the number of new arrivals from increasing incessantly. This merits consideration. Since the Secretary did not touch on this point just now, I hope that she can talk about it when she gives her reply at the end of the debate. But of course all will have to depend on the views of the community and Members. With these remarks, Mr Deputy, I oppose the amendment.

MISS MARGARET NG: Mr Deputy, let me first declare interest as counsel representing groups of mainland residents qualifying as Hong Kong permanent residents under Article 24 of the Basic Law in various court proceedings.

Mr Deputy, I support the motion of the Honourable LAW Chi-kwong, particularly part (a) of the motion. The Government must obey the law. In order to obey the law, the Government must honestly do its best to understand its true meaning. When the court says it is mistaken in its view, the Government must forthwith follow the law as interpreted by the court.

The Basic Law is the constitutional basis of our law. Article 24 confers Hong Kong permanent resident status on six categories of people. The Immigration (Amendment) (No.2 and No.3) Bills passed in July 1997 to set up a Certificate of Entitlement (C of E) scheme. It was a disguised aim of the scheme to delay Mainlanders entering Hong Kong. The Government has been warned that this would contravene the Basic Law.

In its landmark judgment of 29 January this year, the Court of Final Appeal (CFA) has declared the scheme as it stood unconstitutional and unlawful. The CFA made clear that any scheme which goes beyond verification, to control the entry into the Hong Kong Special Administrative Region (SAR) of people who enjoy the right of abode (ROA) here will be unlawful, because the freedom to come and go, and stay as long as he wishes, is the core meaning of the ROA. The Government's purpose has been defeated. The Government must bear the consequence.

The Court has declared various provisions in the Immigration Ordinance unconstitutional. Paragraph 1(2) of Schedule 1 is unconstitutional for discriminating against children born out of wedlock claiming through their fathers. Paragraph 2(c) is unconstitutional because, in defining who is subject to the scheme, it has imposed a more restrictive meaning on Article 24 para 2(3). The CFA has made clear that striking out certain words from the paragraph is not enough. The paragraph must be amended. A law-abiding Government would take immediate steps to amend the Ordinance so that it conforms to the Basic Law. In spite of strong representations, the Administration insisted that it did not have to do anything.

The CFA has also declared unconstitutional the parts of the Gazette Notice of the Director of Immigration requiring mainland residents to apply to the Security Bureau in the Mainland for a C of E, so that there is now no provision in law stipulating that an application can only be made in the Mainland.

Yet the Government has gone on to refer to paragraph 2(c), to require application from the Mainland, as if the Gazette Notice is still intact. This makes a mockery of the judgment of the court.

As a system for mainland residents to come to settle in Hong Kong, the one way permit is wholly unsuited to the purpose of certifying a person's ROA. The CFA has said clearly in its judgment:

"Persons with permanent resident status under the Basic Law are not ...... people from other parts of China. They are permanent residents of this part of China. Nor is it correct to describe them as persons entering for the purpose of settlement ...... They are permanent residents with the right to enter the Region and to remain as long as they wish."

Nevertheless, this Government has completely ignored what the CFA said. This is not to be tolerated. Not just because we should be sympathetic to mainland residents, but because one ROA applies to all: To us as well as to them. The Government must obey all the laws as interpreted by the court, not only when it is convenient to do so.

Now the Government comes to this Council to say that very large numbers of mainland people may qualify under Article 24 as interpreted by the CFA, as if this is a good excuse for disregarding the law. This is absurd. If it is unjust to deny even one person his rights given to him by the Basic Law, to deny hundreds and thousands of people their rights can only make the injustice many times worse. Moreover, the Government should have done their work years ago to find out what they must do to conform to the Basic Law.

The Government can try to change the Basic Law if there are good reasons, but until the law is changed, it must obey the current law as interpreted by the court.

Many in this Chamber today may remember a pre-1997 case concerning the detention of Vietnamese boat people. The Privy Council held that where the evidence was that the Vietnamese Government would not accept them, and therefore there can be no removal, their detention was unlawful under the Immigration Ordinance as it stood.

The Hong Kong Government wanted to detain the Vietnamese boat people even if there was for the time being no hope of removal. They succeeded to rush a bill through the Legislative Council to amend the law. But in the interim, they had to free those who came within the category in the Privy Council judgment. Mr Deputy, for that Government to force such a bill through the Legislative Council was unconscionable enough, but for this Government to take no steps to obey the court, in the hope that somehow the Basic Law may be changed eventually, is blatant contempt for the rule of law.

Mr Deputy, the amendment of the Honourable Mrs Selina CHOW means well. But it deleted the one part which is of the greatest importance. This being so, I must oppose it without hesitation.

Thank you.

MR JAMES TO (in Cantonese): Mr Deputy, the media have started some discussions right after the Secretary for Security had disclosed the figures concerned; besides, members of the public are also expressing their views via some phone-in infotainment programmes. As far as I know, the views from the various sectors of the community are predominantly against the new arrivals or those people who are going to exercise their ROA in Hong Kong. For this reason, the first point I wish to make is to urge the community as a whole to discuss the issue in a more rational manner. Besides, I also hope the Secretary for Security could disclose more information to the media later on when she leave this Chamber, with a view to enabling members of the public to adopt a more rational attitude in discussing the issue.

I believe we need to have more itemized figures. Even if we assume the figures disclosed today are largely correct, we still need to know more about the eligible children. For instance, we need to have information on the different age groups of the first batch of 700 000 new arrivals, since the eligible children include both adults and minors. Besides, we also need to know more about their education background in the Mainland. As regards the parents of these eligible children born in the Mainland — naturally a number of them might have already passed away, so let us just concentrate on those who are still alive — we understand that they are permanent Hong Kong residents, but how well are they doing in Hong Kong? Are their living environment, income situation, as well as daily lives in good state? We must get hold of such kinds of information before we could engage in any rational discussion about this subject, or assess how many of our services and social policies will need to be reviewed more thoroughly.

The second point I wish to make is the Democratic Party is opposed to whatever abolition of certain rights. What I am referring to is the right which certain people are eligible for according to the judgment of the CFA, including the right of that first batch of 700 000 people. I can recall that an Honourable Member raised a question as to whether we could amend the Basic Law. If the amendment to the Basic Law is aimed at revoking someone's right as a permanent Hong Kong resident, which is the same as that of yours and mine, or even that of the Deputy President — mind you, although their eligibility has yet to be verified, it does not imply that they are not eligible for that right; rather, it implies that once their eligibility is verified true, the right should be regarded as their entitlement right from the very beginning — if anyone should try to legislate to revoke someone's right, I cannot but say that any attempts of this kind are utterly unacceptable. Why? This is because if we manage to revoke the ROA which certain persons are entitled to today, we might try to revoke the rights of a second batch of people the next day. For instance, there may be some eugenicists who advocate that the right of certain persons should be revoked on the grounds of their background, disability, or other reasons. As a matter of fact, history tells us that the idea has indeed been advocated before, and someone has even sought to push through the idea in a national council. If today we should attempt to revoke with retrospective effect the right to which someone is entitled, would we be trying to revoke the right of other people to own private property tomorrow? Should that be the case, we will be regressing to the distressful past in which all private properties were made state-owned. For this reason, we must handle the issue with great caution. The Democratic Party is ready to discuss the issue in an open-minded manner. In regard to the 1 million eligible children of the second generation — the figure disclosed today is 983 000 — as well as the first generation persons eligible for the ROA by virtue of their seven years' residence (provided the relevant provisions remain unchanged), do we really need to amend the law to the effect that these people will no longer be entitled to the ROA? Or should we formulate measures to help these people exercise their right in a more orderly manner or in other different approaches? I think the Democratic Party is ready to discuss the matter with an open-minded attitude. Nevertheless, if we are to revoke the right which someone is already entitled to, and which is the same as that of yours and mine, we must handle the matter with great care. Otherwise, how could we tell the world that ours is a law-abiding society? How could we assure the international community that their investment as well as their rights are well protected in Hong Kong?

Thirdly, I hope that in deliberating on the issue, Honourable colleagues will not consider in the first place requesting the CFA to amend its judgment. Bearing in mind that the CFA has already made an explanation at the request of the Government, and that the Government has also considered the judgment clear enough, we will be forcing the Court to do something undesirable if we ask it to involve itself in some political issues or make some political declarations. Besides, so doing will in fact undermine the confidence of the public in our claim to uphold the rule of law in Hong Kong. If anyone of us should try to put forward proposals similar to that in the newspapers today, which says one of the possible measures under consideration by the Government is to ask the Court to make another explanation to the effect that the implications of the judgment would be reversed, I am sure the impact on Hong Kong will be far more catastrophic then.

Another possible measure is to request the Standing Committee of the National People's Congress (NPC) to interpret the relevant provisions of the Basic Law. From a procedural point of view, this is certainly a course we can consider. However, I should like to call Members' attention to the issue of confidence. If the NPC Standing Committee should re-interpret the provisions concerned after the CFA has made and re-confirm its judgment, our confidence in the judicial independence and rule of law upheld in Hong Kong would naturally be undermined tremendously. Moreover, it would also deal a heavy blow to our confidence in and the reputation of such an authoritative judgment made by the Special Administrative Region (SAR) at the early stage of its establishment. Should that happen, how could our CFA manage to maintain the confidence of the public?

The last point I wish to make is that we must expeditiously promulgate the procedure for applying for verification of entitlement, since this is very important in many sense. First, on the practical side, to defer promulgating the relevant procedure will only serve to shatter the hope of those mainland children awaiting to exercise their ROA in Hong Kong, and thus causing them to enter Hong Kong illegally or resort to other irrational actions. Second, if the promulgation should be deferred for a longer period, I can reasonably predict that the stand of the Court in any further proceedings regarding this issue would be even firmer, by then, the SAR Government could hardly hold fast to its arguments, not to say convince the Court. Apart from these two points, I am also afraid that the SAR Government may not be able to fully convince the mainland authorities to accept the judgment of the CFA. Under the circumstances, it should be better for the Government to promulgate the relevant verification procedure as soon as possible.

MR FRED LI (in Cantonese): Mr Deputy, on behalf of the Democratic Party I rise to speak on the motion today from a social welfare point of view. We understand that an opinion poll has been conducted in regard to the judgment of the CFA and the result is that 53% of the people are afraid that the new arrivals from the Mainland may cause additional burden to the community. In addition, we have also heard from the media that many members of the community are looking at the new arrivals from a negative perspective. Many of them consider that the new arrivals are coming here only to enjoy the fruits of the labour of our taxpayers over the years, and that they are coming here only to enjoy our social welfare and services without making any contribution to Hong Kong; as such, many have developed feelings of rejection and hatred towards the new arrivals. Why can our community not adopt a more far-sighted view in looking at the issue regarding new arrivals from the Mainland, why can we not adopt a more tolerant attitude towards them? It is true that the new arrivals will bring along some additional burden to our social resources in the short run, but in the long run these people will be able to contribute positively to our community as a whole. In the coming 20 years, the number of people at the age of 60 or above will increase by 61%, but when the children born in the Mainland to Hong Kong residents settle here, they could help to alleviate the problem of an ageing population and share the responsibility to take care of the aged. Since we could expect the children born in the Mainland to our local residents to settle down in Hong Kong after they have arrived here, we should put in more resources to provide them with the necessary support, with a view to enhancing their productivity in the next few decades. In this connection, social welfare and services could be regarded as a social investment in them.

Because they are new to this place, the new arrivals will naturally need a lot of assistance. But since most of them just do not know where to turn to, the Government should take the initiative to identify the families which are in need of help. For instance, although a great many of the new arrivals are women, the support network provided for them is far too limited. They have no one to turn to when they encounter problems, nor do they know where to seek help. Nevertheless, they would send their young children to attend adaptation classes designed for school children. As such, the organizations providing the services concerned should make an effort to contact the family members of those young children, with a view to helping them to establish a mutual support network. Besides, the Government should also develop outreaching work in areas which have a larger new arrival population. According to the result of a survey conducted by the Home Affairs Department, most of the new arrivals prefer to live in Sham Shui Po, the Eastern District and Kwun Tong. With this information, the Government should step up its outreaching services in the districts concerned, and thereby identifying more new arrivals who are in need of assistance. Although the Government has yet to collect more information on the age, education standard and so on of those eligible children, we can reasonably expect to see a large majority of them being young children under the age of 12. Under the existing policy, there will be many cases in which not both but only either the mother or the child can come to Hong Kong. If these children should come to Hong Kong and there are not enough child care services to cater for their needs, will they be left at home alone by their fathers? Or, will the fathers be forced to quit their jobs and live on Comprehensive Social Security Assistance so as to take care of their children at home, thereby adding a further burden to the existing public expenditure? At present, the charges for child care services are very high. This is because the government subvention available to child care centres could accounts for only 5% of the operating cost, the remaining 95% have to be shared by the parents. To most parents whose young children are new arrivals from the Mainland, a monthly charge of several thousand dollars for child care services would just be too much for them to afford. Moreover, the Child Care Centre Fee Assistance Scheme is very inflexible. For instance, the amount of assistance available to an unemployed parent could only cover the fee charged by a half-day care centre, but if the parent should secure a job again, arrangement must be made for the child to go back to a whole-day centre; as a result, many adaptation problems will be created. In view of the fact that many projects to provide more child care centres were deferred for many years in the past, and that a large number of young children born to the people of Hong Kong will soon arrive, the Government should encourage the social service agencies to organize some mutual help child care services, after-school care services and so on, with a view to providing ample child care places on the one hand, and strengthening the social connection of new arrivals on the other.

While the new arrivals have a considerable need for social services, social service organizations at large are not provided with additional resources to cater to the new arrivals. As such, these organizations have to redeploy their resources to provide services for the new arrivals. Since a number of other services will inevitably be cut back, dissatisfaction may be aroused among other residents of the same district, thereby giving rise to feelings of rejection among service users. This would put on the new arrivals in a disadvantaged position as they try to integrate into the local community. For this reason, the Government should allocate additional grants to cater for the needs of the new arrivals once it has obtained more accurate information and projected the number of eligible persons concerned. Finally, I should like to stress that social welfare and social services are by no means any forms of relief, but parts of a value-adding process. The resources we allocate to social services providing support for the new arrivals today should be regarded as a form of investment, for tomorrow the new arrivals will be making contribution to the community and giving full play to their role at home, in the labour market, as well as other places. However, if we fail to provide the necessary support in time, some of the problems involved may deteriorate or even become a source of unrest in society. With these remarks, Mr Deputy, I support the motion.

MR EDWARD HO (in Cantonese): Mr Deputy, after hearing the speeches made by the Secretary for Security and some Honourable Members, I should like to make a few points regarding this issue.

To begin with, the speech made by the Secretary has given me the feeling that the Government is really at its wits' end. Firstly, the Secretary told us that the Government should respect the ruling of the CFA. Secondly, regarding the part of Mrs Selina CHOW's amendment which urges the Government to make arrangements for eligible persons "to come to Hong Kong in an orderly manner", the Secretary also remarked that the proposed amendment, however well-intentioned, just would not be feasible. The reason she gave us was that while as many as 700 000 or more people might be settling in Hong Kong within three year's time following the judgment of the CFA, Hong Kong just could not find the land to build enough schools and hospitals to cater for their needs or create enough jobs for them. I should like to ask Members this question: Are we being good to these people if they come to Hong Kong all at once only to find that they have no place to live and no school to go to? I believe we all respect the judgment of the CFA and admit that those people have the right to come to Hong Kong. However, would it not be better if we make arrangements for them to come to Hong Kong in an orderly manner so that they could have a job or a school to go to when they arrive here? Would it not be better for these people to come to Hong Kong in an orderly manner? Yes, the ruling says "a reasonable period of time, but who is in the position to decide how reasonable is "reasonable"? I think the arrangements should be reasonable to our community as well as to the mainland people concerned; the interests of both of the next two parties must be taken into consideration. If some 600 000 to 700 000 people should come to Hong Kong within the next two to three years but we give them no schools to go to and no place to live, they will be forced to sleep on the streets, some may even become unemployed and have to live by begging. Would that be reasonable to them? Absolutely not.

The amendment proposed by Mrs Selina CHOW is indeed a very positive one. Apart from urging the Government to make arrangements for the people to come to Hong Kong in an orderly manner — I have spoken on that part just now — she has also urged the Government "to formulate measures to absorb and train these new arrivals from the Mainland with a view to developing them into a new driving force for Hong Kong's economic development", thereby enabling them to really become one of us, the people of Hong Kong. But once again, we were told by the Secretary that despite its good intention, the proposal just would not be feasible because the Government could not cope with such a great number of people.

Mrs Selina CHOW hopes to develop the new arrivals into a new driving force for Hong Kong's economic development because it is a good thing to do so. When they arrive here, we give them training and education, so that they can earn their own living in Hong Kong instead of living on social welfare. However, the Honourable Miss Emily LAU has referred to this proposal as an attempt to make these people our "milch cows". I do not know whether Miss Emily LAU is aware of the meaning the people of Hong Kong or the Chinese people have associated with "milch cows". Anyone who has watched those Cantonese old movies will know that in ancient times some mothers would force their daughters to join a certain industry to earn money for them. (Laughter) There were also beautiful women forced by their lowly husbands to earn money this way. These women were referred to as "milch cows", a very offensive term. I was really surprised to see a Member of this Council accuse such a positive proposal of having a very offensive meaning.

It is true that Mrs Selina CHOW's amendment has sought to delete part of the original motion, for example, the proposal to "give new arrivals the right to enjoy social welfare in accordance with the law". I have spoken with Mrs CHOW about this point. Since she would not have the chance to speak again, I should like to make some clarifications for her. According to Mrs CHOW, the deletion of that part of the motion does not imply any denial of social welfare to the new arrivals. On the contrary, since they have the ROA in Hong Kong, they are part of us when they arrive here, which means that if we have the right to social welfare, so do they. Hence, that part of the wording is indeed repetitious. Mrs CHOW has proposed to amend Mr LAW Chi-kwong's motion by slightly revising part of the original wording to render it more positive.

I do not think we have any reason to object Mrs CHOW's amendment, since the issue before us is the concern of the community as a whole. We had not realized how serious the situation was before the Secretary made her speech. I am sure the issue must hit the headlines tomorrow morning. The various sectors of the community are very much concerned with the situation, and they all hope that the Government can take measures to resolve the arrival problems in an orderly manner. That way, not only will the impact on the community be reduced, the mainland people concerned would also be benefited. Although they may be very eager to come to Hong Kong, they in fact do not have any idea of their future in Hong Kong or the local community here. Nor do they know whether they will be accepted by the community. For these reasons, I believe there is indeed a need for us to prepare well for their arrival. I just hope Members would lend their support to the amendment proposed by Mrs Selina CHOW. Thank you, Mr Deputy.

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

DR YEUNG SUM (in Cantonese): Mr Deputy, in his speech just now, the Honourable Edward HO pointed out that part (c) of the amendment proposed by Mrs Selina CHOW has only proposed to "formulate measures to absorb and train these new arrivals from the Mainland with a view to developing them into a new driving force for Hong Kong's economic development". I believe Honourable colleagues are all aware of that. However, I believe the question lies in her proposal to delete from Mr LAW Chi-kwong's motion the part of the wording which urges the Government to "give new arrivals the right to enjoy social welfare in accordance with the law, assist them in becoming self-dependent and integrating into the community as soon as possible". Generally speaking, we would propose to "delete" the part of a motion to which we do not agree, since we would not delete the points we can agree. Should Mrs CHOW agree with Mr LAW on that point, she could keep the original wording intact and add in the part on "training" and "developing them into a new driving force for Hong Kong's economic development". Should that be the case, Miss Emily LAU would not have made those comments. Speaking of Miss LAU's comments, some of the words she used, such as "milch cows" and so on, might perhaps be a little too harsh. Nevertheless, if Mrs Selina CHOW does agree with the motion moved by Mr LAW, she really should not have proposed to delete that part of the wording. The general practice is that Members would propose to delete the points they disagree with, preserve the acceptable points and introduce new points on top of them. That way, both the new and the old ideas could be maintained. Speaking of amendments, I think it should be better to introduce new points than to delete points from other people's motions.

Mr Deputy, I should like to raise two points only. Firstly, the speech made by the Secretary for Security has enlivened this motion debate. The 1.6 million-odd new arrivals she referred to have aroused much response from Members, thereby making this motion debate a genuine debate on the one hand, and enabling the Democratic Party to put forward arguments in greater detail on the other. I just hope we could have more debates like this in the future.

The second point I wish to raise is that we must abide by the law before it is amended. Although the judgment made by the CFA might pose problems for us, still we should not try to resolve the situation by resorting to some rash measures or re-interpreting the provisions, not to say encouraging the Government to resolve the situation by administrative measures. If we should tell the Government that the situation has become very serious and it must do something to resolve the problems, if we should tell the Government that we will be very understanding and raise no objection to any measures it takes in this connection, what would happen then? I am afraid the impact on Hong Kong would be far more serious then, since I could not help but doubt whether we could still claim that the rule of law is upheld in Hong Kong.

We should never try to distort the judgment of the Court just because there are difficulties in front of us. So long as the Basic Law has not been amended, we have to abide by the decision of the Court; however, since there are so many eligible children of the first and second generations, the only way out is to amend the Basic Law. I should like to defer to Mr LAW Chi-kwong to give a detailed account of the views of the Democratic Party in this respect.

So long as the Basic Law has not been amended, we must abide by it as it is. Administrative problems or other difficulties should never constitute any excuse for us to neglect the provisions of the Basic Law. If we should try to ignore the Basic Law and manage to win the support of the people, we may be able to win the support of the people in our other similar attempts; should that be the case, the rule of law we used to uphold in Hong Kong will be washed down the drain completely. I should like to put this point clearly on the record. Should there be any difficulties in front of us, we must face up to them; should there be any need to amend the Basic Law, we will propose amendments to it. However, before any amendment has been passed, we cannot but abide by the Basic Law as it is and try our best to make the public understand the difficulties confronting us.

Mr Deputy, Mr LAW Chi-kwong has put forward a very good proposal in part (b) of his motion, since he has urged the Government to "make arrangements for persons with the right of abode (ROA), without prejudice to the exercise of their right, to decide for themselves whether or when to settle in Hong Kong after being issued with the Certificate of Entitlement (C of E)". I have discussed with some scholars studying issues relating to immigrants. Drawing on the many studies they have conducted, these scholars believe many people would rush to Hong Kong out of the fear that their right to settle in Hong Kong would vanish if they do not exercise it right away. Moreover, their registered permanent residence in the Mainland will be cancelled once they leave for Hong Kong; as such, they are on a course of no return and they cannot but settle in Hong Kong all at once. However, if they should know that their homes in Hong Kong are incomparable to even the backyards of their homes in the Mainland, they will look before they leap. Given that they may lose their ROA forever if they do not exercise it now, and that they will lose their registered permanent residence in the Mainland once they come to Hong Kong, the only choice for them is to rush to Hong Kong all at once. In this connection, the scholars have suggested the Government hold further discussions in detail with the mainland authorities on issues regarding whether the registered permanent residence of these people in the Mainland should necessarily be cancelled once their eligibility for the ROA in Hong Kong has been established, and whether these people must make their decisions within a very short time. Perhaps these people will not be so eager to come to Hong Kong if they should be given more time to think it over thoroughly. I think it is very insightful of the scholars to draw this conclusion from their studies.

According to the Secretary, the Government has in fact discussed initially with the relevant authorities in the Mainland, only that they have refused to accept the proposals on the ground that the population migration policies of the Mainland would be affected. Naturally the said policies would be affected; how could they remain unaffected? Indeed, that is why we are seeking to make the best arrangement for the population migration in both the Mainland and Hong Kong to take place smoothly. Certainly the Mainland would be affected, and by the same token, we will also be affected by our effort to abide by the judgment of the CFA. How could any parties remain unaffected in this issue? If we could remain unaffected, we would not be scratching our heads about how to make the best arrangements. I believe Mr LAW Chi-kwong has put forward this proposal in the hope that the Government would seriously discuss the issue further with the mainland authorities concerned.

In addition, I should like to further point out that the mainland people should come to Hong Kong in accordance with some order of priority, and that young children or people who come here for family reunion purposes should have priority over other people. My point is that if young children should have to wait for a long time before they could come to Hong Kong, they will be separated from their parents for too long a time; and if they know that they have the ROA but are not allowed to exercise it, they may perhaps develop a sense of hatred towards the local community when they arrive here. Should that be the case, the population of Hong Kong may in the future develop into two streams of people, each of which will identify themselves with and feel they belong in Hong Kong in a manner totally different from that of the other. In my opinion, such a situation will contribute to a crisis for Hong Kong. It is therefore my hope that the Government would make its best effort to handle the matter satisfactorily.

As pointed out by the Honourable James TO just now, members of the public have been expressing their different views after learning from the Government that some 1.6 million-odd new arrivals would be settling in Hong Kong. I hope the Government can clarify the situation with more details later on, since I do not want to see any disturbances being caused to the community by those figures.

Thank you, Mr Deputy.

MISS CYD HO (in Cantonese): Mr Deputy, I rise to speak in support of the original motion moved by Mr LAW Chi-kwong. Actually, we have no objection to the additional wording Mrs Selina CHOW has proposed to the motion, but since she has also proposed to delete from the original motion several important points, we really cannot give her amendment our support. Indeed, the original motion has not asked to be "trimmed", why should parts of its content be deleted? It should be fit and proper if the proposed deletion remains in its original place.

I agree very much with Mrs Selina CHOW in that we need to know the exact figures before we could formulate any corresponding policies. Now we have got the figure, which is some 1.7 million people. The figure was disclosed at slightly after 5 o'clock in the afternoon. I believe members of the public must be agitated and reacting fiercely in the phone-in radio programmes. Seeing that it has almost been three months since the CFA made its judgment on 29 January, I really have to ask the Government why it has not announced expeditiously the application procedure for the ROA in Hong Kong and other relevant arrangements as it should have. Instead, the Government just keeps saying that the survey has yet to be completed; besides, it has also been leaking out figures from time to time, indicating at one time a projection of hundreds of thousands, and as many as 3 million at other times.

Today, at long last, an initial figure has been announced by the Government formally; a projection of almost 1.7 million people. However, the Government has only given us an initial figure, how about the initial policies and the initial application procedures? Actually, it should be within the Government's expectation that the figures, when disclosed, might cause panic among the public. The Government should have reckoned the situation before announcing the figures. As many Honourable Members are already besieged by journalists outside this Chamber, I hope that the public officer will inform this Council whether the SAR Government has in place any measures to handle the situation when she speaks for the second time. The Government just cannot say that it is unable to cope with the problems after telling us when the 1.7 million people will be arriving Hong Kong, for it has the responsibility to resolve the problems. Why did it not investigate how the problems could be resolved before announcing the figures? Why should it cause such unnecessary panic among the people in this couple of days? I just hope that government officials can expeditiously inform us of the Government's solutions before the end of those phone-in programmes; otherwise, they should frankly admit that the Government is really at its wits' end in the face of the 1.7 million new arrivals, so that the public could put forward another question: Why are our government officials at their wits' end?

Mr Deputy, the panic-stricken community is asking about how serious the impact on Hong Kong will be if such an enormous number of people arrive within a short period of time; however, if the rule of law upheld in Hong Kong is being undermined, the impact on Hong Kong will be felt immediately. Right now many chambers of commerce are looking to the Government to see how it would handle this issue. If the Government should resort to administrative arrangements to avoid its responsibility instead of making every effort to enforce the judgment of the CFA within a reasonable period of time, foreign investors will question whether any future business disputes in the SAR could be resolved legally in a fair manner. This will impact on us gravely. I am sure it would be too great a price for the people of Hong Kong to pay.

Let us take a look at part (a) of the original motion. Mr LAW Chi-kwong urges the Government to expeditiously promulgate the procedure for applying for the C of E, I could not agree more. As a matter of fact, promulgating expeditiously the application procedure should be one very effective measure to avoid an influx of illegal immigrants and prevent the Two-way Permit holders from overstaying in Hong Kong, since the persons concerned will be rest assured and go back to the Mainland to wait for their turn. These people are unwilling to wait because in the past it would usually take some 20 to 30 years to get a OWP application approved by the mainland authorities. Given that the application forms are in single copies and unnumbered, and that no records would be kept of the forms received, not even any receipts confirming the dates of submission of such applications, the applicants would never learn of their position on the waiting list even if they are willing to wait. Hence, I consider certain members of the community are being unfair in suggesting that these people are trying to jump the queue; as such, I should like to take this opportunity to straighten up the misunderstanding.

Mr Deputy, Hong Kong was originally a tiny fishing village with a very limited population. Through the years, the respective influxes of immigrants and refugees from the Mainland have supplemented us with ample manpower resources, thereby contributing to the development of Hong Kong. If given scope for their potentials to develop, the newcomers will become one of our valuable assets; indeed, the history of Hong Kong has proven that for us already. However, and if we back off this time, if we cannot remain calm in the face of the forthcoming influx of immigrants, if we make no effort to resolve the situation, how are we going to develop the new arrivals into a new driving force for Hong Kong? So, there is indeed a major crisis awaiting us.

It has been reflected in many recent surveys and statistics that the people of Hong Kong today are generally getting married at an even older age while the rate of birth has amounted to a low 1.3% only. According to the projection made by the Central Policy Unit, Hong Kong will have a population of 8 million by 2030, of which one third will be senior citizens aged 65 or above. For this reason, some sociologists are concerned that Hong Kong might have to sustain a large dependent population by then. Now that we have this opportunity to take in some new immigrants, who are mostly young people, our problem of an ageing population should be resolved.

Mr Deputy, family reunion is not the only reason why a lot of people in the Mainland want to move to Hong Kong. To the mainland people, whether they have the ROA or not, the most important point is that Hong Kong upholds the rule of law and offers equal opportunities to every member of the community. This is something which the people in the Mainland long for and the people of Hong Kong have all along cherished and fought hard to maintain. I hope that Hong Kong will always be a place where people from the Mainland want to stay in. I just hope our community will not deteriorate to such a state that even we ourselves will not want to stay. For this reason, I need to urge the Government to abide by the law, shoulder its responsibility and expeditiously promulgate in detail the arrangements concerned, so that the people of Hong Kong will not be unnecessarily panicked by the news that some 1.7 million people will be settling in Hong Kong in the near future. Thank you, Mr Deputy.

THE PRESIDENT resumed the Chair.

MR JASPER TSANG (in Cantonese): Madam President, I am not sure if you have heard the Honourable Miss Cyd HO refer to the response of foreign investors to the attitude of the SAR Government towards the CFA judgment. I do not know whether she has really heard that herself or that was just her wild guess, but I do have heard about the response of certain foreigners regarding the judgment of the CFA. Some foreign consular corps have told me that if hundreds of thousands of people from the Mainland are really to settle in Hong Kong in the next few years, their countries would reconsider the existing arrangement of granting visa-free entry to SAR passport holders.

Madam President, I should like Honourable Members to make a guess. If the motion on addressing the population expansion problems resulting from the judgment of the CFA which Mr LAW has moved today were passed, or if the amendment proposed to it by Mrs Selina CHOW were passed, would newspapers be running headlines similar to this one tomorrow: "Motion passed in LegCo puts end to immigration tide"? I do not think so. It must be the figures the Secretary disclosed just now that hit the headline.

Our foregoing discussion would have been very meaningful should there be no judgment by the CFA, for we could then sit here and investigate how to encourage the mainland people concerned to remain in the Mainland for a longer time, how more schools could be constructed to cater for the needs of mainland children, how we should take follow-up actions on the social service front, what measures should be adopted to eradicate discrimination, mutual misunderstanding and so on. All these are actions that the Democratic Alliance for the Betterment of Hong Kong had been urging the Government to take before the CFA passed its judgment. Even if there were no judgment by the CFA, the reunification of Hong Kong with China and the implementation of the Basic Law have already caused certain mainland people who did not have the ROA in Hong Kong under the pre-unification laws of Hong Kong to become eligible for the ROA. This is something within our expectation. We had foreseen this situation long before the CFA passed its judgment. In this connection, the Immigration (Amendment) (No. 2 and No. 3) Bills 1997 to which Miss Margaret NG referred just now were introduced to deal with the additional new arrivals from the Mainland following the implementation of the Basic Law. At that time, there was a divergence of view on the total number of people involved, tens of thousands, 30 000, 100 000, and some even considered the total number would amount to between 100 000 and 300 000. In any case, the Government must build more schools and the waiting time for public housing would inevitably be extended. I could not agree more with the points we have discussed just now. The propositions of enabling the new arrivals to integrate into the local community and developing them into a new driving force for Hong Kong are absolutely right; indeed, they are entitled to such rights under the Basic Law. Nevertheless, the situation as a whole has changed by now. As referred to in the premise of the motion today, following the judgment made by the CFA on 29 January this year, the number of new arrivals we need to handle will amount to way above 30 000, 50 000, 70 000, or even one to two hundred thousands. Now that the Secretary has given us the figure, could any colleagues tell whether the discussions we have had carry any substantial meaning at all?

The Honourable Michael HO from the Democratic Party just now asked the DAB if we have any solutions in mind, since the DAB is not willing to accept the reality, which is the fact that a great many people from the Mainland will become eligible for settling in Hong Kong by virtue of the judgment of the CFA. But do we really have to accept this fact? What else can we do? We certainly do not wish to challenge the rule of law upheld in Hong Kong. As clearly pointed out by the Honourable CHAN Kam-lam from the DAB just now, any judgments made by the Court are our laws and we must observe and abide by the laws before they are amended. The question we have raised is: Do we consider this judgment as well as the laws formulated for us should remain unchanged forever? Just now after the Secretary had disclosed the figures, I heard Mr James TO from the Democratic Party say something like they would consider amending the Basic Law at a later stage, perhaps when the second batch were about to come, but the first batch of new arrivals should not be affected; besides, he has also talked about the Democratic Party adopting a more open-minded attitude. However, I just could not catch what he really wanted to say. Miss Emily LAU has also said we should perhaps give some thought to it, since the Basic Law could be amended after all; but then again, she also said we should abide by the Basic Law before any amendment is introduced to it. We could not agree more. Any laws prior to amendment are still laws in force, and we must therefore abide by them. Nevertheless, we do not wish to see Members telling people outside this Council that everything has been resolved after we have happily passed the motion or the amendment proposed to it, for the major premise of this motion is still the fact that a great many new arrivals are coming from the Mainland to settle in Hong Kong following the judgment of the CFA. We can never say that whether we pass the points (a), (b) and (c) of Mr LAW's motion or that of Mrs Selina CHOW's amendment, the problems will be resolved anyway; nor can we say that all this Council needs to do is to push the Government to implement those points (a), (b) and (c). Should that be the case, the work of the Government would become very simple, since all it needs to do is to cater to the requests made by Members of this Council. But could the problems be resolved this way?

In my opinion, the crux of the matter does not lie in our respect or otherwise for the judgment of the CFA, nor does it lie in the measures to be taken by the Government to handle the unexpectedly enormous number of new arrivals eligible for settling in Hong Kong following the judgment of the CFA. I agree with the comments made by Miss Margaret NG regarding the Immigration (Amendment) (No. 2 and No. 3) Bills 1997. However, if it is the C of E scheme that we are opposed to, if we consider this not a proper arrangement and agree with the CFA that the C of E should not be attached to the OWP, then we should abolish the scheme and handle the whole matter in accordance with the decision of the CFA. However, the problem raised by the Honourable TAM Yiu-chung, which is the fact that from the drafting of the Joint Declaration to the enactment of the Basic Law, nobody has ever expected the law would confer on these persons the ROA in Hong Kong. That is why just now Mr James TO said we must be very careful because amending the Basic Law would deprive certain people of their rights. This is true, we must be very careful. As such, I cannot answer the question put forward by Mr Michael HO on what the DAB really wants. I think I should better leave it to the Government to give an answer, since our capability is not comparable to that of the Government. Just now Dr the Honourable YEUNG Sum asked the Government if ......

PRESIDENT (in Cantonese): Mr TSANG, your time is up.

Mr Jasper TSANG (in Cantonese): Thank you, Madam President.

DR RAYMOND HO (in Cantonese): It appears that no other independent Member except Miss Margaret NG has spoken in this motion debate today. Actually I believe there should be quite a number of independent Members in this Council; so perhaps I should take this opportunity to say a few words on the issue.

Madam President, earlier on the judgment made by the CFA of the Hong Kong Special Administrative Region (SAR) regarding the (ROA) of certain mainland citizens in Hong Kong has given rise to widespread discussions in the community. However, since the various sectors of the community were then more concerned with the constitutional crisis consequential upon the judgment, the question as to how the influx of mainland citizens with the ROA should be handled and coped with has become a secondary issue. Fortunately, this consequential constitutional crisis has apparently subsided by now; hence, we could concentrate our effort and discussion on how arrangement should be made for the persons with the ROA to come to Hong Kong, with a view to protecting Hong Kong against the social impacts of a sudden surge in population.

Some members of the community hold that since Hong Kong is a society founded on the rule of law, we should respect the judgment of the CFA. Now that the judgment has been made, we must respect the decision of the CFA and expeditiously draw up plans to deal with the consequences of the judgment, in particular the arrangements for the eligible persons to settle in Hong Kong in an orderly manner under a fair and open system. On the other hand, there are also others who believe the CFA should not attempt to interpret the Basic Law as Article 158 of the Basic Law has set out clearly that "the power of interpretation of this Law shall be vested in the Standing Committee of the National People's Congress"; besides, these people are also concerned that the influx of new arrivals from the Mainland to settle in Hong Kong within a short period of time will inevitably put our social resources and facilities under enormous pressure.

Earlier the Secretary for Security provided this Council with some latest information on the number of persons eligible for settling in Hong Kong by virtue of the judgment of the CFA. These are indeed alarmingly high figures. While 692 000 people will become eligible immediately, the enormous number of eligible children of the second generation will cause the figure to soar to 1 675 000. What is more, this is but a very conservative projection according to the Secretary. As a matter of fact, these are very alarming figures and no one could have ever imagined that. Now that the Government has come up with these findings, I hope that it would expeditiously discuss the situation with the relevant mainland authorities. In addition, since any move in this connection will have far-reaching influence on the future of Hong Kong, we cannot afford to make any precipitate decisions. For all these reasons I have raised, I will support neither the motion today nor the amendment proposed to it.

I so submit. Thank you, Madam President.

MR LAU KONG-WAH (in Cantonese): Madam President, I understand that this is a motion debate, but still I would like to raise a few questions on the points made by Mr LAW Chi-kwong in moving his original motion. This is because the Secretary for Security has earlier furnished this Council with some information which I consider very useful; besides, Mr Law has also reserved some speaking time for making an extensive reply.

Mr LAW has proposed a major premise. According to him, the important point is not to ask how big the problem is but how it is going to be handled. However, I do not think this is the proper attitude. I believe the first question we should ask is how big the problem is. Now that the Secretary has provided us with some initial figures, though the projection might be an underestimation of the actual situation, I should like to ask Mr LAW Chi-kwong whether the problem before us is a big one or a small one in his opinion; and whether the projection has met his expectation or come as a surprise to him.

The second point raised by Mr LAW Chi-kwong was that if we kept talking about the issue, exaggerating it or referring to it as a grave problem, this would serve to arouse resistance in the public and divide the community. This remark of Mr LAW's is indeed an insult to the intelligence of the public. Apparently, public sentiments have caused the existing situation to deteriorate. As a matter of fact, the figure of 1.6 million is clear to all by now. Hence, despite his continuous refusal to respond to the questions raised by members of the public and journalists, Mr LAW cannot but give us his reply. The division in the community is not created by the question made by the public or the press, to say it is would be confusing cause with effect and right with wrong. For this reason, I should like to advise Mr LAW Chi-kwong to listen more to the views of the public instead of taking in only those views that are pleasing to his ears and refusing to listen or respond to views not to his liking.

Thirdly, it seems that Mr LAW has put forward a timetable. According to him, it would be reasonable for tens of thousands of people to settle in Hong Kong in two years' time and 1 million people in some five years' time. However, we are now talking about 1.6 million-odd people, so in Mr LAW's opinion, how long would it reasonably take for all these people to settle in Hong Kong? Could Mr LAW estimate the reasonable time for all these people to settle in Hong Kong in the light of the patience of the mainland people concerned, the receptibility of Hong Kong, and more importantly, the ample social welfare-related experience he has accumulated? Certainly, as referred to by the Secretary just now, we would not have any control over the so-called reasonable time which should most likely be in the hands of the people concerned. Another point raised by the Secretary is that the mainland authorities have to follow the rules in force in the Mainland. Putting two messages together, I am afraid another tide of illegal immigration would be triggered off.

The difference of opinion between the Democratic Party and the Democratic Alliance for the Betterment of Hong Kong (DAB) over this issue has indeed been clearly demonstrated in this debate. To begin with, the Democratic Party holds that the enormous number of people involved should not be an issue but the DAB considers this a grave problem. Then, the Democratic Party has regarded the questions raised by the public as resistant, hostile and irrational, but the DAB believes it is just normal and reasonable of the public to express their queries and concerns as they have the right to do so. If the Democratic Party considers the questions of the public as emotional and irrational, then are they not being emotional in having such questions of theirs?

Should the Democratic Party consider any views and ideas different from theirs as resistant, hostile and irrational, I cannot but say that they have let the people of Hong Kong down and are unworthy of the support their friends have given them. Actually, I consider the speech made by Mr James TO just now out of line with that of Mr LAW Chi-kwong, perhaps there is already a difference of opinion between them from the outset. In regard to the five categories of people to which the Secretary has referred, Mr James TO said at the beginning of his speech that the Democratic Party might well reconsider categories four and five with an open-minded attitude, and that they had intended to take in all of those people at first but changed their mind a little at this stage. In view of the fact that Mr James TO is ready to further discuss the matter with an open-minded attitude, I should like to ask Mr LAW Chi-kwong, who has the same political affiliation as that of Mr TO, whether he would also adopt an open-minded and ready-to-discuss-further attitude to make his reply speech later, or he would still hold that the number of people concerned is not an issue, and that we should not care about how big the problem is but take in all those people. Madam President, I hope that Mr LAW Chi-kwong can answer my questions in detail.

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

MR ANDREW WONG (in Cantonese): Madam President, I believe that no matter whether the motion or its amended version is carried, tomorrow's headline will be dominated by something along the line of "Hong Kong will be overwhelmed by 1.67 million new arrivals". There is no doubt about this. The Government acceded to our request that the Secretary for Security speak first. After she disclosed all those figures, the atmosphere of the entire debate might be changed. After all, the potential problem could be very serious. Mr LAW Chi-kwong from the Democratic Party might have fallen into a trap because the original estimate was in the hundreds of thousands, but the final figure turned out to be an inconceivable 1.67 million. (Laughter)

I must make it absolutely clear that I already expressed my view clearly when the Immigration (Amendment) (No. 2 and No. 3) Bills were introduced by the Government to the then Provisional Legislative Council back in 1997 that the C of E and travel document were two different issues and must therefore be dealt with separately. Once a person is given the C of E (eligible persons should be able to apply for the Certificate in Hong Kong because it would be more better. Of course, they can also apply on the Mainland), he must be allowed to choose to come to Hong Kong. I therefore totally agree to part (a) of Mr LAW's motion. The remaining parts, such as part (c), are about the way to solve the problem. We must protect people's legitimate right.

I think we are facing a moral question insofar as the current situation is concerned. If we do not want to put it so grand, at least it is a matter concerning the rule of law. As these people have the ROA in Hong Kong, we are obliged to accept them in a reasonably fast manner. This is the essential premise. Therefore, I will not support the highly complicated amendment proposed by Mrs Selina CHOW from the Liberal Party which advocates an orderly entry of these people to Hong Kong. The two Amendment Bills to the Immigration Ordinance already stated that these people must be allowed to come to Hong Kong in an orderly manner and the only way to achieve this was to attach the two documents together whereby the procedure for vetting and approving would be carried out first by the public security authorities in the Mainland. But such an arrangement has totally deprived persons who have the ROA in Hong Kong of such a right. Moreover, these persons are still not able to come to Hong Kong even if they have been given the ROA here. This is unacceptable.

We should look at this matter in a practical and realistic attitude. Some people said that they could not support Mr LAW's motion (this is my assumption only) ─ what I mean is the Democratic Alliance for the Betterment of Hong Kong (DAB) because the DAB is in an invincible position. They will not tolerate any dissenting views in the light of the figure of 1.67 million. They actually wish that all those eligible will come to Hong Kong in an orderly manner without overwhelming Hong Kong. They have therefore become the big winner on this issue. My initial impression after listening to what Mr CHAN Kam-lam said was that we seemed to share the same stance, which I think is correct because the fundamental question is the erroneous ruling by the CFA on two questions ( I did not intend to insult it). But if its ruling is correct, this will mean that the Basic Law is not written properly and clearly. Anyway, I will step on someone's toe no matter which one I blame.

Anyway, two questions have seriously compounded our problem: one concerns children born out of wedlock; another is about children who were born before their parents had lived in Hong Kong for seven years and become permanent residents. The bases of these two rulings, as pointed out by Mr TAM Yiu-chung, were not the legislative intent when the Basic Law was drafted. Even if this was not the legislative intent, the problem would not have arisen and the CFA would not have made such a ruling had Article 24 of the Basic Law been clearly written. However, remedial measures can still be adopted even though the CFA has made its ruling. The Government was satisfied with itself in 1997 in the false belief that a victory was guaranteed in the proceeding. As such, when the case was put before the CFA, did the Government cite the legislative intent of the Basic Law Drafting Committee and the National People's Congress (NPC)? Did it cite Article 24 of the Basic Law? If not, had the Government tried to convince the Central Authorities immediately after the CFA delivered its verdict? Although the Government was troubled then by another constitutional problem, this was a more critical one as it was closely related to the development of Hong Kong and the number of people who will have the ROA in Hong Kong. The Government could have discussed with the NPC and the State Council on this issue to see whether it was possible to urgently define or rewrite the relevant Articles of the Basic Law more clearly. I have reservations about retrospective effect. I do not want to reveal whether I am in favour or against it as it is not good to state my position too early. In this way, we will show our respect for these people's ROA because they have such a right according to the legislative intent. However, this piece of news came out of the blue indeed. I am very surprised too. Nobody raised this point during the solicitation of opinions and consultation exercise on the Basic Law. At that time, what was mentioned was whether both or one of a person's parents should be permanent resident if that person was to have the ROA in Hong Kong. The question of children born out of wedlock was not mentioned because illegitimacy was regarded as morally wrong. Nor was the question of whether those who were born before their parents became permanent residents should be eligible raised. The real solution lies in reinstating the legislative intent of the relevant Articles.

I am pleased to note that Mr James TO has called for an "open-minded" attitude. This is the correct attitude in solving problems indeed. Political parties should not use this chance to seek more votes and support from the public by presenting a more righteous image for their parties, claiming that their parties are helping the public, or helping to promote moral standards or see to it that justice is done. I think we should reflect on how to find a real solution to the problem after today's debate. The crux of the problem is the NPC's apparent unwillingness to amend the Basic Law which has come into effect for a short period of time. Some people have floated the idea of seeking an interpretation from the Standing Committee of the NPC as a solution. I would like to state my opposition to such an idea as it will further complicate the issue in that the NPC may be mistaken for making laws for Hong Kong. The CFA in Hong Kong has the right to interpret Article 24 of the Basic Law and it has done it. Therefore, I am of the view that the only solution is for the NPC to amend the relevant Articles in such a way that they can reflect their genuine legislative intent.

Madam President, having said so much today, I may have therefore offended a lot of people. I have always adopted a low profile on this issue and have not spoken out too much. But I am impelled to state my position clearly today. It seems to me that the Government wants us to do the dishonourable thing to save itself from the dilemma as a result of what may have been a wrong strategy it has adopted when dealing with this problem. I just hope we can get out of this dilemma quickly. Thank you, Madam President.

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

MR NG LEUNG-SING (in Cantonese): Madam President, the CFA ruling has reaffirmed from a legal point of view the legality of both the C of E and the requirement that applicants must apply for the certificate on the Mainland. The ruling also stipulates that the application procedure put in place by the Government must be reasonable and no "unlawful delay" in vetting and approving the applications is allowed.

Insofar as the executive authorities are concerned, apart from the legal point of view, they must also consider from an administrative point of view how arrangements can be made to facilitate a large number of mainlanders with the ROA coming to Hong Kong in a proper way so that the territory will not have to bear an unbearable population burden on its resources. From a legal point of view, once these people are given the C of E, they can decide whether or when to come to Hong Kong and the Government is not empowered to take the initiative in setting priority for their arrival in order that they will come to Hong Kong in an orderly manner. The original motion calls for the issue of the C of E within a reasonable period of time and this is what the executive authorities are legally required to do. The original motion also demands that arrangements be made for persons with the ROA in Hong Kong, without prejudice to the exercise of their right, to decide for themselves whether or when to come to Hong Kong. Whether such arrangements can significantly alleviate the population pressure on Hong Kong is questionable, especially in view of the fact that there is still a considerable discrepancy in living standards between the two places. Moreover, while such arrangements may be effective in prompting those with the ROA, who are well educated, skillful and established, to delay their plan to come to Hong Kong, those who possess no skill or career base may not make the same choice. It will not be helpful in improving the overall quality of new arrivals in the long run.

Overall, the original motion does not touch directly upon the key question of whether Hong Kong can cope with an uncontrolled influx of mainlanders with the ROA from a realistic point of view. But the community as a whole must answer this question: Does Hong Kong have enough resources and the capability to cope with it? The Secretary for Security said in internal meetings earlier that the Government did not have the information about the number of mainlanders with the ROA. But she already revealed this afternoon that the number was estimated to be over 1.67 million. When the Government completes the comprehensive assessment in July, I believe Hong Kong will face tremendous and unbearable pressure in terms of housing, education, health care and even social welfare.

According to the survey findings published by the Census and Statistics Department in early 1998, more than a quarter of migrants from the Mainland who had been living in Hong Kong for less than seven years lived in public housing estates, the proportion could be higher if those who were in genuine need of public housing and met the criteria for income limit were included. Among those who had been living in Hong Kong for less than seven years, more than 40% had a monthly income of less than $6,000, a proportion twice as much as that of the corresponding proportion in the working population in Hong Kong. In 1997-98 alone, up to 54 000 mainlanders came to settle in Hong Kong under the OWP quota system. Now the number of mainlanders who are qualified to have the ROA has suddenly increased significantly. There will not be an easy solution to the population problem and Hong Kong may have to cope with a population which is inflated by legal new arrivals on a prolonged basis. Once the C of E is issued, it is beyond the Government's control as to when holders of the certificate choose to come to Hong Kong. As permanent residents, they should be entitled under the Basic Law to the same welfare services, such as housing Comprehensive Social Security Assistance and so on. The pressure on the already tight public expenditure will become even more serious. In view of the above and for Hong Kong's realistic interests, I will vote against the original motion and the amendment today.

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

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Mr LAW Chi-kwong, you may now speak on Mrs Selina CHOW's amendment. You have up to five minutes to speak.

MR LAW CHI-KWONG (in Cantonese): Madam President, many Honourable colleagues have spoken on Mrs CHOW's amendment and I agree to many of their arguments. Therefore, I do not want to go into details. However, there is one point that I wish to clarify and that is, I have not said that we should not talk about the number of people with the ROA in Hong Kong. To those who know me well, it would be strange to hear that LAW Chi-kwong did not mention the number in this respect. It is probably because I have not made my point clear enough, which has led to the misunderstanding among those Honourable colleagues. I will respond to the questions raised by Mr Jasper TSANG and Mr LAU Kong-wah later on.

I have to the effect of "regardless of the number", which does not mean that we should not discuss the number. What I meant was that we had to solve the problem no matter what the number was. The misunderstanding could have been due to the difference in meaning between what I spoke in Cantonese and what was written down.

As regards the grace period, I did not mean that many of those with the ROA would not come to Hong Kong after being granted a grace period. I said on other occasions that I believed very few of them would choose not to come to Hong Kong. While I agree to most of what Mr NG Leung-sing has said, we hold different views on quality. A well established person on the Mainland, say a university professor, may end up being a Putonghua teacher in Hong Kong. What a waste of human resources! In fact, some new arrivals used to be doctors, engineers on the mainland, but their professional qualifications are not recognized in Hong Kong. Does this do any good to them? Some people talk about improving the quality of new arrivals and they do not consider it a problem that some highly qualified professionals are unable to find the same type of jobs after coming to Hong Kong, as long as the quality of their children is improved. Such a view sounds inhumane to me. We should focus on how to lend a helping hand to these people.

I have never said that they do not need to abide by the laws on the Mainland. However, as the Secretary for Security pointed out earlier, Mrs CHOW's amendment is very likely to contradict the CFA ruling. I am baffled by what Mr Howard YOUNG said in his speech in which he said that if these people did not come to Hong Kong today, they would come simultaneously two years later. How were we going to cope with it then? I am really baffled by such remarks. He only needs to take a look at Mrs CHOW's speech to realize that his arguments are groundless. I therefore need not refute him.

I am not sure whether Mrs CHOW is aware that the deletion of the third paragraph of my motion could amount to flouting the Basic Law. I simply copied the text of Article 36 of the Basic Law, which provides, among other things, that "Hong Kong residents shall have the right to social welfare in accordance with law". Her proposed deletion of the relevant part of the original motion seems to be a show of disrespect to the Basic Law. I therefore find it difficult to support Mrs CHOW's amendment.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the amendment moved by Mrs Selina CHOW be made to Mr LAW Chi-kwong's motion. Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

Mrs Selina CHOW rose to claim a division.

PRESIDENT (in Cantonese): Mrs Selina CHOW has claimed a division. The division bell will ring for three minutes.

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

PRESIDENT (in Cantonese): Before I declare that voting shall stop, Members may wish to check their votes. Are there any queries? If not, voting shall now stop, and the result will be displayed.

Functional Constituencies:

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Mrs Selina CHOW, Mrs Sophie LEUNG, Mr Howard YOUNG, Mr LAU Wong-fat and Mrs Miriam LAU voted for the amendment.

Mr Michael HO, Dr Raymond HO, Mr LEE Kai-ming, Miss Margaret NG, Mr CHEUNG Man-kwong, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Mr SIN Chung-kai, Dr Phlip WONG, Mr WONG Yung-kan, Mr Timothy FOK, Mr LAW Chi-kwong, Mr FUNG Chi-kin and Dr TANG Siu-tong vote against the amendment.

Mr Eric LI and Dr LEONG Che-hung abstained.

Geographical Constituencies and Election Committee:

Mr HO Sai-chu voted for the amendment.

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Miss Christine LOH, Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Andrew WONG, Mr Jasper TSANG, Dr YEUNG Sum, Mr LAU Chin-shek, Mr LAU Kong-wah, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr TAM Yiu-chung, 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 PRESIDENT, Mrs Rita FAN, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 27 were present, eight were in favour of the amendment, 17 against it and two abstained; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 27 were present, one was in favour of the amendment and 25 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.

PRESIDENT (in Cantonese): Mr LAW Chi-kwong, you may now reply. You have seven minutes 20 seconds out of your 15 minutes.

MR LAW CHI-KWONG (in Cantonese): Madam President, I would like to first respond to some questions of greater importance. Although I still have seven minutes to speak, that may not be enough.

What Mr James TO said earlier does not represent "a volte-face" on the part of the Democratic Party. You can watch part of my interview with ATV in which I already stated this point.

Mr TAM Yiu-chung spoke of the legislative intent of the Basic Law Drafting Committee and the decision by the Preparatory Committee of the Hong Kong Special Administrative Region (SAR) and that is, only when parents have become permanent residents in Hong Kong when their children are born, will such children meet the requirement stipulated to in Article 24 para 2(3) of the Basic Law. I hope the Government will exercise care in handling the ROA issue. Our legislative intent is one thing and the legislation which is subsequently passed is another. We cannot expect the Court to make its ruling according to our legislative intent which is not clearly spelt out. As legislators, we cannot show disrespect to the Court and say, "we have spelt out our intent. They should study the legislative intent carefully before delivering the ruling. We have spelt out our intent clearly, so it is not our fault and amendment is out of the question, the Court should reconsider its ruling". I consider this a sign of disrespect to the Court. The Democratic Party is therefore strongly opposed to the idea of the SAR Government seeking a re-interpretation of Article 24 of the Basic Law by the Standing Committee of the National People's Congress (NPC), thereby overturning the CFA ruling. Such a course of action will not only seriously hurt the judicial system of Hong Kong, but also cause damage beyond repair to its economy and international reputation.

The Democratic Party suggests the Government seriously consider amending the Basic Law to handle the issue involving the second generation who will automatically have the ROA after their parents have become permanent residents. As these people are yet to have the ROA in Hong Kong, amending the relevant Articles of the Basic Law should not be regarded as depriving them of their right. Moreover, as these people do not have the ROA in Hong Kong at the moment, when the SAR Government and the Central Government are in the process of amending the Basic Law, they will not be prompted to come to Hong Kong illegally as they can obtain the ROA through legal channels.

Of course, despite the above suggestions, more detailed and careful studies on the legal implications are still required in order to carry out a detailed analysis. The Democratic Party has all along been open-minded in the discussions about amending the Basic Law.

Mr Jasper TSANG's words earlier have made me fully realize why Mr TSANG has been dubbed "an expert at putting words into other people's mouth", a literal translation from an English expression. No other people except Mr TSANG himself has said that the passage of the motion will provide solution to all the problems. If the passage of motions without legal effect in the Legislative Council can solve all the problems, there will not be a need to hold a debate in this Council. I do not think that the passage of a motion without legal effect can solve the problem.

Regarding the questions raised by Mr LAU Kong-wah, it is probably because I have not clearly expressed myself. I have never said anything like "the number is not a problem" or "what the number is does not matter". I just asked all of you not to raise such questions. I have fully experienced the feelings of some officials who had been picked on by Mr LAU in other committee meetings when they used some words less precisely. In fact, I have been misunderstood. Maybe I have not clearly expressed myself. I would like to apologize to Mr LAU. We must define the problem first before setting off to find a solution. However, the media have not handled the matter in a proper way because they always ask something like "what is the problem" instead of "what is the solution to the problem". Therefore I have repeatedly stressed that we should not only ask questions. My voice might not be high enough just now when I uttered the word "only", resulting in it being missed. Anyway, it does not matter. Let us stop arguing on such a minor point, which has probably arisen from the fact that I have not clearly expressed myself.

Similarly, never has the Democratic Party said that the people of Hong Kong discriminate against new arrivals. We all know the result of the survey and we do not mean that we should disregard public opinion. As a political party, we must listen to public opinion. But when the public has misunderstandings about certain matters, we are duty-bound to explain to them. At the same time, we are also obliged to tell them that the people of Hong Kong are in the same boat and should therefore help and respect each other, for social harmony is very important. Discrimination against each other will not benefit anybody. Of course, when we feel that some members of the public discriminate against certain underprivileged people, we should listen to what these members of the public have to say, but that does not mean that we agree with them. Therefore, when we handle this matter, we should consider whether such remarks made in public will lead to misunderstandings among the public.

The Secretary for Security has disclosed a huge number. I believe tomorrow's headline will be dominated by something about the figure of 1.67 million. At first glance, the Government's strategy and its officials' solemn faces were intimidating. As a matter of fact, the pressure on us for the next seven years is just the 690 000 people who are said to be qualified for the ROA. The Government should not have revealed the figure of 1.67 million at the first place.

As to what constitutes "reasonable or unreasonable" in questions put to me I can hardly believe that a judge will base his judgment simply on the opinions of the appellant. I hope the Government will carry out an in-depth and careful study on what should be a reasonable period of time for handling the applications from a legal point of view, instead of saying that what is considered reasonable by the appellant is reasonable.

My original intention for today's motion was to discuss how to solve the problem. However, as the problem has turned out to be so serious, what we are most concerned about is the arrangement, or whether the Basic Law should be amended. The Democratic Party has said that we are open-minded on this issue, but our bottom line is that seeking an interpretation by the Standing Committee of the NPC is unacceptable.

Madam President, although the passage of this motion will not solve the problem, I still hope Honourable colleagues of this Council will support it.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr LAW Chi-kwong, as set out on the Agenda, be passed. Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

PRESIDENT (in Cantonese): I think ......

Mr LAW Chi-kwong rose to claim a division.

PRESIDENT (in Cantonese): If Members should like to claim a division in the future, please rise earlier. Actually, Mr LAW Chi-kwong, before I proceeded to declare the result, I had paused for a while to see whether you had risen.

The division bell will ring for three minutes.

MR LAW CHI-KWONG (in Cantonese): I am sorry.

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

PRESIDENT (in Cantonese): Before I declare that voting shall stop, Members may wish to check their votes. Are there any queries? If not, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr Michael HO, Miss Margaret NG, Mr CHEUNG Man-kwong, Mr SIN Chung-kai and Mr LAW Chi-kwong voted for the motion.

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Dr Raymond HO, Mr LEE Kai-ming, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Mrs Sophie LEUNG, 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 motion.

Mr Eric LI and Dr LEONG Che-hung abstained.

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, Miss Christine LOH, Mr LEUNG Yiu-chung, Mr Andrew WONG, Dr YEUNG Sum, Mr LAU Chin-shek, Miss Emily LAU, Mr Andrew CHENG and Mr SZETO Wah voted for the motion.

Miss CHAN Yuen-han, Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung and Mr Ambrose LAU voted against the motion.

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

THE PRESIDENT announced that among the Members returned by functional constituencies, 26 were present, five were in favour of the motion, 19 against it and two abstained; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 27 were present, 14 were in favour of the motion and 12 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 motion was negatived.

PRESIDENT (in Cantonese): Second motion. Labour Day.

LABOUR DAY

MR LEE CHEUK-YAN (in Cantonese): Madam President, today is a couple of days before Labour Day and my motion is one of the ways to commemorate it. Labour Day brings us happiness because we have a holiday on this day from this year onwards. But on the other hand it is sad to remember that Labour Day commemorates American workers' struggle for an eight-hour day more than a century ago. Nevertheless, today, many workers in Hong Kong are reversing what their American counterparts struggled for more than a century ago, for they have to work an 11 or even 15-hour day from the previous eight-hour one. What a satire on this year’s Labour Day!

The current problem is the worrying situation for the working class in Hong Kong in terms of job security and income, stemming from the collusion between the Government and private sector employers who have explored all possible means to compete for the top spot of unscrupulous employers, which has resulted in "casualization" among the wage-earning class and "a downward spiral in their wages". The general impoverishment in the community and polarization of the rich and the poor have reached a critical point, threatening social stability. Such phenomena as wage reduction, redundancy, double pay turning into bonus or end of contract gratuity, longer working hours and heavier workload and so on are very common in the private sector.

Moreover, we can see that the Government is doing its bit to follow this trend. Firstly, Mr TUNG Chee-hwa and many Members of the Executive Council have "paved the way" for employers by repeatedly targeting at the wage levels and claiming that wages in Hong Kong must come down. Secondly, the Government has pre-empted the review on civil service pay by directing the Social Welfare Department and the Transport Department to employ staff at 70% of the original salaries before the outcome of the review is known. Thirdly, the Government is trying to "make use of other people's chopper" to slash the number of civil servants. The Chief Secretary for Administration said that there was a growing trend towards contracting out public services and this was in the interest of the management in the long run. The contracting out of government services is actually an excuse for the Government to "make use of other people’s chopper" to slash the number of civil servants. By doing so, the Government itself does not have to hold down wages because the latter will automatically go down after government services are contracted out. A few days ago, I met a worker working for the contractor of the service contracted out by the Urban Services Department and he told me that he had to work for eight hours a day, seven days a week and 365 days a year without a break for a meagre $4,000 monthly. This is the plight of workers working for contractors of government services. Is this not a case of "making use of other people's chopper" to slash the number of civil servants? If the trend towards contracting out more government services continues, the wages of wage earners in Hong Kong will be further held down.

Another recent case is related to the Post Office which encountered several problems. The first and foremost was its temporary staff who had been employed for a long time, some of them for as long as nine years. Secondly, under a piece of legislation passed by the then Legislative Council back in 1997, an employee who has worked for the same employer for more than two years is entitled to end of service payment. These temporary staff were persuaded by the then Post Office to resign in the false belief that arrangement would be made for them to be employed as permanent staff. But these workers have yet to become permanent staff to date after their resignation while the Post Office has avoided paying the long service payments. This was what the Post Office did in 1997, which I did not know until recently. Thirdly, the Post Office's recent decision to cut its temporary staff's wages by 20% is applicable to new recruits as well as existing staff. This violates the guideline on wage reduction. The Post Office informed its temporary staff of its decision on the 16th of this month and handed them the letter of dismissal the following day without prior consultation with those affected. I would like to ask the Secretary: Has the Post Office followed the guideline on wage reduction? Is the guideline useful? Will the Secretary discuss the guideline on wage reduction with the Post Office? I hope the Secretary will tell me whether the guideline is still effective in view of the fact that even the Post Office has disregarded it. Its decision to cut temporary staff's wages by 20% has put more downward pressure on wages. Those part-timers told me that their hourly rate had been reduced from $57 to $47, and the rate for new recruits had been further slashed to $42. As a result, they are worried that they will be dismissed by the Post Office one year later because by then the department will naturally hope to recruit workers at a lower hourly rate of $42, putting more downward pressure on wages. In view of such circumstances, we think the Government should be more concerned about the problems with law wages. We have therefore put forward four proposals: first, to set a minimum wage; second, to establish a collective bargaining system; third, to strengthen the protection for employees participating in trade union activities; fourth, to review the tax system.

First of all, I would like to talk about a minimum wage. The main purpose of imposing a minimum wage is to ensure that a hardworking worker will make enough for the basic livelihood of his family. How many people are we talking about? In Hong Kong, there are currently about 300 000 wage earners whose monthly income is less than $6,000, excluding domestic helpers. In 1997, the number of such wage earners increased by 12% over the previous year. In other words, workers' wages are coming down continually. In view of this, we propose to set a minimum wage, which is in line with Article 7 of the International Covenant on Economic, Social and Cultural Rights ─ most of my colleagues on this Council support this Covenant ─ which provides, among other things, that the State Parties to the Covenant must ensure that remuneration for workers "provides all workers, as a minimum, with ...... a decent living for themselves and their families in accordance with the provisions of the present Covenant ......" The Covenant provides for a decent living. I would like to remind Honourable colleagues that Article 39 of the Basic Law stipulates that this Covenant will continue to be apply in Hong Kong.

Some people argued that the imposition of a minimum wage would disrupt the operation of the free market. I think that this is a moral question ( Mr Albert HO said just now that what I was talking about was "moral economics"). In my opinion, when wages go down to a shamefully low level, the free market mechanism has failed and government intervention is required so as to ensure that wage earners' right to a decent living and survival is safeguarded and the principle of "more pay for more work" instead of "less pay for more work" is truly embodied in society. To workers earning low wages, the present situation is reflective of "less pay for more work". Is this fair? This is a question related to moral standards and values. Therefore, I hope that when we consider the pros and cons of a minimum wage, we will ask a fundamental question: Do we have a clear conscience when we see workers being paid $4,000 a month for toiling 10 or 12 hours every day? If not, we should support the imposition of a minimum wage. Many people said there was an alternative to a minimum wage. Please put forward your alternative proposal. To date, apart from a minimum wage, I have not heard of any other solution to the low income problem.

Other people argued that the imposition of a minimum wage would push up the unemployment rate and they loved to cite the example of the plight of small and medium enterprises (SEMs). Does the survival of these enterprises depend on holding down wages or low wages? If you feel pity for the closure of such enterprises, do we not feel pity and sorrow for those workers whose wages are too low to support a decent living? Why do we feel sorrow for the plight of SEMs only and not for workers earning low wages? I did not mean that we should not offer help to such enterprises. But can we help them by other means? One should not cite the plight of SEMs whenever labour problems were discussed as if the latter did not exist at all. Even if we were to offer help to SEMs enterprises, that should not be achieved through holding down wages.

As to the question of additional costs which the imposition of a minimum wage will incur, according to my calculations, with 10% of the working population in Hong Kong falling under the low wage earning category, the operating costs for the commercial and business sector will go up on average by 1% only with the imposition of a minimum wage. Please be reminded that the implementation of the Mandatory Provident Fund Scheme will result in an 5% additional costs for enterprises as a whole.

Some people argued that the minimum wage could become maximum wage. One should not forget the market forces. When the market rates are going up, it is impossible to hold down wages to the lowest level. For example, if the market rate for a certain job is $8,000 a month, you cannot offer $5,000 to hire someone to do the job. As the market will adjust upward naturally, it is therefore impossible for a minimum wage to turn into a maximum wage. We just hope that wages will not be held down to far too low a level. I also hope that we will reconsider the proposal for a minimum wage and ask ourselves: Do we have a clear conscience seeing that those workers are earning such low wages?

Secondly, what I hope Members will support is employees' right to collective bargaining, which was debated in this Council as well as the former Legislative Council. I therefore do not want to talk a lot on this subject. I just want to ask one question: Do Members admit that the current labour relations are maintained not on an equal footing? A spate of recent incidents concerning wage reduction and redundancy have shown that wage earners have almost lost all of their bargaining power. Employers often get around trade unions to put pressure on workers whose power to fight back is substantially weakened by a lack of the right to collective bargaining. Do Members admit that an unequal labour relationship has been created due to a lack of statutory regulation? If so, I hope Members will support employees' right to collective bargaining, in order to strengthen their bargaining power.

Thirdly, I hope Members will support introducing legislation to protect employees' right to participate in trade union activities. Although current legislation provides that employees who are dismissed for participation in trade union activities can initiate criminal proceedings against the employer, but so far no such prosecution has been successful. Therefore, this provision is often described as existing in name only because of the difficulties in proving the wrongdoing on the part of employers. As for civil proceedings, employees can be compensated in monetary terms only, without being given the right to reinstatement. In other words, employers can suppress trade unions as long as they are willing to spend some money. Current legislation actually does not offer protection to employees participating in trade union activities. We hope that employees can participate in trade union activities without fear. In this way a fair labour relationship can be established. How can a labour relationship be described as fair if employees are worried about being dismissed for joining trade unions? This will mean that power always prevails over justice. Recently, a number of incidents occurred in which trade unions were discriminated against. Such companies as the Orient Overseas Container Line Limited, the Seven Sea Chemical (Holdings) Limited and the Far East Hydrofoil Limited have all practised discrimination against trade unions by dismissing our union members. I hope that Mr TUNG Chee-chen will consider re-employing the trade union secretary dismissed by his company after becoming the Chairman of the Hong Kong General Chamber of Commerce. What kind of safeguard exists if all of those who join trade unions will be dismissed? The labour relationship will never be equal if employees are not protected. I therefore hope that Members will consider protecting workers' fundamental human rights.

Finally, we suggest that the tax system should be reviewed. After all, the problem of disparity between the poor and the rich must be resolved by using such an effective tool as the tax system. We therefore urge the Government to review the tax system. The Confederation of Trade Unions has always supported the idea that those who can afford should assume a bigger share of the tax burden so that the Government will have sufficient resources to provide various services to improve the life of low income families. We hope the Government will introduce a progressive tax regime whereby SEMs will pay less tax and those big companies making enormous profits will pay more. The tax burden to the community as a whole should take the form of a graduated scale as that of salary tax. I hope Members will support such a system.

Finally, I also hope Members will carefully consider this fundamental question. If we are concerned about economic growth in total disregard of the need to ensure a decent living for wage earners, it amounts to putting the cart before the horse. Is it useful to achieve economic growth without guaranteeing a decent living for wage earners? Thank you, Madam President.

Mr LEE Cheuk-yan moved the following motion:

"That, on the eve of Labour Day, this Council worries that the promotion and adoption of a flexible appointment system by both the Government and the private sector may lead to a trend of 'casualization' and job insecurity for the wage-earning class in Hong Kong, as well as a drastic plunge in their wages, resulting in general impoverishment in the community and polarization of the rich and the poor, thereby foreshadowing a potential crisis of social instability; this Council regrets that the Government has disregarded the situation, and urges the Government to improve the quality of life for the wage-earning class by adopting positive measures, including:

(a) instituting a statutory collective bargaining system and strengthening the protection for employees participating in trade union activities;

(b) setting a minimum wage to safeguard the basic livelihood of employees; and

(c) conducting a review of the tax system in Hong Kong with a view to reducing the disparity between the rich and the poor."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr LEE Chek-yan, as set out on the Agenda, be passed.

Mr CHAN Wing-chan will move an amendment to this motion, as printed on the Agenda. In accordance with the Rules of Procedure, the motion and the amendment will now be debated together in a joint debate.

I now call upon Mr CHAN Wing-chan to speak and to move his amendment.

MR CHAN WING-CHAN (in Cantonese): Madam President, I move that Mr LEE Cheuk-yan's motion be amended, as set out on the Agenda.

The May 1 International Labour Day will come in a few days' time. This year, the May 1 International Labour Day is different as it will be a paid labour holiday from this year onwards. The labour sector and trade union organizations in Hong Kong have all along demanded the Government to make the May 1 International Labour Day a paid holiday and their demand is met this year after years of effort and fighting.

Take the Hong Kong Federation of Trade Unions (FTU) as an example, at the 25th General Meeting in 1986, the FTU formally proposed that it would strive for making the May 1 International Labour Day to be made a statutory paid holiday. Accordingly, the FTU has actively reflected their views to the Government, made efforts for the demand and contacted other labour bodies to make collective efforts for this goal. In 1987, the Labour Sector Basic Law Joint Conference promulgated the May 1 Declaration requesting the Government to make May 1 a statutory paid holiday. Today, the goal is finally achieved after the labour sector in Hong Kong has fought and made collective efforts for more than two decades.

On the May 1 International Labour Day this year, for the first time, the Government will take part in the relevant activities and the Acting Chief Executive, Mrs Anson CHAN, will host a reception at the former Government House (proposed to be renamed the "Purple Cottage"). Madam President, I would like to say something in passing. Some people have expressed their views on renaming the former Government House as the "Purple Cottage". I wonder if the word "azalea" could be added before "Purple Cottage" to make it sound more pleasant. I suggest calling the former Government House the "Azalea Purple Cottage" because many people visit the former Government House every year to admire azalea and the public has become very familiar with this event. Besides, no building in Hong Kong has such a name now and there will not be two buildings with the same name. Madam President, if the Government will make any changes to the proposed name, the "Purple Cottage", it might as well consider my suggestion.

PRESIDENT (in Cantonese): Mr CHAN, would you please explain how the name you mentioned is related to the Labour Day? (Laughter)

MR CHAN WING-CHAN (in Cantonese): Madam President, it is just a digression. (Laughter)

Let me turn back to the reception. The representatives of trade unions, employers, industrial and commercial bodies and the relevant labour organizations have been invited to the reception to be held in the former Government House. Actually, there is a world of difference between the current situation and that when the former British Hong Kong Government was not happy whenever the May 1 International Labour Day was mentioned. This demonstrates a particular characteristic of the Hong Kong Special Administrative Region, that is, an open attitude towards the May 1 International Labour Day. This I appreciate very much.

Around 1 500 trade union representatives in the territory will attend the reception this year. However, while the labour sector celebrates the May 1 International Labour Day, we are more concerned about the difficulties of local workers. In the May 1 Declaration, we made six appeals, including assisting the low-income group in alleviating their hardships, legislating for a statutory labour-management bargaining mechanism and recognizing the status of trade unions in bargaining. We have made our requests to Honourable colleagues and I will not repeat them here.

Nevertheless, I have to say that the unemployment rate keeps rising, from 3.5% last year to 6.2 % in the first quarter this year. When interviewed by the press, the Chief Executive said frankly that the unemployment rate would continue to rise. However, the Government was quite helpless in the face of a high unemployment rate and a substantial swell in the unemployed ranks. Although the Administration has established a Task Force on Employment supervised by the Financial Secretary, the number of unemployed people has actually increased rather than decreased. As no progress has been made in creating job opportunities and relieving unemployment, the labour sector is extremely worried and disappointed.

At present, more than 200 000 people are unemployed and workers are in great difficulties. Many employers take advantage of the fact that employees are caught in a less favourable bargaining position to reduce their wages and benefits. For two years, there have been numerous cases in which employers have unilaterally revised employment contracts. For example, they reduced employees' wages and benefits, turned double pay into annual bonus, laid off staff, extended working hours, revised the terms of employment contracts, discontinued employees' years of service to evade making long service payments and pegging employees' wages to turnover levels. Multifarious methods have emerged one after another. For example, most watchmen have to work for 12 hours a day. Like meat on the chopping board, they reluctantly allow themselves to be trampled upon and suffer the terrible plight.

When we assist employees in bargaining with employers in respect of wage and benefit reductions and layoff, we feel deeply that trade unions and workers and employers are not negotiating on an equal basis and employers are often unwilling to recognize that trade unions are representative. For example, the employers of large enterprises and companies are unwilling to recognize that trade unions are representative and they shut trade unions out when they have to bargain with employees over material matters. In my opinion, the status of trade unions must be legally protected so that they can more effectively assist employees in fighting for reasonable benefits. Among other things, the May 1 Declaration asks to "improve labour relations, legislate for a statutory labour-management bargaining mechanism, recognize the status of trade unions in bargaining and legislate for the protection of employees' rights to strike".

Madam President, the situation of local workers now is similar to that of workers in the United States more than a century ago. At that time, these workers fought for improvements to their treatment and working hours. In the 1980s, there was an economic recession in the United States and a large number of unemployed people were caught in an agonizing abyss; they were poor, hungry and suffered from diseases. To reap greater profits, the United States capitalists made workers work for 14 to 16 hours daily, but workers still did not have enough to eat and wear. As a result, more than 350 000 workers in dozens of cities like Chicago, Detroit and New York took to the streets and demonstrated on 1 May 1886. A major strike broke out and workers demanded improved working conditions and an eight-hour day system. This is the origin of the May 1 International Labour Day.

It is stated at the beginning of the May 1 Declaration of the labour sector that "The May 1 International Labour Day is to commemorate the day more than a century ago on which the working class shed blood and tears for an eight-hour work system". I would like to add that the demonstration of the United States workers lasted until 3 May when the Chicago authority suppressed the demonstrating masses by shooting. Afew workers were killed and dozens more were injured. On 4 May, more than 3 000 workers assembled in Chicago to mourn the dead, and 180 policemen carrying loaded guns rushed there and dispersed the workers with force. As a result, some 200 workers were injured, hundreds arrested and four worker leaders hung to death. I am not going to elaborate this but I would like to make two points. First, workers pay prices, even blood and tears, for the results they yield; second, the democratic United States today has gone through a gradual democratic process.

Madam President, another concern of the labour sector is the civil service reform which has developed like a wildfire recently. When a big employer such as a private company or the Government revises the terms of employment, it has to adequately discuss the matter with employees, and more importantly, the Government should set an example of a good employer.

Labour Day is the theme of my amendment which asks for more extensive and comprehensive labour protection. As the motion moved by Mr LEE Cheuk-yan does not include the appeals in the Declaration, I have moved an amendment to include the appeals in the 1999 "May 1 Declaration" made by the labour sector in Hong Kong. I hope that Honourable colleagues will support my amendment. Thank you, Madam President.

Mr CHAN Wing-chan moved the following amendment:

"To delete "worries that the promotion and adoption of a flexible appointment system by both the Government and the private sector may lead to a trend of "casualization" and job insecurity for the wage-earning class in Hong Kong, as well as a drastic plunge in their wages, resulting in general impoverishment in the community and polarization of the rich and the poor, thereby foreshadowing a potential crisis of social instability; this Council regrets that the Government has disregarded the situation, and" after "That, on the eve of Labour Day, this Council"; and to delete "improve the quality of life for the wage-earning class by adopting positive measures including: (a) instituting a statutory collective bargaining system and strengthening the protection for employees participating in trade union activities; (b) setting a minimum wage to safeguard the basic livelihood of employees; and (c) conducting a review of the tax system in Hong Kong with a view to reducing the disparity between the rich and the poor" after "urges the Government to" and substitute with "implement the suggestions in the 1999 'May 1 Declaration' made by the labour sector in Hong Kong for assisting the low-income people in alleviating their hardships, legislating for a statutory labour-management bargaining mechanism and recognizing the status of trade unions in bargaining"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Mr CHAN Wing-chan be made to Mr LEE Cheuk-yan's motion.

Members who wish to speak will please raise your hands and press the "Request-to-Speak" buttons.

MR SIN CHUNG-KAI (in Cantonese): Madam President, some points in the motion moved by Mr LEE Cheuk-yan today deserve detailed study and I will mainly speak on a review on the tax system as proposed in the original motion. In general, we can consider a taxation policy from four aspects. First, efficiency. Are taxes simple and feasible? How much administrative cost is incurred? Will market efficiency be affected? Second, its effect on the economic activities of a taxpayer. For instance, will it affect the work, saving and investment of a taxpayer? Third, fairness, including horizontal and vertical fairness. The former means that people having the same income should be given equal treatment while the latter means that different tax rates should apply to people with different levels of income with the effect of reducing the difference between their proceeds. Fourth, its role in stabilizing the economy, for instance, the effect of a taxation policy on inflation and the unemployment rate.

From the 1980s till now, the tax regimes under successive Financial Secretaries can be summed up as follows: first, collecting adequate revenue to meet expenses and maintaining an adequate reserve; second, low and simple taxation. Our tax regime remains neutral as far as possible in terms of the economic activities such as investment, saving and work of a taxpayer. As for some important taxation principles such as reducing the disparity between the rich and the poor and stabilizing the economy, it appears that they are not explicit and unimportant. Sir Philip HADDON-CAVE said that the purpose of a fiscal system was to allocate a suitable proportion of social resources to public expenses but not to uphold social justice at the same time. His successor, Sir John BREMRIDGE, also stated explicitly that taxation was used to support public expenses and nothing else. Besides, Mr Piers JACOBS and Sir Hamish MACLEOD who became Financial Secretaries later had not said that taxation had a distribution function.

In 1996, the incumbent Financial Secretary, Mr Donald TSANG, released the first budget after he assumed office and restated the seven principles of public revenue management. The first five principles emphasized revenue and administrative efficiency, the sixth was to relieve the tax burden while the seventh was to stabilize the economy. Let me quote the sixth principle: "provide concessions where most needed", a principle which is actually rather vague. As the Government should give priority to salaries taxpayers as far as tax concessions were concerned, therefore, the Government proposed a wide range of concessions on salaries taxes. It relieved the tax burdens of all salaries taxpayers but not a particular class. It is evident that our tax regime regards fairness as less important and does not take vertical fairness into consideration.

As the taxation principles of the Government have completely ignored the allocation of proceeds, in order to get more revenue, the Government often broadens the tax base and opens up more sources of taxation without hesitation. For example, it has looked into the possibilities of charging land departure tax and sales tax. I must emphasize that we do not oppose imposing new taxes or broadening the tax base but we find it inappropriate for the existing taxation principles to lay particular stress on maintaining revenue and a simple tax regime without taking the distribution of proceeds into consideration. Before the Government imposes new taxes, it must carefully and comprehensively review the existing taxation principles and structure.

In fact, since the publication of the report by the Third Inland Revenue Ordinance Review Committee in 1976, no detailed tax review has been made. In 1991, the Honourable Fred LI moved a motion asking for a comprehensive review of the tax regime. Legislative Council Members and the community made similar requests later but the Government refused to listen. After two decades, the Government finally published a consultation paper on the tax regime in July 1997 but it was a pity that the discussion was limited to profits tax. A more disappointing point was that the long-expected review was conducted casually and the report only comprised seven A4 pages. It only contained background information but not analysis. The Democratic Party, other political parties and professionals have suggested that the Government should consider imposing progressive profits tax. In other words, different tax rates should apply to different taxable profits. Our views match those of the Hong Kong Confederation of Trade Unions on this point. The Government should also consider imposing directional profits tax. In other words, enterprises that invest in high technology and manpower should be given tax concessions. Nevertheless, the paper has not analysed these suggestions, other than continuing to stress the consistent low and simple taxation policy.

It is expected that our economic growth will slow down and the growth of revenue from salaries tax and profits tax that account for 30% of the total government revenue will also slow down. While expenses continue to increase against a pessimistic outlook for revenue increase, Hong Kong can cope with the short-term budget deficit with its abundant fiscal reserves. But in the long run, the Government must look for solutions. Therefore, various sectors in the community have made new suggestions concerning taxation so that the Government can open up more sources of taxation to reduce the deficit. The Democratic Party has come to the view that it is also essential to review the existing tax regime. For instance, the salaries tax base has substantially narrowed, and the number of people paying tax at the 15% standard rate has dropped largely from 160 000 in 1993 to 10 000 in 1998. Many Members here who just receive remuneration as Legislative Council Members are not eligible for paying tax at the standard rate.

The Government has all along relied too much on property-related revenues such as stamp duties on land sales, investment in and sales of property. Such revenue has increased from around 10% in 1990 to 30% in 1997 mainly due to high land and property prices and rents. The high rents and property prices people pay are undoubtedly equal to a form of taxation transformed through land. Therefore, a banking analyst has said that property-related revenue is actually a concealed compulsory sales tax and expensive rents greatly cripple the competitiveness of enterprises. After the financial turmoil and the asset bubble has burst, the Government can hardly rely on taxation in this respect as its main source of revenue.

Madam President, I hope that the Government will grasp this opportunity to review the tax regime in detail.

PRESIDENT (in Cantonese): Mr SIN, your time is up.

MR LAU CHIN-SHEK (in Cantonese): Madam President, on 1 May this year, wage earners in Hong Kong can finally enjoy a Labour Day holiday for the first time.

As far as I can recall, when we debated in this Chamber two years ago a Members' Bill on making the May 1 International Labour Day a holiday, I said that making the Labour Day a holiday had two meanings. First, its commemorates those who have taken part in trade union movements and fought for labour interests in a century or so; second, it reminds the working class that labour interests in Hong Kong are still fraught with many deficiencies, and wage earners must continue to unite and fight for improvements.

Although the revisions made by the Provisional Legislative Council have delayed our work in making the May 1 Labour Day a holiday for a year, the Labour Day is still highly meaningful today. This is especially true because wage earners enjoy less employment protection and lower wage levels. On the eve of May 1, it is even more meaningful for us to restate our appeal for an improvement in labour interests.

The May 1 Labour Day is worth commemorating but the present circumstances do not merit any celebration. As Mr LEE Cheuk-yan has said, the labour sector is now in a terrible plight of unemployment, with 210 000 being unemployed, more than 100 000 underemployed and some employees laid off almost everyday. Workers are forced to work for longer hours but less wages. This is a true portrayal of wage earners today.

The Government has always opposed legislating for employees' right to collective bargaining and refused to consider setting a minimum wage. It employs a euphemism that this is non-intervention in the operation of the labour market. However, it is not objective or neutral and it helps large commercial associations to take actions against the working class. The Chief Executive has stressed time and again that wages are high in Hong Kong. Does he want to intervene in the market? The Government corporatizes public services, briefs out services, hires temporary workers and employs staff at 70% of the original wages. Is it intervening in the market? The former Legislative Council passed the bill on collective bargaining proposed by Mr LEE Cheuk-yan but the Special Administrative Region Government froze the legislation and then repealed it once it was in power. Is this intervention?

In the labour market today, wage earners are not given basic protection in terms of wages and they cannot bargain with their employers collectively. Is this not by the doing of the Government?

Let me cite a latest example. During the Chinese New Year, an employee of a company told me that his company had issued an internal directive before the Chinese New Year, requiring employees to distribute promotional leaflets on property sales in various parts of Hong Kong, Kowloon and the New Territories every 10 days. At first, he thought that he would be given overtime pay for this extra work and that he was only asked to distribute leaflets once in a while. But he later found that the days on which employees distributed leaflets would be deducted from their 14 days' annual leave and they would not be paid. I hope that Members would note that employees would not get overtime pay by distributing leaflets, and that the days they spent would be deducted from their annual leave and they would not be paid in lieu.

Although this is free market operation, the Government is duty-bound to set down fair rules of the game. The Government should empower workers to bargain with their employers collectively and set a minimum wage to provide a safety net. However, the Government has not done so. It did not do anything and even stopped others from doing so. It even abolished the legislation already enacted by other people. What is its policy or rationale?

Madam President, the key point at issue today is a minimum wage. Some say that setting a minimum wage will reduce job opportunities and further push up the high unemployment rate. But if wages are too low, workers will be complled to work longer hours or to take up a few more part-time jobs to make ends meet. Similarly, there will be less vacancies and the unemployment rate will go up. Some others think that a minimum wage violates the principle of free market operation and sets a precedent for government intervention in the wage levels in the private labour market. Some also question if a minimum wage will turn out to be the maximum wage. The arguments for and against a minimum wage are fairly unambiguous and I do not intend to refute them one by one. On the contrary, I would like to state clearly once again that the starting point of establishing a minimum wage is very simple: to give every wage earner a dignified wage and living standard.

I hope that officials and Honourable colleagues present will put aside profound economic theories for the time being and look at the actual situation of workers in the lower strata from a human perspective. A cleaner in a fast food shop only earns $10 an hour. Although the eight-hour work of a middle-aged watchman in a building is extended to 12 hours, he still earns a bit more than $4,000 a month. A refuse collection worker toils all the day but he earns less than $4,000 a month. We cannot deny these facts for they are the true portrayals of wage earners in the lower strata.

Regardless of the perspectives we adopt, many wage earners who are less capable of negotiating prices are forced to accept shamefully low wage levels. It is shameful for they pay more than half a catty but they get less than two qian; this is an insult to the dignity of the working class. It is even more shameful that low wages cannot let them live in a dignified manner.

Setting a minimum wage has only one aim: to stop the inhuman trend of wage reduction. More than a century ago, the working class fought for eight-hour work and dignified working conditions. Today, wage earners in Hong Kong are also fighting for dignity and establishing a basic wage level.

On the one hand, the Government organized activities to celebrate the May 1 Labour Day, on the other, it is indifferent to the plight of wage earners. I have to say that this is the gravest insult to the Labour Day.

With these remarks, Madam President, I fully support Mr LEE Cheuk-yan's motion. Thank you.

MR LAW CHI-KWONG (in Cantonese): Madam President, as a minimum wage is the thrust of this motion, I will express my views on it. Perhaps Honourable Members have read in the newspapers that there are different views within the Democratic Party, that while some support the idea, others oppose it. Therefore, it is extremely hard for the Democratic Party to decide whether it will vote for or against this motion as it will have an established position either way. It appears now we have unfortunately decided to abstain from voting, we will get the same result as though we have voted against it. We do not want to do so. However, we cannot reflect the views of the Democratic Party on the matter even if we vote either way.

Concerning our discussion as to whether the Government should consider setting a minimum wage, I agree to the views of Mr LEE Cheuk-yan and Mr LAU Chin-shek on the fundamental problem. If a person is only paid $10 an hour, he will only get $2,000 even though he works for 200 hours a month. This makes me recall an incident that happened more than two decades ago. In the computer room of the bank I was working with then, I found that the trading amount was increasing every minute. After I had calculated my salary and the marginal profits of the bank, I found that I had been exploited by the bank even though my salary was far higher than that of a lower class worker. I had a feeling that I was exploiting him indirectly. With an hourly rate of $10, a worker would only make $2,000 even though he worked for 200 hours a month, and he could not even eke out his livelihood. Comparing his personal value to mine, or the personal value of a person who earns more to mine, will the result be that different? My current salary is around 40 times higher than the median wage of a worker at the McDonald's, but I do not think that my personal value is 40 times higher than his. Therefore, I find the wage issue distressing. How can a person be so worthless?

I meet with new arrivals sometimes and there was such a case earlier on. The party concerned was paid $9.5 an hour for washing dishes in a dingy room from 7 am to 11 pm. Under the present social circumstances, do we find this acceptable? We actually do not want such things to happen. The problem is that the wages of many workers, especially those in the catering industry, have seen no rises for the past decade or so. But we cannot say that there is no minimum wage in Hong Kong. For example, foreign domestic workers have a minimum wage. In the past, the minimum wage might be more or less the same as the market wage but after adjustments made along with inflation year after year, the wages of foreign domestic workers are now higher than those of low-income local workers. The problem does not lie in the wages of foreign domestic workers, but rather the imbalance of the local market where the supply of low-skilled workers with low academic levels far exceeds the demand. From the end of the 1980s to the beginning of the 1990s, our manufacturing industry has been losing 60 000 to 70 000 jobs annually. The low-skilled grassroots with low academic levels are the victims of economic transformation. The fact that their wages have not been adjusted in the past decade or so gives rise to the very serious problem today.

In the former Legislative Council and this Council, we often discuss the disparity between the rich and the poor. The situation in Hong Kong is really scary and I believe the Gini coefficient exceeds 0.52 today. Actually, this figure reflects the seriousness of the disparity between the rich and the poor. Having said so much, I still find it hard to accept such low wages as far as morals and people's dignity are concerned. The problem of the disparity between the rich and the poor has to be solved. Unfortunately, I still fail to convince myself or be convinced by Honourable colleagues as to whether a minimum wage can really help the grassroots. Some criticize that the Democratic Party for its ambiguous position on this matter, and that we are deserting the grassroots. But if this measure can really help the grassroots, so long as I am convinced, I will support the proposal of setting a minimum wage when we hold discussions within the Democratic Party. Unfortunately, I still stand to be convinced.

Some suggest that a minimum wage should be set at $35 an hour. If the boss of a fast food restaurant pays an employee $12 an hour, why should we believe that the boss will remain in business and pay his employee $35 an hour? We cannot think of a logical reason why the businessman will do so. Is he exploiting his employee? I believe some people will exploit the interests of the working class, but are all businessmen operating with a small capital exploiting employees? In fact, they themselves are being exploited. They have invested a lot of money in decorating the shop but they earn less than they can if they work elsewhere. However, for personal or other reasons, they may choose to remain in business. Therefore, I am still not convinced to support setting a minimum wage. Suppose we set a minimum wage at $12 an hour which I believe Mr James TIEN will not strongly oppose, but what is the use of setting this rate? If we set a minimum wage at $12 an hour, I do not think the unemployment rate will be caused to rise. But if we set a minimum wage at $35 an hour, it will definitely affect the unemployment rate. If we set the income of some 300 000 people at $6,000 or below, say $5,800, $5,700, $5,600 or any amount below $6,000, I believe the unemployment rate will certainly increase by 3% to 4%. Are we prepared to accept this? If people accept such a high rate of unemployment and we consider adopting other coupling measures the same time, we can possibly consider setting a minimum wage. Nevertheless, people must accept the overall social changes that will be brought about by this. Thank you, Madam President.

MR CHAN KAM-LAM (in Cantonese): Madam President, the May 1 Labour Holiday this Saturday is made a statutory holiday for the first time. This pleasant holiday marks the result of the efforts made by the labour sector over the years and is a day for celebration. But the rising unemployment rate reaches 6.2% lately, and low-income and unemployed people are in a precarious state. Probably because of free market operation, the efforts made by the Government in stimulating consumption and creating employment seem to have no effects at all. On the eve of the May 1 Labour Day, wage earners feel helpless.

Madam President, the Democratic Alliance for the Betterment of Hong Kong (DAB) has always stressed that the Government must actively take the initiative to solve the unemployment problem. On the one hand, it should stimulate our economy and create more job opportunities, and on the other hand, it should adopt measures to encourage the unemployed to take up jobs again and help low-income workers out of a meagre living.

The original motion proposes three measures for improving the quality of life for the wage-earning class. We cannot say with certainty that improving the quality of life for the wage-earning class will not be helpful, but I am afraid it may not be the best solution to problems such as unemployment and the disparity between the rich and the poor.

Hong Kong has always upheld a free economy in which there are market adjustments to wages. As a result of the recent economic downturn, layoffs and wage reductions, the quality of life of wage earners has kept declining. However, I am afraid that disadvantages will come before advantages if we simply introduce a minimum wage at this time far so doing may not really help low-income workers tide over difficulties or solve the unemployment problem. It is most worrying that a minimum wage may be turned into "a maximum wage" and some employers may seize the opportunity to cut costs and reduce the wages of some employees to the minimum wage level. As for companies on the verge of closing down, they may not be able to afford the minimum wage.

I surely do not agree to the remarks of some Members that a minimum wage is immoral because the level of wages cannot be regarded as a moral standard. If it is immoral to give employees low wages, what about high wages? Do wage earners have to kow-tow to show their gratitude? If we think so, we have completely neglected the value of labour in the labour market and the effect of competition caused by surplus manpower in the labour market when our economy is at the low ebbs. Besides, the downward adjustment of production cost will inevitably pound at workers' wages. If we wish that wage earners at large can receive pay rise and preserve their rice bowls in economic adversity, it will only be our wishful thinking.

Those who say that low wages is immoral is actually making labour relations more acute and implying that low-income wage earners should retaliate and refuse to accept immoral and cruel exploitation. Besides, they are playing a prelude to a class struggle.

Mr LEE Cheuk-yan's motion also proposes the introduction of a progressive tax regime to alleviate the problem of the disparity between the rich and the poor. The DAB thinks that Hong Kong has always adhered to a simple and low tax rate policy. If a progressive tax regime is adopted, it will inevitably complicate our tax regime and Hong Kong will lose its good reputation of being a place with a simple and predictable low tax regime. As a result, international investors will lose interest in Hong Kong and it is thus not conducive to improving the local business environment. Frankly speaking, will reduced investments, a shrunken economy, underemployment and a further increase in the unemployment rate have a beneficial effect on the livelihood of local people? A recent survey shows that most people agree that a minimum wage should be set. If we ask people if they agree that a minimum monthly wage of $5,800 should be set, will anyone disagree? However, ordinary wage earners may not consider the adverse effects in depth. Therefore, it seems that Mr LEE Cheuk-yan's motion has given a wage earner a sweet; he finds it very sweet when he eats it but he will have tooth decay afterwards.

Although a minimum wage can guarantee a minimum income for workers, the labour market undeniably has a natural adjustment mechanism. When there is a manpower shortage, wages will naturally increase but when there is a manpower surplus, wages will be adjusted downwards. The survival of the fittest, able people work more and the more a person works, the more he earns are the basic principles of free competition in the labour market of a free economy. Compulsory setting of a minimum wage will only wrench the regular pattern of a free market. It will not help people having low skills and academic levels, those without working experience and the old and weak secure jobs in the labour market.

The implementation of a minimum wage system should be built upon some basic social conditions. For instance, there should be a large proportion of large state-owned enterprises or monopolies in the labour market. However, given that more than 90% of local enterprises are small and medium and the lack of a sound employment protection system, therefore, we may not be able to implement a minimum wage protection system in a satisfactory manner.

Under the pretext of improving the quality of life for the wage-earning class, Mr LEE Cheuk-yan has made suggestions that are not conducive to the business environment in Hong Kong, strike a blow at investors' desires to invest in Hong Kong, and intensify social contradictions. In the end, they will not only fail to help the labouring masses, but also do wage earners harm. Therefore, the DAB cannot support his motion. Thank you, Madam President.

MR JAMES TIEN (in Cantonese): Madam President, Members from the Democratic Party Members were highly devoted when we debated over labour-management problems or collective bargaining rights in the past. Today, it is very strange that not even one Democratic Party Member is present when I speak. I believe they have not done so intentionally for they do not know it is my turn to speak. (Laughter) In the past, they would speak in support of similar motions but Mr LEE Cheuk-yan is pitiable today because all Democratic Party Members have left after Mr LAU Chin-shek has spoken.

Madam President, this topic has been debated for many times and the Secretary for Education and Manpower and other officials such as the Commissioner for Labour may not wish to listen to similar discussions again. But now that we are having a motion debate, we certainly have to express our views. Originally, I intended to speak only after I have listened to more Members' speeches but as no representative of the business sector or employers has spoken yet, I would like to express my views first.

Madam President, we are bringing up an old topic today and we had many debates over collective bargaining rights in the past. The Liberal Party always thinks that the relations between labour and the management have remained harmonious for decades. In some countries, employees enjoy the right to collective bargaining and the right to strike after they have joined labour unions. But they do miss one thing. What is it? In Hong Kong, if employees have their rights, employers should also have their rights. An employer has the right to run his business. If his business is in a slump, what else can he do other than laying off employees? If an employee is assured of the right to be reinstated after he has taken part in a strike organized by the trade union, relatively speaking, his employer will not have the right to dismiss him. Why is it necessary to make provisions for severance payment then? We surely have to find a way to strike a balance.

Actually, employers in Hong Kong are not protected. As Mr LEE Cheuk-yan has said, I often talk about small and medium enterprises (SMEs). As the data show, we have a working population of 3.4 million people in Hong Kong. Government information shows that 60% of the enterprises employ less than 20 employees and these enterprises are regarded as small sized enterprises. In other words, the employers of 2 million wage earners are employing less than 20 people. In this case, will the trade unions or the SMEs (employing less than 20 people) get the upper hand when collective bargaining rights are discussed? I believe that the strengths of these small bosses and their employees are almost equal. Employers may not necessarily be in a more advantageous position than wage earners and wage earners may not necessarily be more advantageous than their employers. The proceeds small bosses make from their businesses may only be equal to the wages they may get if they are employed by other organizations. In the case of large enterprises, although employees do not have collective bargaining rights, we can see in the Cathay Pacific and Hongkong Telecom incidents that the community supported employees in bargaining with their companies. Very often, the employers of large enterprises have to make concessions. Therefore, we do not need collective bargaining rights or a trade union framework in such form when we handle most problems or balance the interests of employees.

Madam President, when a minimum wage is set, will everything be fine in Hong Kong? If the minimum wage is set at $5,800, most of the employers of small sized enterprises employing some 2 million wage earners will have employees earning less than the $5,800 minimum wage. I do not think that the remaining 40% large enterprises that employ the remaining 1.4 million workers have many employees earning only $4,000 or so. If we consider setting the minimum wage at $5,800 or $35 an hour, apart from the fast food restaurants or McDonald's just cited, most employees in large companies are not affected. In other words, most people earning more than $4,000 are employed by small sized enterprises. Under the present economic circumstances, I definitely believe that if we set a minimum wage at $5,800, we will do harm despite our good intentions for there will be a greater chance for wage earners to be unemployed and small sized enterprises, be they restaurants or retailers, to close down. It is not possible for us to enact separate legislation to protect SME's rights to survive, say specifying that a cup of coffee should at least be sold for $10 and a lunch box for $30 or using commodity prices to control the survival rights of SMEs so that they can give their employees the $5,800 minimum wage.

In this case, if such a high minimum wage is set, I do not think all of the 300 000 people mentioned by Honourable colleagues will become unemployed. Employers will certainly give employees receiving $5,700 or $5,600 the $5,800 minimum wage but the employers of those receiving $4,000 or so will not be able to afford it and they will be forced to dismiss employees. I am not sure what employers will do. Will an employer reluctantly takes up the work of his employee concurrently, let three employees take up the work of four employees, shrink or close down his business? Employers may take these actions.

Madam President, lastly, Honourable colleagues have said (not today) that a National Wage Committee was set up in Singapore in 1972. I have looked up some information on Singapore. The Committee was established in 1972 not to set a minimum wage but to suppress wage increase as wages were rising too quickly then.

Madam President, let me discuss Mr CHAN Wing-chan's amendment. He says that the original motion is not contradictory to his amendment. In addition to supporting the contents of the original motion, he actually wants to implement the May 1 Declaration. As he fully agrees to the contents of the original motion but the Liberal Party does not support the original motion, we will not support Mr CHAN Wing-chan's amendment because in addition to legislating for a statutory labour-management bargaining mechanism, his amendment also seeks to implement the May 1 Declaration which includes the details of the original motion. Thank you, Madam President.

MR AMBROSE LAU (in Cantonese): Madam President, the labour-management relationship in Hong Kong has all along been harmonious. The prescription of a paid holiday for the International Labour Day is a step forward for realizing the mutual understanding and respect between employers and employees. The Hong Kong Progressive Alliance (HKPA) is of the view that the significance of Labour Day should lie in promoting the communication, understanding and co-operation of the two parties, rather than highlighting the interests of a certain class.

So far, employees in Hong Kong have been able to devote to their work proactively; employers have been able to take part in the market competition wholeheartedly; and the Government has been able to focus resources on economic development and social construction. All these are definitely attributed to an important reason that both employers and employees have been striving to avoid wasting their energy on struggles which are not cost effective.

Madam President, in the midst of an economic recession, Hong Kong is now experiencing tremendous socio-economic changes. It is not only the wage-earning class as referred to in the original motion which is under attack. Similarly, employers need to bear the pressure of difficult business and hard living. The amendment hopes that the Government can stimulate the economy, create employment opportunities, upgrade the occupational safety level of employees and maintain a fleet of stable and quality civil servants. This is the aspiration for both the wage earners and the employers.

We should not, just because of the short-term economic hardship, think that the interests of employers and employees represent a kind of zero-sum relationship. The HKPA has all along held that employers and employees are in the same boat. In times of economic depression, they should co-operate with one another and work jointly to solve their difficulties.

Some labour organizations have called for the setting up of unemployment insurance, enactment of legislation to enforce collective bargaining, setting up of a minimum wage system and so on. The HKPA holds that these demands will not only go against the free market economy that Hong Kong has been so proud of, but also dampen investment desires and intensify contradictions between the two parties. Consequently, we might destroy our own bulwark and lose the harmony among employers and employees ─ a recipe for Hong Kong's success. In fact, some demands put forth by labour organizations might even produce a result that runs counter to our wishes. For instance, in times of economic depression, the minimum wage system will particularly aggravate the employers' burdens. Employers will find it impossible to reduce their spending on employees' remuneration in light of their economic hardship. As they cannot reduce their operating costs, they have to cut staff or wind up their business. The final victim will still be the employees.

In times of economic doldrums, employers and employees will unavoidably have more conflicts. Over the past few years, the Government has launched a number of relief measures which were well-received by employers and employees alike, including expanding the scope of the Occupational Deafness Compensation Scheme, issuing the Guideline on What to do if Wage Reduction and Retrenchment are Unavoidable and so on. The first and foremost task for the Government now is to further perfect the established mechanism which has proved to be effective in order to facilitate the forging of a more constructive relationship between employers and employees so that they can seek solutions to their problems jointly.

Madam President, I so submit.

MISS CYD HO (in Cantonese): Madam President, first of all, I would like to clarify one point. It is reported in the press today that Mr LEE Cheuk-yan is fighting in isolation and the Frontier does not support him. I would now stand up to prove by action that the Frontier supports his motion. This afternoon, some Frontier members are also supporting Mr LEE Cheuk-yan outside the Legislative Council.

Madam President, I am going to speak on a few points. First, I would like to discuss the tax rate. Some academics have said that the tax rate should be clear and easily comprehensible so that people will not think of too many ways to evade tax. Second, it should drive people to work. If the more a person works, the more tax he pays, he will lose interest in working. Fortunately, we are still far from this scenario here in Hong Kong. But this may come true if we collect 40% to 50% taxes like other welfare countries. However, the existing standard rate is just 15%. Third, it should drive consumption. If we are to exempt certain taxes, we should aim at the grassroots because they will spend every extra dollar on daily necessities. But if we give "prime workers" or enterprises making enormous incomes tax exemption, they will only use the amounts so saved to make investments, even overseas investments. For example, they may buy the United States bonds, and their consumption may not help the local retailing industry. Fourth, a very important function of taxation is to make the more able pay more. After taxpayers have paid taxes, the Government will allocate social resources in a humane way so that the grassroots or people who are not able to compete can benefit.

I fully support Mr LEE Cheuk-yan's remark that Hong Kong has to consider adopting a progressive tax regime as it will benefit the grassroots and SMEs. At present, the profits tax rate is set at 15%. Why do we not consider allowing SMEs making less profits to pay less tax? Should another tax rate be set above the 15% standard rate so that enterprises making more profits have to pay more tax? However, the present situation is precisely the opposite. We have a minimum tax rate, a tax rate in disguised form, that is, the rate of Mandatory Provident Fund and Health Care Financing contributions. The Financial Secretary does not require a wage earner earning $9,500 a month to pay tax and he stays outside the tax net. However, when he starts making Mandatory Provident Fund and Health Care Financing contributions, he is rigidly required to make contributions at a rate of 7% of his wages. I do not see any difference between this rate and a minimum tax rate.

Honourable Members have just said that if we set a minimum wage, our competitiveness will be reduced. In fact, production costs comprise the prices of land, raw materials, capital and labour. Land prices are expensive in Hong Kong and I do not need to elaborate this for Honourable colleagues have touched upon this for many times. Raw material prices cannot be controlled by Hong Kong as the prices are set by other countries that sell us raw materials and we cannot control capital neither. Therefore, I hope that banks will abolish the Interest Rate Agreement as soon as possible so that they will compete among themselves to the benefit of SMEs. Many operators of SMEs in Hong Kong lack bargaining power before property developers and banks over prices. The most convenient way in which they can regain competitiveness and reduce costs is to wield the axe at on wage earners who do not have bargaining rights. If there is no collective bargaining rights and minimum wage in Hong Kong, wage earners will become the first target any time. If there is legislation to protect wage earners, they will think of ways in which they can bargain with developers and ask for rent reductions or bargain with banks so that they can borrow money at lower interest rates.

Oligopolies still exist in Hong Kong and they increase the operational costs of SMEs. Property development is monopolized and food establishment operators encounter fuel supplier monopolies. When the Secretary for Economic Services occasionally said that the prices of gasoline and petrol should be reduced, prices were slightly reduced but secretly increased soon afterwards. Liquefied Petroleum Gas prices have recently increased. I hope that the Secretary for Economic Services will say something now so that the relevant prices will be reduced. In addition, since manufacturing industry quotas are monopolized by some large factories, the production costs of SMEs have to include quota prices. As a result of monopolies, the operators of SMEs may be more miserable than their employees, and poor bosses are struggling against poor workers. Why can we not legislate to protect the workers?

Madam President, let me now turn to collective bargaining rights. Mr James TIEN worries that employers employing less than 20 workers will be harmed if workers have collective bargaining rights. I ask him not to be worried because the relevant legislation has already been frozen and repealed. Even if there is such legislation, only workers in an enterprise employing more than 50 workers can bargain collectively, and workers in an enterprise employing 20 to 50 workers only have the rights to be consulted. I hope that Mr James TIEN will set his mind at rest.

Madam President, I still brood on a piece of news about a single mother I read in early 1998. She had a part-time job at McDonald's apart from a few more part-time jobs and she could only sleep for four hours every night. She went to sleep one night but never woke up again because she had broken down from constant overwork. Do more similar incidents have to happen before we will consider the moral request of Mr LEE Cheuk-yan to set a minimum wage?

Thank you, Madam President.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, several Honourable colleagues remarked earlier that the labour-management relationship in Hong Kong had demonstrated a high degree of harmony in the past. Therefore, it would not be essential to enact so many pieces of labour legislation to impede the development of this relationship. I want to tell those colleagues that while our labour-management relationship seemed to be harmonious in the past, is it really like that deep inside? Perhaps we can look a little back into the past when many manual workers faced such predicaments as low wages, long working hours and no protection in terms of vocational safety over a prolonged period of time. In fact, this happens everyday and can be found everywhere. Wage earners cannot express their own opinions. This is mainly attributed to the fact that the existing labour legislation is unable to protect them. If they express their views, they might lose their jobs the next day. When wage earners are asked to choose between rice bowls and dignity, they will frequently be forced to opt for rice bowls. Therefore, they can only endure in silence. The actual situation is not so satisfactory as some Members have said.

In fact, we can say that we are both happy and yet quite sad that we can enjoy the Labour Day holiday this year. This is because Labour Day serves to bring out the message that workers are now being respected for they can have eight-hour work, eight-hour labour and eight-hour rest. However, our workers still cannot receive such treatment. In this tragic situation, we can find unemployment, wage reduction and welfare reduction almost every day. Over the past two years, Madam President, the cases that I, as a member of a labour organization, received every day were all concerned with wage reduction proposed by bosses, dismissal of workers or refusal of bosses to pay wages to their employees.

Of course, Members can say that this is all attributed to our economic situation. But I would like to ask Members to look back. What was the situation when the economy was prosperous in the '50s, '60s, '70s or '80s? In fact, the situation of workers remains nearly the same. Similarly, they are put in an environment where wages are low, working hours long, jobs are insecure and personal safety unprotected. Let us not to bother about working hours for the time being. Let us look at industrial safety only. Actually, the figure of industrial casualties is constantly rising, reflecting the dark side of the harmony that Members would not like to know.

Recently, the Government took the lead to cut wages by 30%. As even the Government, the biggest employer, took the lead in doing so, other small and medium enterprises or organizations will definitely follow suit. If we are really to celebrate Labour Day, then we have to ask the Government not to do something like that. It should instead consider in concrete terms how to improve the livelihood of the wage-earning class to ensure that they will not get more run-down every year.

Just now, many colleagues mentioned such issues as a minimum wage and a progressive tax regime. Many of them objected to the setting of a minimum wage, fearing a minimum wage will turn into a "highest wage" or, even worse, they might "end up doing harm despite their good intentions" and, as a result, many people will lose their jobs. I think what will really turn out may not necessarily be like this. Let us look at other countries which have set a minimum wage. What happens to these countries is not like this. Let me cite the United States as an example. The United States has constantly adjusted its minimum wage in recent years. During the two years between 1996 and 1997, the hourly pay was raised from US$4.25 to US$5.15. However, its unemployment figure has not risen for the past three years. On the contrary, it is going downward. The unemployment rate in the United States in August 1996 was 5.2%, but 4.2% in March 1999 ─ a downward movement in the unemployment rate. Just now, some Members remarked we might "end up doing harm despite good intentions", whereas Mr LAW Chi-kwong maintained he did not see any reason suggesting something like that would not happen. However, the relevant figures published by the United States have illustrated the fact that the setting of a minimum wage will not necessarily lift the unemployment rate. Therefore, I would like to ask Members not to express their views blindly.

Under the current economic situation in Hong Kong, more attention should be focused on internal spending. If wages of the public go on dropping, how can we expect them to spend? If no one spend their money, a vicious circle will be resulted. On the contrary, if wage earners make better earnings, they will then have a definite spending power. This is going to stimulate the economy. Therefore, we should not only concentrate on saying that some organizations will not be able to afford a minimum wage and they will thus face closure. This is not necessarily the truth.

If Members have to look at figures, they can make reference to what happens in other countries. As far as I know, nearly 30 countries have set up a minimum-wage system. Why do Members not see for themselves whether these countries are performing so badly? Why do we not do some research? As the Secretary has so many resources, he should do more statistical work to let some Honourable colleagues understand what is really going on.

As regards the progressive tax regime, I think the disparity between the rich and the poor is extremely serious at the moment. Those who have made a lot of money are not necessarily required to pay a proportionate rate of tax. As a result, members of the grassroots level have to shoulder some burdens similar to indirect tax. If we do not improve the existing tax regime, it will only constantly add pressure on the livelihood of the people at the grassroots level.

I am now going to put forth several proposals for the Government's consideration: first, as proposed by Mr LEE Cheuk-yan, to enhance the degree of progression with respect to income tax rate; second, to consider levying progressive profits tax; and third, to adjust the current practice of requiring even people of the grassroots level who have meagre incomes to pay rates.

Thank you, Madam President.

MR LAU KONG-WAH (in Cantonese): Madam President, some Honourable colleagues have expressed different opinions on some of the remarks and observations made by Mr LEE Cheuk-yan, so I do not intend to repeat them here. Nevertheless, I strongly believe self-adjustment made by the labour market would provide the best solution.

I recall that during the financial turmoil last year, Members from the Frontier were strongly in favour of free economy and opposed government intervention when we discussed how to deal with the assault on Hong Kong by international speculators. Now, in less than one year, why do they actively advocate government interference in dealing with issues related to the labour market? Why do they ask the Government to "soften its stance" when international speculators are intervening in our market and, on the contrary, ask the Government to "hold fast" to a certain line when the economy and wages are adjusting downward? Why do they put forward the free economy concept in the capitalist market while advocating active intervention in the labour market? In September last year, Miss Cyd HO, representing the Frontier, announced in this Council in a dignified manner that the Frontier was firmly against the Government's intervention in the market. But this year, the Frontier firmly supported the Government's move to intervene in the market. What school of free-economy philosophy is that?

Just now, some Members put forth the opinions given by some academics. stating that a minimum wage would not push up the unemployment rate. But actually, we can also quote some other academics to illustrate that the situation may turn out to be the opposite, that is, a minimum wage would push the unemployment rate up. In fact, the opinions held by academics are like many of those held by lawyers: when one school of thought is advanced, another school of thought will emerge. I think it is most important for us to look at the actual situation of Hong Kong.

Madam President, over the past few days, some people advocated that Hong Kong should set its minimum wage at the level of $6,000. But actually, the wages offered by many jobs nowadays are below $6,000. How will Mr LEE Cheuk-yan make his choice if he is an employer? We have three options as follows: The first option is to immediately raise the wages of his subordinates, who were originally receiving a wage of $4,000-odd, to $6,000. Will he choose this option? The second option is to change these workers into casual or part-time workers. But in so doing, it will worsen the phenomenon of "impoverishment resulting from casualization" as put forward by Mr LEE Cheuk-yan. The third option is to wind up business because of escalating costs. In this case, the great majority of Hong Kong enterprises will face closure. Which option will Mr LEE Cheuk-yan prefer?

In the previous motion debate held earlier, I did not quite agree with some of the observations made by Mr LAW Chi-kwong. But in this motion debate, I wholly agree with him. Just now, Mr LAU Chin-shek mentioned the question of human nature. But if doing so will push the unemployment rate up again, it will similarly lead to a problem pertaining to human nature. In my opinion, the decision of not to support the setting of a minimum wage is not the same as being immoral, and not to support the setting of a minimum wage is not tantamount to being inhuman. This hat is virtually too large.

Madam President, I have always put forward a rationale and, that is, wage earners in Hong Kong are to prosper and survive with business operators simultanously: When we ask wage earners whether they can survive, we should, at the same time, ask business operators whether they can survive as well. Bearing the same rationale in mind, when business operators aim only at making profits, they should also think about the fundamental interests of wage earners. Therefore, the aspirations of the labour sector as put forward by Mr CHAN Wing-chan are in line with the actual situation. I will therefore support Mr CHAN's proposal wholeheartedly.

Mr LEUNG Yiu-chung quoted the experiences of foreign countries, particularly the experience of the United States, and this is actually a very sensible move. But unfortunately, he has left the Chamber. According to him, the unemployment rate in the United States has not risen after the setting of a minimum wage and, on the contrary, the employment rate has risen. My question is: Is the economic performance of the United States really a result of the setting of a minimum wage? Can the setting of a minimum wage really reduce the disparity between the rich and the poor? Having implementing the minimum wage system for a few decades, the disparity between the rich and the poor in the United States is growing even bigger. Does it mean that Mr LEE Cheuk-yan has identified a wrong prescription?

Madam President, in the early 1980s, the United States witnessed a downward economic adjustment and a rise in unemployment rate, a situation similar to what is happening in Hong Kong at the moment. But the United States concentrated all its efforts on creating wealth. This explains why the United States has registered economic growth over the past few years. Obviously, this was definitely not due to the setting of a minimum wage. On the contrary, this was because the United States had sharpened its competitive edge, introduced innovative industries and made a lot of efforts in creating wealth.

If we make a comprehensive survey of the global situation, we can see that wages in high-wage regions will go down while wages in low-wage regions will go up as a result of the growth in cheap labour force and opening up of markets and the fact that capitals are flowing freely. This phenomenon can fully be explained by the fact that the shifting of Hong Kong businessmen towards the north has resulted in wage adjustments in both Hong Kong and the Mainland and this is what market force means. I do not believe a government can stand in the way by legislative means.

Actually, one important measure a welfare state will adopt is to require strictly for the setting of a minimum wage and an extreme progressive tax regime. This system has been practised in western countries for a few decades and we can see many examples of failure illustrating that this system will not only aggravate the burden on society, but also lower the competitiveness of a country. What happened to the United States in the early 1980s is obviously a lesson of failure.

Therefore, what Mr LEE Cheuk-yan has done wrong is to learn from the failure of advanced countries while giving up the successful experiences that Hong Kong gained in the past. I see that Mr LEE Cheuk-yan is vulnerable for his proposal might push up the unemployment rate. I also see that Mr LEE Cheuk-yan is unwise for his proposal might trigger off contradictions among different classes. On the surface, what he proposes will arouse admiration. But actually, it will destroy the peacefulness of society. As the saying goes, "gossip is a fearful thing". The remarks made by Mr LEE Cheuk-yan is indeed fearful.

Madam President, the only merit of the financial turmoil is that it has given the people of Hong Kong an opportunity to rethink. There are four options before us: First, whether we should discuss more about enhancing or weakening our business environment; second, whether we should discuss more about sharpening our competitive edge or stepping up government intervention; third, whether we should discuss more about creating wealth or distributing wealth and, finally, whether we want to be self-reliant or continue to rely on the Government. This is also a choice for Hong Kong.

Thank you, Madam President.

MR AMBROSE CHEUNG (in Cantonese): Madam President, I would like to speak on the question of a minimum wage in today's debate. I wish to comment in particular on some of the arguments advanced by the Government.

I personally do not support the immediate introduction of a minimum wage, but I have found that the Government has totally denied the practicability of a minimum wage whatsoever. The Government's conviction lies in the self-adjusting mechanism of a free market economy in solving all problems of inequality.

I would like to focus on two fronts; firstly, from a social justice point of view and secondly, from an economic point of view which is what we are talking about.

From a social justice point of view, I consider that if a safety net and a decent level of are to be established so that every one in the labour market can lead a decent life, both the Government and every member of the community should assume this responsibility.

If we look at this question from an economic point of view (this is what the Government does) rather than a social justice point of view, an ordinary textbook on economy will tell us the various unfair phenomena created by a market economy and these happen to be appearing in Hong Kong in the form of a widening gap between the rich and the poor.

Let us look at the experiences in other countries. In fact, the number of countries in the world that have imposed minimum wages is in the region of 60 to 70, if not 80. The concept of a minimum wage was put to practice in such market economy as that of the United States as early as 1938.

A free market can make adjustments in normal conditions. But can it do the same at a time of an economic downturn and uncertainty? When the supply and demand of labour is out of balance in which the supply outstrips demand and there is an unhealthy competition in respect of wages, a free market will not be able to make the adjustments.

I would like to cite an example. The previous debate was about whether there would be an influx of mainlanders into Hong Kong. If these people come to Hong Kong unsystematically, it will definitely bring a considerable impact on the labour market in Hong Kong where the abundant supply of labour will be more than what the economy can absorb, thereby upsetting the balance in supply and demand, which is difficult to be regained without government intervention.

Mr LEUNG Yiu-chung mentioned the situation in the United States. Does a minimum wage have a direct bearing on unemployment rate? Those who say yes and their opponents have many arguments. Even economists fail to reach a conclusion on this question. The United States raised its minimum wage in 1996 and 1997, but its unemployment rate stood at 4.85%, the lowest in 20 years. To the contrary, the employment rates in certain industries increased after the minimum wage was raised. This was because workers would rather live on social welfare payments than work if wages were far too low. However, when the wage level was raised, it was easier for certain industries to employ workers. Fast food restaurants were a case in point.

Let us then see whether employment rate will really go down and become unacceptable. As a matter of fact, many studies have indicated that if the minimum wage is increased by a certain percentage point, say 10%, the employment rate among young people may shrink by about 1% or 2 % while the decrease in adult employment rate is negligible. Therefore, many studies have concluded that no direct relation exists between minimum wages and employment rates.

Actually, the key question is the level at which the minimum wage should be set. Some suggest $5,800 or $5,700. I want to reserve my judgment on whether such a level is reasonable or not. But generally speaking, minimum wages are normally set at about 40% of the median wages of those countries, which is much lower than the equilibrium of the labour market. If the minimum wages are set at this level, will they have a significant impact on current wages of workers at small and medium enterprises? I will draw my conclusion after obtaining more information.

I think that the concept of a minimum wage is feasible provided it does not affect employers too much while, at the same time, it can ensure that the basic needs of low-income people are met. Therefore, adjustments of a free market or free economy may not necessarily be the only solution to the problem. Even though I am not in favour of setting a minimum wage right now, I disagree to the argument that the concept of minimum wages will never be needed or feasible.

Thank you, Madam President.

DR LUI MING-WAH (in Cantonese): Madam President, on the eve of the May 1 Labour Day, Mr LEE Cheuk-yan has proposed to "set a minimum wage" and "institute a collective bargaining system", which is very timely and attracts the attention of various sectors. Although I do not support either his motion or Mr CHAN Wing-chan's amendment, it is after all a good thing that we raise this topic for another discussion as both employers and employees are very concerned about it.

Madam President, there are three reasons why I object to them. First, Hong Kong is a free economy where both the labour market and the reward for labour are determined by supply and demand in the free market. This is the fundamental principle of a free economy. There is no reason why we should intervene in it.

Second, the wage is the most important item in calculating their costs by the industrial and business sector. Its rise and fall are determined by the market. When the economy is booming, like 10 years ago, wages could be raised four time a year and the employer and the employee could both share the fruit of the prosperity. But when the economy is slack, the supply and demand are automatically adjusted and the wages are lowered to reduce the costs. Thus, enterprises can survive and employees can keep their jobs. Is this not very good? Everybody should give some thought to why the manufacturing sector of Hong Kong relocated their operation to the Pearl River Delta. They were driven away by the high land prices and high wages in Hong Kong. Let us think again. After the financial crisis, many Southeast Asian countries have been recovering quickly while the economy of Hong Kong is still shrinking. Our competitiveness, being affected by the high land prices and high wages, has yet to be able to regain its vigour. All people in Hong Kong still have to suffer for some considerable time.

Third, it is very hard to determine what the minimum wage should be. Theoretically, the wage is the reward for work set under certain conditions agreed upon by both the employer and the employee. If the Government sets a minimum wage, determining a figure by administrative means, it may not be acceptable to both the employer and the employee at the same time. This will only arouse the resentment of the employer and the employee, consequently tipping the social balance and causing negative effects on the community. Other Members who have spoken have also talked about problems in this regard and so I will not repeat.

Owing to the above reasons, it is not feasible to set a minimum wage at this stage. Therefore, I will not support Mr LEE Cheuk-yan's motion. Thank you.

MR LEE WING-TAT (in Cantonese): Madam President, originally I did not intent to speak. Before after listening to the criticism made by Mr LAU Kong-wah against Miss Cyd HO, I am not quite convinced. Although I am not a member of the Frontier and the position I hold today is not the same as that held by the Frontier, I think we should be fair in our comments. Mr LAU Kong-wah criticized Miss Cyd HO and the Frontier for supporting the adoption of a free economy when the Government intervened in the market last year and, on the contrary, supporting the Government to intervene in the labour market. In fact, the Democratic Alliance for the Betterment of Hong Kong (DAB) did the same thing too. Last year, the DAB supported the Government to intervene in the market. But today, it objects to the Government's intervention in the labour market. This is in fact tantamount to making two different criticisms by saying the same thing.

I feel that Mr LEE Cheuk-yan is being very candid ─ our positions are different and I will criticize his proposal later ─ he supported this proposal and so he boldly wrote it out and presented it to this Council for debate. Once I ran into Mr CHAN Wing-chan. I asked him whether or not he agreed with Mr LEE Cheuk-yan's proposal of setting a minimum wage. Mr CHAN said that he did not agree with it. Yesterday, I ran into Miss CHAN Yuen-han and I asked her whether or not she agreed with this proposal. She remarked that she supported it. Even the Hong Kong Federation of Trade Unions (FTU) held two different opinions. But it seems that the FTU has not indicated specifically whether or not it supports the setting of a minimum wage. Judging from this point, Mr LEE Cheuk-yan is more lovely for he has frankly stated his own position, no matter whether or not other people are in support of his proposal. If I use my own word to describe him, I would say that he is "affectionately stupid". And this is right. How did the DAB deal with its relation with the FTU then? Basically, as what was said last week, there are one party, 10 members as well as two different schools of opinion. Now concerning the issue of minimum wage, the same thing might happen again. I feel that even if we are to make criticism, we should not go too far. Otherwise, it will be like "the pot calling the kettle black".

I want to talk to Mr LEE Cheuk-yan about this issue. In fact, I have known Mr LEE for a long time. Very often, he went a bit too far in making criticism. As a member from the Democratic Party, I am regarded as being more inclined to the left. When I was studying in the university, Mr LEE Cheuk-yan was two years more senior than me. Both of us read books written by Marx and Lenin. At that time, one who had not read the contradiction theory and dialectics would be barred from joining the students' association. At that time, we were also inclined towards socialism. Socialism is literally very beautiful ─ all people work according to their ability and are rewarded according to the efforts they have made. Although people are not rewarded according to their needs, it is already very idealistic if they can be rewarded according to the efforts they have made. In universities, if one was not inclined towards Marxism or Leninism, one would definitely have no ideal. Many of my university alumni are now working in government departments. Some of them are even high-ranking officials. Actually, they are also inclined towards Marxism, but I will not speak out their names for fear that they might be dismissed. I find that these people are indeed very lovely for they all have their own ideals. But as far as implementation is concerned, can socialism solve the problems pertaining to inequality of wages or incomes, so to speak literally, over the past few decades? Insofar as implementation is concerned, this has been proved to be impossible.

Of course, Mr LEE Cheuk-yan might say we are now talking about wages rather than socialism. In fact, more than 80 countries ─ more than 80 countries, not more than 20 countries as mentioned by Mr LEUNG Yiu-chung ─ now have a minimum wage. Insofar as the proposed minimum wage is concerned, if you ask economists, nine or nine and a half out of 10 will raise objection; if you ask unions or people dealing with labour interests, nine out of 10 might agree. This issue will remain debatable in many countries and communities. Therefore, I do not think we can drawn an absolute conclusion. What I mean is the setting of a minimum the wage will not make the unemployment problem disappear. Nor will it improve the wages of workers so that they can earn more than $5,000 each month and eliminate all other negative impacts. I also disagree with some friends of mine who are from the commercial and industrial sector who said that with the setting of a minimum wage, the economy will crumble. I think this involves a lot of issues pertaining to give and take. Therefore, I hope Mr LEE would not say in future that objecting to the proposal of setting a minimum wage is the same as betraying the interests of the citizens or riding on the heads of the people. This is not very nice to the ear. I think he has gone too far.

Recently, a mayor from London, United Kingdom came to Hong Kong. We asked him how liberalized the government under the British Prime Minister was. He said that it was even more severe than the Conservative Party, that is to say, more "right" than the Conservative Party. Mr LEE Cheuk-yan, one day you might have a chance to rule. Once you touch on this issue when you rule, other people might refer back to what you said 10 or 20 years ago, that is, not setting a minimum wage is the same as riding on the heads of the people or the same as betraying the interests of the citizens. Perhaps when you handle your business ......

MR LEE CHEUK-YAN (in Cantonese): Madam President, I wish to seek an elucidation.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, do you want to elucidate what you said or the remarks made by Mr LEE Wing-tat?

MR LEE CHEUK-YAN (in Cantonese): I want to clarify the remark "riding on the heads of the people" that Mr LEE Wing-tat made. But I am not sure whether he will give way.

PRESIDENT (in Cantonese): Mr LEE, if you want to elucidate what you said, you have to wait until Mr LEE Wing-tat has finished his speech. But if you ask to elucidate what Mr LEE said just now, you can interrupt at this point. I will let you speak later, all right?

MR LEE WING-TAT (in Cantonese): Fine. But if I have quoted him wrongly, I would like to make an apology. But I have heard many Members quote the remark "riding on the heads of the people".

In any case, I think this is not an absolute issue, and there is a need for debate. Therefore, the position held by the Democratic Party today is not to object to this proposal. We would prefer to hold a debate on this issue. I agree with Mr LEE Cheuk-yan that there is a need for a debate. But at what level should the minimum wage be set? What Mr Ambrose CHEUNG said just now is very reasonable and, that is, if the proposal one makes is only a slogan, it will be very attractive. "Minimum wage" is a very attractive expression but at what level should it be set? Some people said it should be set at the median wage level. According to Mr Ambrose CHEUNG, the normal standard adopted by countries over the world is 30% or 40% of the median wage. Insofar as Hong Kong is concerned, it will then be approximately $2,000 or $3,000, which is less than the $5,000-odd that I mentioned earlier. This is what we need to debate. Let us not insist it is a matter of right or wrong. I hope, in a healthier debate, we can see Members give their incisive views on this issue, instead of pushing their views to the extremes and saying that those who agree are definitely standing by the interests of the citizens, while those who disagree are definitely riding on the heads of the people.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan, do you want to elucidate what you have said?

MR CHAN WING-CHAN (in Cantonese): Yes, Madam President. Just now Mr LEE Wing-tat said that he once asked me whether I objected to the minimum wage proposal put forth by Mr LEE Cheuk-yan. I told Mr LEE Wing-tat at that time that the Hong Kong Federation of Trade Unions had still not reached a clear final decision with respect to the minimum wage issue. I did not say we objected to the minimum wage proposal. Perhaps Mr LEE Wing-tat had misunderstood what I said. What he quoted just now is therefore incorrect.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, do you want to elucidate?

MR LEE CHEUK-YAN (in Cantonese): Madam President, I only want to elucidate. I have never said that the Democratic Party is riding on the head of the people. It was Mr Albert CHENG King-hon who said so. Thank you, Madam President.

MR LEE KAI-MING (in Cantonese): Madam President, originally I did not intend to speak. But being a representative of the labour sector, I cannot refrain from speaking on this important issue. Originally, I thought there would be heated response from the industrial and commercial sector, but regrettably only several Members have spoken. Nevertheless, I think their viewpoint is acceptable for our basic position should be like that.

I want to focus on three points only. First, no matter how many different views we have, I am pleased to see that the Government of the Hong Kong Special Administrative Region (SAR) can designate Labour Day as a holiday and celebrate this day by holding an official banquet. This is because, unlike other holidays, Labour Day marks the day on which people from the labour sector fought in unity. I think we should be pleased to see that the official side can finally ratify this day. Of course, some people consider no celebration should be held during this difficult period. But in any case, we are given one more paid holiday.

Second, although the SAR Government has given the labour sector an honour by way of a holiday, the way it has dealt with the current economic recession and financial turmoil is disappointing. If it would be too harsh for us to criticize the SAR Government for "doing nothing", then at least we should criticize it for "taking inadequate measures". In stressing a free market and a free economy, the Government's power is indeed limited. In fact, what can the Government do? The concept of free market and free economy does not mean that there should absolutely be no intervention. For instance, there are anti-dumping intervention, anti-monopoly intervention and even "anti-cut-throat" intervention. Even a free economy and a free market exercise self-intervention. The problem lies in whether or not intervention is beneficial to the community as a whole. But as far as unemployment is concerned, I fail to see what concrete measures the Government has in mind to solve the problem. What is more disappointing is that government organizations have even thrown the Civil Service out into the market. The current situation in the market is already very bad. The Government has even introduced such ideas as corporatization, privatization, sub-contracting, casualization as well as contract system and so on to the Civil Service. The Government is definitely trying to alter the market instead of making market adjustment in our free economy. This is why I said in the Budget debate that the Government should come under fire for it was trying to, at a time when supply exceeded demand in the market and when the labour sector was having no bargaining power, carry out reform to the Civil Service. In doing so, the Government is actually like adding to the misfortunes of a man who is already unfortunate for the salaries of the Civil Service will be suppressed, thereby making the salaries of the community to drop further.

My third point, concerns the minimum wage as mentioned by Mr LEE Cheuk-yan and current assistance offered to low-income people by the labour sector. The issue of a minimum wage has been debated in Hong Kong for a long time. I recall a labour expert from the United Kingdom compiled a report in 1968 concluding that it was not suitable for Hong Kong to adopt a minimum wage. From then on, constant disputes have been going on in this area. On 27 May, the Legislative Council Panel on Manpower will debate a report compiled by the Research and Library Services Division. The theme of this report is about the implementation of a minimum wage in countries all over the world. Therefore, I do not want to devote too much time to minimum wage today as we still have the chance to continue with this discussion.

The concept of a minimum wage does not necessarily mean a uniform minimum wage. Each trade, each type of job can determine its own minimum wage. The labour sector is of the view that discussions on the issue of minimum wage can continue. Now the proposal on assisting the low-income people has been forwarded. This is all because we see that the current unemployment problem is very serious and that the number of unemployed people receiving Comprehensive Social Security Assistance (CSSA) has been rising sharply. The main reason for these unemployed people to choose CSSA rather than employment is that the wages they earn might even be lower than the CSSA payment they receive. Members should be aware that CSSA payment is only sufficient for a recipient to maintain a minimum living standard. This is also called "adject poverty" assistance. In fact, unemployed workers are not willing to accept this. They all hope to lead a dignified life by relying on themselves. But they are left with no alternative. Their wages are now subject to the so-called "cut-throat" competition. At the moment, the industrial and commercial sector is rallying against "cut-throat" competition. But on the contrary, such competition is going on in the labour sector, with wages going down as the competition continues. Under such circumstances, the Government should offer certain support to low-wage jobs if it is to discourage more people from receiving CSSA. For instance, it should determine a median wage or wage standard. When wages drop below a certain amount, the Government will have to offer partial assistance to discourage people from receiving CSSA. This notion has in fact been mentioned in Mr CHAN Wing-chan's amendment to Mr LEE Cheuk-yan's motion. Insofar as this point is concerned, there should not be any major dispute. What Mr CHAN hopes for is to set a minimum standard so as to enable unemployed people or low-income workers to lead a dignified life without resorting to CSSA.

Therefore, on the unemployment problem, some Members from the industrial and commercial sector said earlier that we are all sitting in the same boat ─ you have your difficulty and I have mine. But the problem is you might know how to swim and have a life buoy as well as a life jacket. But I do not know how to swim and I do not have other equipment either. Therefore, I might get drowned. Even if we are sitting in the same boat, the labour sector will be the first to get drowned when the boat capsizes. We can see that there is a constant rise in the number of people receiving CSSA due to unemployment. What about the number of people receiving CSSA due to bankruptcy? Judging from the ratio, the industrial and commercial sector should indeed lend a helping hand to the unemployed rather than "give each of them 50 slaps". This is not fair for the unemployed might be forced to apply for CSSA because they have nothing to rely on for the purpose of sustaining their livelihood. This problem can be illustrated by the dramatic rise in the figures. But why has this problem come about? The answer is very simple. In order to solve the unemployment problem, some countries resort to reducing working hours, like cutting weekly working hours from 38 hours to 33 hours or even 30 hours. Some people only work five days so that the unemployed can work for the remaining hours. But in the case of Hong Kong, even the labour sector dares not put forth this suggestion. This is because workers find it difficult to make a living and so they are forced to work longer hours to maintain their livelihood. How can they accept five-day work or shorter working hours? The suggestion is originally a good prescription for tackling the unemployment problem. Of course, it is not a panacea but still it is one of the solutions. Nevertheless, even the labour sector in Hong Kong dares not put forth this measure. This shows that the labour sector fully appreciates the hardships faced by the workers in Hong Kong.

Therefore, what solutions will the Secretary offer to these problems? I can only criticize the Government for "doing nothing and taking inadequate measures". Thank you, Madam President.

MISS CHAN YUEN-HAN(in Cantonese): Madam President, the Labour Day on 1 May 1999 is going to be the first paid holiday in the history of Hong Kong. I think it has some significance as it symbolizes that all sectors across the community recognize the importance of workers in Hong Kong.

The relevant ordinances were passed by the Legislative Council. As the Labour Day draws near we can see the labour sector in Hong Kong, be they right, left or neutral politically, unite together to release the 1999 "May 1 Declaration" in which some issues were raised. Although our community recognizes the importance of workers and reward them with a paid holiday, what has become of them after the financial turmoil? It was against this background that the labour sector released the "May 1 Declaration".

I am not going to repeat those points made in the speeches of CHAN Wing-chan and Mr LEE Kai-ming made a while ago. I feel, however, I must say a few words about several things which I hope the Government can consider. As Hong Kong, acclaimed as a civilized, progressive and free society, enters the nineties, what is happening to the workers as the financial turmoil rages? Like the community, the workers are completely not what they look like on the surface.

In the past year or so, we have dealt with an enormous number of labour disputes. Incidents of wage reductions, benefit cuts and retrenchments took place one after another. In large, small or medium companies alike, when employees opposed the proposals put forward by the employers, there could only be one outcome: They would be dismissed. In the beginning of last year, employees tended to be more resistant in labour disputes. Towards the middle of the year they dared not say much. Towards the end of the year, they told me they did not need my help; instead they would deal with their problems by themselves. They were scared by reductions in wages and welfare, and even by retrenchments. To date, I am still working on some labour disputes, and workers are still struggling. At midnight last night, some workers approached me for help on matters about wage and welfare reductions. They however were reluctant to come forward today. What are they afraid of? They are afraid that they would be dismissed if they put forward counter proposals. This situation is true of employees in big institutions such as the Hongkong Telecom. This phenomenon does not fit the overall image of the community. Under the existing Employment Ordinance, when an employer wants to implement reductions in wages, welfare or remuneration, consent of the employees is required. Those who are familiar with the law can tell that mutual consent is required. But very often terms were changed unilaterally. We told the Government the law could not be enforced. What can we do? Do we need to amend the relevant law so that it can be enforced to protect both parties by enabling employees to use negotiation mechanisms to hold discussions with employers? Eventually, at our request the Government formulated some Guidelines in December last year. Miss J.A. WILLIS, then Commissioner for Labour, told me she would try to apply the guidelines from Singapore to Hong Kong. But what are the results? It did not work because the Guidelines were not law and could not offer any protection. A similar postion is true of civil servants. The reform of the Hong Kong Housing Authority (HA) is an example. The Director of Housing said he needed to submit the consultancy report to the HA before any discussion was possible. He took an umcompromising stand.

Madam President, why can we not conduct negotiations in a friendly manner? We hope to foster amicable labour relations. We want to help each other to tide over the difficulties. Why do we not sit down and talk about ways to prepare Hong Kong for a better tomorrow? I hope the Government can see collective bargaining seriously and offer protection to workers who take part in unionist negotiations. This is protection that should duly be offered by a civilized society and the Government should not be shy in offering it.

In addition, in the wake of the financial turmoil, workers lack negotiating power because of the large army of jobless people. I wrote an article entitled "Labour is invalulable", but then I thought it was not well-worded and did not publish it. We have no negotiating power, and indeed most of the middle to lower level employees or even the managers have no negotiating power. In the forties, the Government formulated a policy for minimum wage to protect workers and we are in a similar situation now. At that time, Hong Kong workers found themselves in misery and regarded it necessary for the Government to offer protection in the form of a minimum wage. And the Government accordingly offered the same by formulating a policy. However, as the economy recovered after the War, the related issues, as pointed out by Mr LEE Kai-ming, were discussed only sporadically. As the economic development gained momentum, these issues seemed not to be important anymore, evident in the attitudes held by the labour sector. We think that it would be an inappropriate thing to do if we find there are problems but refrain from bringing them up for discussion. The reason is that the wage level is nose-diving. In the retail industry, a 9 to 11 job brings an income of $4,000 to $ 5,000, which is what worker got in the seventies.

Faced with that kind of situation, we need to discuss the matter openly across the community. We need to consider solutions such as a minimum wage or other means to address the problem. Some say things will go better tomorrow but I do not see any signs for that as the labour force has no negotiating power in the market. A moment ago, Mr LEE Kai-ming said we would be having discussions in the Panel on Manpower because we see the need to explore the proposal for a minimum wage. However, I think that for any improvements to be made, we must hold discussions in a sympathetic manner.

Although 1 May Labour Day has become a statutory holiday, signifying our recognition of the importance of the labour sector, I hope other sectors can think and act in the same way. It is for this reason that Mr CHAN Wing-chan from the Federation of Trade Unions his sought to amend Mr LEE Cheuk-yan's motion, referring to the "May 1 Declaration". We do not oppose the spirit of Mr LEE Cheuk-yan's motion. But we simply think that there are still some issues that warrant further discussion. So, will support Mr LEE Cheuk-yan's original motion if the amendment is not passed.

Thank you, Madam President.

MR HOWARD YOUNG (in Cantonese): Madam President, Mr LEE Kai-ming said earlier very few Members from the business sector had spoken. I did not intend to speak as I think what the business sector wants to say has been said by our chairman, Mr James TIEN.

A look at today's original motion and amendment will tell us that there is a commonality between them and that is the point about collective bargaining. However, I am not going to comment on that point. The difference between the motion and the amendment is the point about minimum wage. The stand of the Liberal Party and the business sector is very clear: we are against setting a minimum wage. From what a non-affiliated Member─I think it was the Honourable Ambrose CHEUNG ─ or even Members from the Hong Kong Federation of Trade Unions said, it seems they were saying there is room for discussions on this matter. I think there is indeed a need for further discussion among various political parties, for one reason or the other.

When Mr James TIEN spoke, it so happened no one from the Democratic Party was present. I was wondering whether the Democratic Party still supported the idea of setting a minimum wage. I seem to recall reading the Honourable LAW Chi-kwong's article in a newspaper rejecting the idea of minimum wage. Unfortunately, Mr LAW could not finish his speech within the seven-minute time limit.

I just read a newspaper cutting from yesterday describing some party members of the Democratic Party who wanted to force other members of the party to sign up in support of setting a minimum wage. I was not surprised at divergent views in a party, because similar events occurred in the Liberal Party before. I sympathize with those who have to face pressure from the lobbying by different groups as all political parties need to face such events. What I want however is to see other political parties stating their positions clearly. I understand the Frontier has been supporting the setting of a minimum wage. The Hong Kong Federation of Trade Unions has stated their views. The Democratic Alliance for the Betterment of Hong Kong appears to be against the idea. From the Honourable LEE Wing-tat's speech, it seems to me the Democratic Party is against the setting of a minimum wage but I am not sure if they want to make allowances for an about-turn after discussiosn in the community. The Liberal Party opposes the amendment. I hope more Members can object to the amendment of Mr CHAN Wing-chan. We need to oppose the amendment so that we can see clearly the stand of various political parties when we vote on the original motion moved by Mr LEE Cheuk-yan.

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

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, you may now speak on Mr CHAN Wing-chan's amendment. You have up to five minutes to speak.

MR LEE CHEUK-YAN (in Cantonese): Madam President, Mr CHAN Wing-chan said earlier the former Government House might be re-named Azalea Violet Lodge. I am afraid a unit at Portland Street would be given the same name soon afterwards, just as Mr LEE Wing-tat speculated. That would be a disaster. Mr CHAN also said in his speech we should treat Labour Day with a correct attitude, and he felt the Government of the Special Administrative Region (SAR) did exactly that, which made it different from the former British Hong Kong Government. But I need to remind Mr CHAN that the SAR Government had in fact abolished Labour Day as a paid holiday. We should have had a paid holiday on Labour Day last year. If we did, the SAR Government could then be said to have done what is justly correct.

I would like to ask Mr CHAN Wing-chan whether he treats Labour Day in the correct manner. He said he does. But what about labour problems? The Honourable Miss CHAN Yuen-han and LEE Kai-ming talked a lot about labour problems. We however thought the Administration has not treated Labour Day in the correct manner and that was why the Hong Kong Confederation of Trade Unions would be boycotting the Labour Day reception. I hope Miss CHAN may come along with us for the rally to the Government Secretariat on 1 May. We would be meeting at three in the afternoon at Victoria Park and expect to reach the Government Secretariat at 5.30 pm.

There are several points in Mr CHAN Wing-chan's amendment that I do not understand. First, why does he want to delete my original phrase about a suppression on wages initiated by both the Government and the private sector, and about polarization of the rich and the poor? In fact, they are saying the same thing. I cannot understand why they wanted to make that deletion. Second, I do not understand why the minimum wage mentioned in my original motion should be deleted. Although minimum wage was not mentioned in the May 1 Declaration of the labour sector, we can make the Declaration complete by adding the idea of minimum wage. Can one delete the part about the May 1 Declaration to enable Mr LAU Kong-wah and Mr CHAN Kam-lam to accuse me of triggering off class conflict? In fact, I think Mr CHAN Kam-lam supports the idea of setting a minimum wage. While Mr CHAN said he was still pondering over the matter, Miss CHAN Yuen-han already showed her support in the TV programme Hong Kong Affairs. Later when I read the Hong Kong Economic Journal I learned that a decision would be made on the spot. Although Miss CHAN Yuen-han said eventually she would support the idea, she indicated "some issues" would have to be ironed out. She did not say what issues these were, so I cannot tell what they are. As such, why did they delete the idea of a minimum wage? If they support the idea then they should not delete it. Is the deletion meant to allow the Democratic Alliance for the Betterment of Hong Kong to open fire at me by saying the May 1 Declaration is more realistic? But in fact Mr CHAN Wing-chan supports my proposals which are deemed to be less realistic. How can he explain that?

Originally, my entire motion is targeted at the present situation. I have no objection to adding the May 1 Declaration to it, especially when they are overlapping in such areas as collective bargaining and enhancing the protection of employees participating in trade union activities. I have no objection to deleting the overlapping parts. But can we add the parts that are not overlapping? Why do they have to be deleted? Moreover, there are certain empty parts in the Declaration, which as I hear have no solutions yet. Part of Mr CHAN Wing-chan's amendment is about assisting the low-income people in alleviating their hardships. Mr LEE Kai-ming said "the low-income people" might refer to those people on Comprehensive Social Security Assistance but I do not think Mr CHAN Wing-chan had indicated clearly how low-income people can be assisted. I was expecting Mr CHAN would say these people could be assisted by the setting of a minimum wage, but he did not. He even deleted the part on minimum wage in the end. Moreover, Mr CHAN has proposed to amend the Employment Ordinance to make it complete, and expand the protection for employees. These are rather vague notions. I think my original motion is clearer and pinpoints the present problem of low wages. It points out the solution lies in setting a minimum wage and instituting a collective bargaining system. It is with some regret that the Hong Kong Confederation of Trade Unions has to abstain in the voting on the question on May 1 Declaration.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, on the coming Saturday the Hong Kong Special Administrative Region will celebrate, for the very first time, the May 1 Labour Day in the form of a statutory public holiday. On that day, the Acting Chief Executive will host a cocktail reception. People from the industrial and commercial sector, leaders of the labour sector in particular, are invited to the reception. The development of Hong Kong from a desolate fishing village into today's international cosmopolitan city can be largely attributable to our over 3 million workers who contribute their utmost to their work at various posts and keep striving for the better. The former and incumbent Members of our legislature have spared no efforts to further the interests of the labour sector and to enhance communication between the employer and the employee. I wish to take this opportunity to extend my heartfelt gratitude to every worker and all Members.

Hong Kong is now in the process of an economic adjustment triggered off by the economic crisis. Employers and employees alike have all suffered hardships. The focus of the Government's policy is to ensure that our workforce is well-trained, highly adaptable and versatile so that we can maintain our competitiveness and exploit the opportunities that may emerge anytime. In light of that, we have gauged the current and future demand for manpower of the needy industries, such as the tourist, construction and information technology industries, and provided corresponding training and retraining to workers in these industries with a view to enhancing the skills of the overall workforce to meet these demands.

Given the present high unemployment, we will make even greater efforts to provide comprehensive and effective employment counselling services to the unemployed in order to help them rejoin the workforce and reduce the length of their unemployment period as much as possible. At the same time, we will continue to strive for a more harmonious employer-employee relationship and better interests for employees to tie in with the pace of the socio-economic development in Hong Kong.

The Government has spared no efforts in enhancing the protection for employees. It is our policy to, according to the social and economic development of Hong Kong, and under the principle of striking a balance between both the interests of the employer and the employee, improve the rights and interests of the employees progressively. In fact, the rights and benefits of our employees have been constantly improving. From 1994 to 1998, we put forward 92 labour-related proposals, which were subsequently passed by the Legislative Council.

In response to the current economic situation, the Government moved a resolution in the Legislative Council in February this year to raise the ex gratia severance payment from the Protection of Wages on Insolvency Fund (the Fund). This resolution was subsequently passed by the Legislative Council.

Moreover, to provide greater protection to employees who are owed severance payments by their insolvent employers, we proposed to amend the Protection of Wages on Insolvency Ordinance in the Legislative Council on 21 April. The amendment enables the ex gratia payment from the Fund to be calculated on the basis of an employee's wage level before the wage reduction if his employer has undertaken to do this in writing before the wage reduction. These two incidents show that the Government fully understands the difficulties faced by employees and is always prepared to assist them.

On basis of the following reasons, we do not support the Honourable LEE Cheuk-yan's motion.

Concerning the institution of a system of collective bargaining, we have repeatedly explained in this Council the Government's stand on that. In a nutshell, we do not object to the employer and the employee bargaining in a collective manner, but we do not agree to lay down in law a mandatory collective bargaining system.

In fact, the Government has always been supportive of the employer and the employee holding voluntary direct negotiations. If necessary, the Labour Department will come in to mediate. This approach is proven effective and is conducive to the maintenance of a harmonious relationship between the employer and the employee.

To further promote voluntary negotiations between the employer and the employee, the Government has set aside resources to set up a Workplace Consultation Promotion Unit and also encourages various organizations to establish an effective channel for communication and negotiation and a voluntary bargaining mechanism through a series of publicity campaigns such as forums, workshops, seminars and training courses. The Unit also provides a counselling service, giving professional opinions to organizations to help them set up a mechanism for communication between the employer and the employee or improve their existing ones. The Unit also assists in the establishment of a consultation committee for various sectors, whose members include representatives of employers, employees and the Government, to discuss the employer-employee problems faced by the sectors. Since the publication of the Guidelines on What to do if Wage Reduction and Retrenchment are Unavoidable in October last year, many employers have followed the suggestions to explain to their employees the financial situation of the company and candidly negotiate with them to work out solutions to problems that they are both faced with. Mr LEE Cheuk-yan mentioned that the Post Office had not followed our guidelines, but as far as I understand it, the Post Office has done so. It has given the employees seven days' notice to allow them to consider whether to accept the new employment terms. Besides, the Post Office will give them a non-civil service contract employment package, allowing them at least one year of stable employment as compared to the present arrangement. I am also aware that the management of the Post Office will meet with the representatives of trade unions, including Mr LEE Cheuk-yan, tomorrow to discuss these matters.

On the contrary, to institute a statutory collective bargaining system will reduce the flexibility of the labour market, and deal a blow to the operation of small and medium enterprises, in turn affecting the power of the entire economy to deal with contingencies. A mandatory collective bargaining system cannot guarantee that both sides will reach an agreement. Besides, before the employer and the employee reach a consensus on this subject, to institute a statutory collective bargaining system will only add to the strain on the employer-employee relationship to the disbenefit of both sides.

The Government is of the opinion that the present Employment Ordinance has already provided reasonable protection in respect of the rights of employees to participate in trade unions. Under Part IV A of the Employment Ordinance, any employee has the right to form, participate in, or become a member or an officer of a trade union. A member or an officer of a trade union has the right, at any appropriate time, to take part in the activities of the trade union. An employer shall not prevent or deter an employee from exercising the above rights or dismiss, penalize or discriminate against the employee by reason of his exercising such rights. An employer shall not set down as a term of employment that an employee cannot exercise these rights. Any employer violating the above provisions shall be prosecuted and liable on conviction to a maximum fine of $100,000.

In addition, Part VI A of the Employment Ordinance enacted on 27 June 1997 already contains protective provisions. An employee dismissed for exercising his rights in relation to trade unions can file a civil claim for remedies. If an employer dismisses an employee for joining or participating in the activities of a trade union, the employee is entitled for remedies by the employer by reason of unreasonable and illegal dismissal. The Labour Tribunal may order the employer to pay a remedy of not more than $150,000 to the employee. Recently, some employees have won the claim for remedies in the Labour Tribunal. This is the first successful case in this regard.

We are now reviewing the provisions on the order of reinstatement of employees and we will consult the Labour Advisory Board on the findings of the review later on.

We do not agree to the setting of a minimum wage. We have made our stand on this very clear on various occasions, including in the former legislature. Please allow me to give a brief account of our reasons:

1. That Hong Kong has become a world-renowned free market economy, other than because of the high efficiency and strong contingency power of our labour market, is also because of one very important factor, which is our adoption of a wage system oriented by the market demand. To set a minimum wage in Hong Kong will not only distort the wage structure of our labour market but also impose a bigger restriction on the determination and adjustment of wages. In particular, during an economic recession, this restriction will bring about unfavourable effects and damages on the ability of the local industrial and commercial sector and even the whole economy to adjust themselves in response to foreign impacts.

2. Leaving the wage level to the decision of the market will help ensure that Hong Kong always has a dynamic workforce who keeps striving for the better and the higher. All along, employers determine the wages of their workers according to their productivity, capability and performance as well as the financial situation of the company. Therefore, in general, our workforce is highly motivated to work hard and to receive training and retraining in order to enhance their effectiveness and efficiency. This factor, coupled with the Government's continuous investment in education, vocational training and employees' retraining, is the main force that drives the overall quality of our workforce ever upwards. To implement a minimum wage system in Hong Kong will only erode the incentive of our workers, especially those with lower skills who earn a lower pay, to improve themselves and upgrade the quality of their work. That will jeopardize the long-term development of the local economy.

3. If a statutory minimum wage deviates from the wage level determined by the market, be it above or below, it may not necessarily be beneficial to workers. On the contrary, that will have an adverse effect on their employment opportunities. If the minimum wage level is set below the market rate, employers will obviously have no difficulty in compliance. However, when the labour market slows down and the unemployment rate stands high, some employers may refuse to offer wages higher than the minimum to recruit workers with higher productivity or better performance. Under such a circumstance, the minimum wage actually becomes the maximum wage. In that case, a minimum wage will not raise the income of the workers but rather erode the workers' motivation to strive for a better education and higher productivity instead, which will in turn undermine the overall quality and competitiveness of the local workforce.

If the minimum wage level is set higher than the market rate, certain industries, especially the small and medium enterprises, would find the labour cost too high, and it would be difficult for them to maintain their competitiveness or even to stay in business. Some companies will thus be down-sized or even closed down. This will lead to an overall reduction in employment opportunities and increase in unemployment. This situation will even be more apparent when the economy is slow or during a recession. On the other hand, to off-set the high wages, the employer may set stricter non-wage-related requirements or employment terms to reduce the actual labour cost. Therefore, in any case, setting a minimum wage will not achieve the goal of protecting workers' interests.

Mr LEE Cheuk-yan has given workers' dignity as the reason for setting a minimum wage. Emotionally, I sympathize with his view, but I believe that Mr LEE also understands that when it comes to the formulation of a policy, we have to deal with the matter in a rational manner.

The Honourable LEUNG Yiu-chung has mentioned a scholar's study on the implementation of minimum wage in the United States. I am aware of the findings of the study, but I do not think that they are applicable to Hong Kong. Everyone knows that the recent years have seen such a strong economic growth in the United States that is even beyond the expectation of many scholars, including economists. The current situation is entirely different in Hong Kong. And the drop in the unemployment rate in the United States is mainly due to the large number of new jobs brought by economic growth.

I remain convinced that setting a minimum wage will not be able to protect the interests of workers.

In terms of taxation, it is our long-standing policy to maintain a simple and clear tax regime of low tax rates. When preparing the fiscal budget each year, we review all taxable items, and where it is necessary, improvements and concessions will be made. The Government always seeks to maintain the tax rate at a reasonable level and ease the burden of the public.

Over the past few years, we have made a number of concessions on the salaries tax. At present, the tax burden on the low-income earners is by no means heavy. Of the entire working population, about 60% do not need to pay any salaries tax, and those who pay a salaries tax at an actual rate of 5% or lower, including those who pay nothing, account for about 94% of the working population. In other developed areas, as compared with Hong Kong, the tax rates are much higher and the population of tax-paying workers is much bigger.

As for the profits tax, our low tax regime has given various sectors bigger capital to use on commercial investments or development of new businesses. These commercial activities create more employment opportunities which benefit the whole community.

To raise the tax rates for high-income earners or corporations may inhibit investments, affect our economic growth, which will in turn lead to increase in unemployment, lowering of our living standard, subsequently affecting all the public, including the low-income earners.

Our low tax regime is the driving force for the various strata to work hard. This regime is also an important factor that maintains the development in Hong Kong. To seek to achieve certain goals of social policy by means of taxation will have serious implications on the overall interest of Hong Kong.

The Honourable CHAN Wing-chan's amendment urges the Government to implement the requests of the labour sector's "May 1 Declaration" to assist the low-income people in alleviating their hardships, legislate for a statutory labour-management bargaining mechanism and recognize the status of trade unions in bargaining. I will explain the Government's stand on these requests.

The Comprehensive Social Security Assistance (CSSA) Scheme has all along provided a safety net for all those who are suffering from financial difficulties as a result of various social problems. Those who have financial difficulties because of unemployment or low income may also obtain cash assistance through the CSSA Scheme to meet their basic living needs. Moreover, the Social Welfare Department is working with the Labour Department and the Employees' Retraining Board (ERB) together and launched a "Support for Self-reliance" Scheme on 1 June this year to encourage and assist the unemployed CSSA recipients to look for jobs in order to re-enter the labour market soon.

To solve the unemployment problem, the first and foremast task of the Government is to help the unemployed to regain employment soon by equipping them with a necessary skill, so that they can find a job and hold it. The Labour Department has launched a series of measures to enhance its placement service. These measures include enhancing the Job Matching Programme, introducing a simple registration procedure and an on-line placement service, setting up a Job Vacancy Processing Centre and a Telephone Employment Service Centre. All these measures can help people from all strata to find jobs.

The Labour Department also has many services targeting at the low-income earners. For example, in view of the huge demand for domestic helpers, the Labour Department has set up a special counter to strengthen the placement services for domestic helpers. It also holds weekly talks on job hunting techniques and also provides information on job vacancies.

As for training, many training organizations also provide many courses suitable for lower income earners. The ERB and the Vocational Training Council have offered a nine-month course, "Certificate of Service Training (Service Industry)", which has 1 000 places especially targeted at people who have Form Three qualification or equivalent. This course that many Members, especially the Honourable CHAN Yuen-han, are familiar with started last September. The ERB also offers other tailor-made courses for domestic helpers, building managers and care providers for the elderly. A training course on shoe making is also about to begin. All these courses can help place lower-income earners.

As regards the status of trade unions, at present all trade unions registered under the Trade Unions Ordinance are statutory organizations which enjoy a legal status. These trade unions and their members/officers are immune from legal actions against them for their involvement in organizing or intensifying labour disputes. Actually, under the proven effective mechanism of voluntary negotiation between employer and employee, trade unions always provide active help to employees and play an important part in the bargaining between the labour and the management.

The entire economy of Hong Kong has undergone substantial changes over the past year. All social strata, rich and poor, have felt the impact to varying extents. Under a difficult business environment, employers must use their resources carefully. They may even lower the commodity prices to stimulate people's consumption desire. On the other hand, the average pay rise has obviously slowed down. Employees of individual organizations even have to put up with pay freezes or pay cuts.

In the face of the present situation, we have to treasure the harmonious employer-employee relationship which is the fruit of years of our efforts. I have just read an international economic magazine which reports that in the decade between 1988 to 1997, in 23 member countries of the Organization for Economic Co-operation and Development (OECD), for every 1 000 employees, the number of working days lost as a result of labour disputes is in the tens or even hundreds each year, as compared to merely about one in Hong Kong. The harmonious employer-employee relationship is a valuable asset of Hong Kong. It is the hard-earned fruit of co-operation and co-ordination between the Government, and the employer and the employee over the years. It is also one important factor in foreign investors' decision to invest in Hong Kong.

In recent months, we have seen some signs of improvement in our economy. The bank liquidity has been eased; there is a noticeable slow-down in interest rate hikes; the stock prices have bounced up and property prices stabilized. While we are working hard to revive our economy, we have to be extra cautious not to intensify the labour disputes.

The Government will continue to make an effort to implement the measures and join hands with the public to face up with and solve our current economic and employment problems together.

MR TAM YIU-CHUNG (in Cantonese): Madam President, it is now a little late and I originally did not intend to speak. But having heard LEE Cheuk-yan question the amendment proposed by Mr CHAN Wing-chan, I would like to say a few words in response to Mr LEE's remarks.

It is a good thing to discuss in this Council matters relating to the interests of the labour force in some detail, on the eve of Labour Day. The proposer of the motion certainly wants his motion to be passed, but the most controversial part in Mr LEE's motion is the setting of a minimum wage by legislation. The fact that people across the community, Members in this Council, and the labour sector hold different views about the issue. No one knows for sure whether the setting of a minimum wage can help low-income workers or whether it will only bring about more problems. As we legislate we need to consider several issues all at the same time, such as the possibility of the minimum wage becoming the maximum wage and that of the setting of a minimum wage really benefiting the low-income workers, before we have the unemployment assistance. I think these are issues to be dealt with, which cause us some concern. Everyone will be able to tell how likely it is when one brings such a controversial issue to this Council with a view to having them passed.

The six items in the May 1 Declaration are the results of some discussion in the labour sector which regarded them as urgent items. Hence I think there is significance in Mr CHAN Wing-chan's amendment as it provides one more choice for those who care about the interests of our labour force without confronting the controversial issue of legislating for a minimum wage. As such I do not think the criticisms directed against Mr CHAN were fair or reasonable.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the amendment moved by Mr CHAN Wing-chan be made to Mr LEE Cheuk-yan's motion. Will those in favour please raise their hands?

(Members raised their hands)

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

(Members raised their hands)

Mr CHAN Wing-chan rose to claim a division.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan has claimed a division. The division bell will ring for three minutes.

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

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

Functional Constituencies:

Mr Michael HO, Mr LEE Kai-ming, Mr CHEUNG Man-kwong, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Mr SIN Chung-kai and Mr WONG Yung-kan voted for the amendment.

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Dr Raymond HO, Mr Eric LI, Dr LUI Ming-wah, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr Bernard CHAN, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU, Mr FUNG Chi-kin and Dr TANG Siu-tong voted against the amendment.

Miss Margaret NG abstained.

Geographical Constituencies and Election Committee:

Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss CHAN Yuen-han, Mr Gary CHENG, Mr Jasper TSANG, Dr YEUNG Sum, Mr LAU Kong-wah, Mr SZETO Wah, Mr TAM Yiu-chung, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung voted for the amendment.

Mr LEUNG Yiu-chung, Mr HO Sai-chu and Mr Ambrose LAU voted against the amendment.

Miss Cyd HO, Mr LEE Cheuk-yan, Miss Christine LOH, Mr LAU Chin-shek, Miss Emily LAU, Prof NG Ching-fai and Mr MA Fung-kwok abstained.

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

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, seven were in favour of the amendment, 17 against it and one abstained; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 25 were present, 14 were in favour of the amendment, three against it and seven abstained. 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.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, you may now reply and you have up to one minute 53 seconds out of your original 15 minutes.

MR LEE CHEUK-YAN (in Cantonese): Madam President, after listening to Mr TAM Yiu-chung's speech just now, I am even more uncertain how the Hong Kong Federation of Trade Unions will vote later. In the controversy about setting a minimum wage, the crucial issue is unemployment. Just now, Mr LAW Chi-kwong said that the unemployment rate would be 3% to 4% higher as a result of a minimum wage. I do not know how he could say such a figure off the cuff. Will the setting of a minimum wage really lead to a higher unemployment rate? As Mr LEUNG Yiu-chung said just now, in the United States, the unemployment rate has fallen rather than risen after the minimum wage was increased by 20%. Some people might say that surely it must be since the United States economy is doing well. However, let us consider the study cited by LAM Hang-chi today which was carried out between 1989 and 1992 . At that time, the United States economy was not faring well. The study was carried out eight times and the results showed that the minimum wage did not cause a rise in unemployment. I hope Members could take a look at that book, instead of making generalizations and insisting that a minimum wage would cause a rise in unemployment. Just now, Mr LAU Kong-wah asked me to consider the matter from the point of view of owners of small and medium enterprises (SMEs). At least owners of SMEs have a choice. Workers in low-paid jobs have no choice but to grudge along.

Lastly, in signing a minimum wage bill in 1938, Roosevelt, the former United States President, had this to say: "Do not let any calamity-hauling executive with an income of one thousand dollars a day tell you that a wage of eleven dollars a week is going to have a disastrous effect on all American industries". I know that fighting alone today, I am bound to lose. However, I hope that Members would reconsider when I come back with this proposal next year, since Mr CHAN Kam-lam said that he would look into it again. I really hope that the minimum wage proposal can be realized in the future.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr LEE Cheuk-yan, as set out on the Agenda, be passed. 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)

Mr LAU Chin-shek rose to claim a division.

PRESIDENT (in Cantonese): Mr LAU Chin-shek has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Please proceed to vote. (Pause) Dr Raymond HO.

DR RAYMOND HO (in Cantonese): Madam President, there is a problem with my button.

PRESIDENT (in Cantonese): You have to press the "present" button first.

DR RAYMOND HO (in Cantonese): It is all right now. Just now there was a problem. Thank you.

PRESIDENT (in Cantonese): Do other Members have problems with their button? If there are no problems, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr LEE Kai-ming, Mr CHAN Kwok-keung and Mr CHAN Wing-chan voted for the motion.

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Dr Raymond HO, Mr Eric LI, Dr LUI Ming-wah, Miss Margaret NG, Mr HUI Cheung-ching, Mr Bernard CHAN, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU, Mr FUNG Chi-kin and Dr TANG Siu-tong voted against the motion.

Mr Michael HO, Mr CHEUNG Man-kwong, Mr Ambrose CHEUNG, Mr SIN Chung-kai and Mr WONG Yung-kan abstained.

Geographical Constituencies and Election Committee:

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

Mr HO Sai-chu, Prof NG Ching-fai, Mr MA Fung-kwok and Mr Ambrose LAU voted against the motion.

Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Mr Gary CHENG, Mr Jasper TSANG, Dr YEUNG Sum, Mr LAU Kong-wah, Mr SZETO Wah, Mr TAM Yiu-chung, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung abstained.

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

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, three were in favour of the motion, 17 against it and five abstained; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 25 were present, six were in favour of the motion, four against it and 14 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, she therefore declared that the motion was negatived.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the Council until 2.30 pm on Wednesday, 5 May 1999.

Adjourned accordingly at Eleven o'clock.

Annex I

WRITTEN ANSWER

Translation of written answer by the Secretary for Trade and Industry to Mr Howard YOUNG's supplementary question to Question 1

In the 1998 Survey of Regional Representation by Overseas Companies in Hong Kong conducted by the Industry Department, the responding companies were asked about the factors that they would consider in choosing Hong Kong as the location for a regional headquarters or regional office. The factors for consideration are hereunder arranged in order of their importance as indicated by the responding companies:

1.	Cleanliness of government
2.	Access to information
3.	Rule of law
4.	Banking and financial facilities
5.	Government economic policy
6.	Tax regime
7.	Cost of office/factory space
8.	Staff cost
9.	Infrastructure
10.	Availability of professional/technical skill
11.	Availability of managerial skill
12.	Adequacy of supporting services
13.	Linked exchange rate system
14.	Geographical location in the Asia-Pacific Region
15.	Political climate
16.	Labour productivity
17.	Local market potential
18.	Availability of suitable office/factory space
19.	Intellectual property protection

Annex II

WRITTEN ANSWER

Translation of written answer by the Secretary for Trade and Industry to Mr CHAN Kam-lam's supplementary question to Question 1

The relevant information on the 1998 Survey of Regional Representation by Overseas Companies in Hong Kong conducted by the Industry Department is attached in the Appendix for Members' reference.

Appendix

1998 Survey of Regional Representation by Overseas Companies in Hong Kong

Line of Business and Number of Employees

	Number of Companies#
Line of Business of Organizations Stationed in Hong Kong	11 Regional Headquarters which have already moved out	37 Regional Offices which have ceased operation	65 Newly Established Regional Headquarters	136 Newly Established Regional Offices
Wholesale, Retail, Import/Export	6	12	33	71
Other Business Services	3	12	13	34
Finance	2	8	9	13
Transport and Related Services	-	1	3	12
Manufacturing	1	1	4	4
Construction, Architectural and Civil Engineering	-	2	6	3
Insurance	-	1	1	3
Real Estate	-	-	-	2
Telecommunication Services	-	-	1	-
Restaurants and Hotels	-	-	1	-
Entertainment Services	-	1	-	-
Television Programme Production	-	-	-	1
Electrical Engineering	-	-	-	1
Total Number of Employees	Not known*	Not known*	3 689	3 146
# Some companies are engaged in more than one line of business
* As the Industry Department has only begun to collect information on the number of employees of regional headquarters and regional offices since it conducted the 1998 Survey of Regional Representation by Overseas Companies in Hong Kong, we have not been able to know the number of employees of the regional headquarters or regional offices which have moved out of Hong Kong or have ceased operation in Hong Kong.

Annex III

WRITTEN ANSWER

Translation of written answer by the Secretary for Trade and Industry to Mr HUI Cheung-ching's supplementary question to Question 2

Since the implementation of amendments to the origin rule in respect of footwear made in Hong Kong in February this year, no less than four footwear manufacturers have confirmed with the Industry Department that they would set up production lines in Hong Kong. In addition, five have indicated their interest to the Department. Certainly, as the decision of whether or not to set up production lines in Hong Kong is a commercial one, it is only natural that government information may not have been able to reflect the total number of footwear manufacturers interested in setting up production lines in Hong Kong.

As regards the kinds of assistance that footwear manufacturers hope the Government would provide and the Government's response in this respect, such have been explained by the Secretary for Trade and Industry in his main reply given on 28 April. Insofar as we understand it, footwear manufacturers generally would like to have assistance in areas such as loans securing, technological support and labour training. However, apart from these areas mentioned above, we believe that there are other commercial factors which manufacturers would also consider in the course of deciding whether or not to set up production lines in Hong Kong, just as they are making other commercial decisions. These factors include the tax regime of Hong Kong, business environment, related transport infrastructure, operation costs, flow of market information and so on. We do not have evidence to show that loans securing, technological support and labour training are some of the deciding factors, nor do we have evidence to support that government assistance is a prerequisite for footwear manufacturers in deciding whether or not to come to Hong Kong for investment.

Annex IV

WRITTEN ANSWER

Translation of written answer by the Secretary for Trade and Industry to Dr TANG Siu-tong's supplementary question to Question 2

At the end of March this year, the Employees Retraining Board has approved two "tailor-made" craftsmen training programmes organized by the Clothing Industry Training Authority, with the aim of assisting two footwear factories in training a pool of shoe-making craftsmen to tie in with the development of new production lines in Hong Kong.

The theme of the first programme is shoe lasting and sole attaching of sports shoes. Altogether 18 places are provided and the programme has already started on 3 May. As for the second programme, the theme is shoe lasting, sole attaching and heel attaching. There are again 18 places and the programme is expected to start this June.

All participants of these two training programmes will attend full-day basic training at the Clothing Industry Training Authority during the first week. Lecturers of the Training Authority will explain to them the structure of shoes (mainly on the types produced by the shoe factories concerned), knowledge on materials, the flow process of shoe production, as well as the basic operation of hand lasting or/and machine lasting machines, and each participant will learn to last 40 pairs of shoes. As for the second to the fourth week, arrangements will be made for the participants to practise in the factories, under the instruction and assistance of technicians of the factories and the instructors responsible, in order to be familiarized with the relevant working procedures, namely, material collection and distribution, insole attaching, toe lasting, waist lasting, heel lasting, roughing, cementing, sole attaching/sole pressing, last releasing and so on. In the three months thereafter, lecturers of the Clothing Industry Training Authority will further provide counselling on progress and technique to those participants who will be employed in the trade upon graduation.

Depending on the response of the participants and the market to these two programmes, the Clothing Industry Training Authority may consider applying further funds from the Employees' Retraining Board for the running of two more similar courses in July and August.

Annex V

WRITTEN ANSWER

Translation of written answer by the Secretary for Trade and Industry to Mr FUNG Chi-kin's supplementary question to Question 2

From what we have gathered from the trade, it is their wish that the Government could provide assistance in areas of loans securing, technological support and labour training. The Secretary for Trade and Industry has explained in detail in his main reply what the Government could do in these respects to meet their expectations. Of course, we believe that there should be a lot of other factors which footwear manufacturers would consider in deciding whether or not shoe shaping production lines should be brought back to Hong Kong, just as they are making other commercial decisions. These factors include the local tax regime, business environment, related transport infrastructure, operation costs, flow of market information and so on.

Annex VI

WRITTEN ANSWER

Written answer by the Secretary for Education and Manpower to Mr LAU Chin-shek's supplementary question to Question 3

We understand that figures on the number of employers prosecuted in respect of the claims from the Employees Compensation Assistance Fund are not kept. This is because in the processing an employees' compensation case, the Labour Department will initiate prosecution action immediately if it is found that an employer has failed to take out insurance cover as required by the law. In fact, due to the time restriction (that is, six months from the date of detecting the offence) imposed by the law on the taking out of prosecution, the decision to prosecute is usually made well before the case is referred to the Employees Compensation Assistance Fund Board (ECAFB).

To respond to the question, we find it more useful to provide the Honourable Member with prosecution statistics on employers detected for not having taken out insurance cover in reported employees' compensation cases handled by the Labour Department in 1998 and 1999.

Year	No. of cases with no insurance cover	No. of cases prosecuted	Total number of employees' compensation cases reported	% without insurance	Average fine
1998	9	2*	77 198	0.01%	$4,000
1999 (January - March)	1	1	16 636	0.006%	$4,000
* Remarks: Only two cases are prosecuted because injured workers in respect of six other cases refused to act as prosecution witnesses. Of the one remaining case, the Department of Justice did not consider it advisable to take out prosecution.

The Honourable Member may also wish to note that, under the Companies Ordinance (Cap. 32), the ECAFB has the right to preferential payment for the compensation paid in the winding up of a company where the employer has failed to take out insurance. From 1995-96 to 1998-99, the ECAFB has recovered some $2,458,000 from this channel.

Annex VII

WRITTEN ANSWER

Written answer by the Secretary for Security to Mr LAU Kong-wah's supplementary question to Question 5

Provision of traffic arrangement assistance to the Garrison by the Hong Kong Special Administrative Region Government is dealt with by the Hong Kong Police Force direct. The police have established a liaison mechanism with the Garrison and the Senior Superintendent (Operations) at the Police Headquarters is the designated Liaison Officer. Where the traffic assistance required only involves individual Traffic Formations, the Liaison Officer will convey the request to the Formation concerned and the request will be approved by the Commander (at Senior Superintendent, Superintendent or Chief Inspector rank) of that Traffic Formation. Where assistance involves deployment of an escort convoy, the Assistant Commissioner of Police (Operations) will be responsible for vetting and approval of the request.

Annex VIII

WRITTEN ANSWER

Written answer by the Secretary for Security to Mr Andrew CHENG's supplementary question to Question 5

The Hong Kong Police Force have confirmed that similar traffic assistance had been provided to vehicles of the British Garrison before the reunification and the procedures for dealing such requests were the same as those currently in use. However, the police have not maintained any statistics on traffic assistance provided to the British Garrison.

Annex IX

WRITTEN ANSWER

Translation of written answer by the Secretary for Health and Welfare to Dr TANG Siu-tong's supplementary question to Question 6

As to the question about out of those who complained of gastrointestinal discomfort after consumption of sashimi over the past three years, how many of them had patronized unlicensed food establishments, the relevant figures are listed as follows:

Year	No. of Unlicensed Food Establishments	No. of People Complained of Gastrointestinal Discomfort
1996	2	5
1997	0	0
1998	1	2
	---	---
Total	3	7

Annex X

WRITTEN ANSWER

Translation of written answer by the Secretary for Health and Welfare to Mr Michael HO's supplementary question to Question 6

According to the reply from the two Municipal Services Departments, since it takes quite a long time for the Court to issue "Closure Orders" through prosecution procedures against unlicensed food establishments, the two Municipal Councils have decided to amend the Public Health and Municipal Services Ordinance (Cap. 132) by introducing an additional administrative power to enable the authority concerned to close down immediately food establishments which are not licensed or the sanitary conditions of which are unsatisfactory in order to expedite action in banning such food establishments.

Annex XI

WRITTEN ANSWER

Translation of written answer by the Secretary for Health and Welfare to Mr Ambrose CHEUNG's supplementary question to Question 6

As we understand it, the Law Draftsman is drafting an amendment legislation on closing down immediately food premises which are unlicensed or the sanitary conditions of which are unsatisfactory, and will arrange for the amendment to be submitted to the Legislative Council as soon as possible for Members' consideration.

Annex XII

ADAPTATION OF LAWS BILL 1998

　

COMMITTEE STAGE

Amendments to be moved by the Secretary for Security

""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;".

Clause	Amendment Proposed
Schedule 2, section 4	By deleting it and substituting -
	"4. Section 17(3) is amended by repealing "Governor" and substituting "Chief Executive".".
Schedule 3, section 1(b)	By deleting the proposed definition of "relevant executive order" and substituting -
Schedule 3, sections 6, 7, 8, 9(a) and (b) and 22	By deleting "relevant executive orders" and substituting "the Public Service (Administration) Order".
Schedule 7, section 3	By deleting paragraph (a).
Schedule 9, section 1	By deleting "in Council".
Schedule 12, section 4	By deleting "in Council".
Schedule 13, section 1(b)	By deleting "in Council".
Schedule 14, sections 7(b) and (8)	By deleting "in Council".
Schedule 15, section 6	By deleting everything after "Central" and substituting "Authorities or the Government of the Hong Kong Special Administrative Region under the Basic Law and other laws".".