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 CYD HO SAU-LAN

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

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE MICHAEL HO MUN-KA

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

THE HONOURABLE LEE WING-TAT

THE HONOURABLE LEE CHEUK-YAN

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

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

THE HONOURABLE LEE KAI-MING, J.P.

THE HONOURABLE FRED LI WAH-MING

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 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.

DR THE HONOURABLE YEUNG SUM

THE HONOURABLE YEUNG YIU-CHUNG

THE HONOURABLE LAU CHIN-SHEK, J.P.

THE HONOURABLE LAU KONG-WAH

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

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

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

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

THE HONOURABLE CHOY SO-YUK

THE HONOURABLE ANDREW CHENG KAR-FOO

THE HONOURABLE SZETO WAH

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

THE HONOURABLE LAW CHI-KWONG, J.P.

THE HONOURABLE TAM YIU-CHUNG, J.P.

THE HONOURABLE FUNG CHI-KIN

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

MEMBERS ABSENT:

THE HONOURABLE HO SAI-CHU, J.P.

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

THE HONOURABLE RONALD ARCULLI, J.P.

THE HONOURABLE HOWARD YOUNG, J.P.

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE MRS ANSON CHAN, J.P.

THE CHIEF SECRETARY FOR ADMINISTRATION

MR RAFAEL HUI SI-YAN, G.B.S., 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 GORDON SIU KWING-CHUE, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

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

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

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

MR STEPHEN IP SHU-KWAN, J.P.
SECRETARY FOR ECONOMIC SERVICES

MISS YVONNE CHOI YING-PIK, J.P.
SECRETARY FOR TRADE AND INDUSTRY

CLERKS IN ATTENDANCE:

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

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

MRS JUSTINA LAM CHENG BO-LING, ASSISTANT SECRETARY GENERAL

Subsidiary Legislation	L.N. No.
Control of Chemicals Ordinance (Amendment of Schedule 3) Order 1999	138/99
The Ombudsman Ordinance (Amendment of Schedule 1) Order 1999	139/99
Rehabilitation of Offenders Ordinance (Amendment of Schedule) Order 1999	140/99
Securities and Futures Commission (Fees) (Amendment) Rules 1999	141/99
Electoral Affairs Commission (Electoral Procedure) (District Councils) Regulation	142/99
District Councils (Election Petition) Rules	143/99
Control of Chemicals Ordinance (Amendment of Schedule 2) Order 1999	144/99
Tax Reserve Certificates (Rate of Interest) (No. 4) Notice 1999	145/99

ORAL ANSWERS TO QUESTIONS

PRESIDENT (in Cantonese): Questions. Question time normally does not exceed one and a half hours, with each question being allocated about 12 to 15 minutes. I would like to remind Members again that, when asking supplementaries, Members should be as concise as possible. They should not ask more than one question, and should not make statements. Because, on one hand, to do so would contravene the Rules of Procedure, and on the other hand, if the supplementary question is too long, other Members may not have enough time to ask their questions. 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.

First question.

Entry Qualifications for the Post of Commissioner for Tourism

1. MR NG LEUNG-SING (in Cantonese): Madam President, an expatriate official has been appointed to temporarily fill the post of Commissioner for Tourism because the open recruitment exercise failed to identify a suitable candidate for the post. In this connection, will the Government inform this Council:

(a) of the major reasons for not being able to identify a suitable candidate in the open recruitment exercise;

(b) whether it has assessed if the person for appointment to the post of Commissioner for Tourism must be proficient in Chinese and have a good understanding of local customs and culture; and

(c) whether it will consider consulting the travel industry on lowering the entry qualifications for the post?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, my answer to Mr NG's question is as follows:

(a) Candidates were assessed mainly on the basis of their knowledge, vision of the tourist industry, their ability to co-ordinate and implement tourism-related projects, ability to communicate with the tourist industry, and their capability for strategic thinking to lead the development of tourism in Hong Kong. However, the Selection Board did not consider anyone of the candidates to possess all the qualities required, and hence no suitable candidate was identified for filling the post of Commissioner for Tourism in the open recruitment exercise.

(b) One of the original criteria in the open recruitment exercise is proficiency in Chinese language, that is, having Grade E or above in Chinese Language in the Hong Kong Certificate of Education Examination or equivalent. We fully recognize that it would be ideal if the Commissioner for Tourism could be proficient in both Chinese and English. However, given the experience in the initial recruitment exercise, we feel we could relax the Chinese Language requirement to cast our net wider. Moreover, having considered that the Commissioner would have frequent contact with tourism-related bodies and travel trade members both locally and internationally, and that these people generally can communicate in English, we therefore do not think that proficiency in Chinese is a must for the Commissioner.

Although we did not specifically require the person to be appointed as the Commissioner for Tourism to possess a good understanding of local customs and culture, these qualities definitely will be assessed in the course of our considering the candidates' understanding of the industry as well as their vision and strategy in promoting tourism development in Hong Kong. It would certainly be desirable for any person taking on the position to have a sense of the product he or she is promoting.

(c) With the appointment of a civil servant as the new Commissioner for Tourism for the time being, we shall, taking into account the experience we gained in our ealier recruitment exercise, review the requirements for the post before we embark on a fresh search. We would of course listen to and consider the views of the travel industry.

MR NG LEUNG-SING (in Cantonese): Madam President, in order to help the economy recover as soon as possible, I think it is beyond reproach that the Government decided to temporarily fill the post of Commissioner for Tourism as it did not want to have any more procrastination. With regard to part (b) of the main reply, can it be taken to clearly stating that the relevant requirements for the post will be relaxed distinctly? If yes, will the candidates who responded to the earlier recruitment be reconsidered?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): I would like to thank Mr NG for his supplementary question and acknowledgement that we are presently at a crucial moment. As the tourist industry is facing many challenges, I think the most important thing now is having a suitable person to fill the post of Commissioner for Tourism. Of course, just as I said in the main reply earlier, we think that the requirement of proficiency in Chinese can be suspended for the moment. We have consulted the tourist industry on this issue and they generally think that it is naturally better if the Commissioner is proficient in Chinese, but it is also acceptable if he cannot fulfil the criterion of having Grade E or above in Chinee Language in the Hong Kong Certificate of Education Examination. Of course, when another recruitment exercise for this post is conducted in the future, those persons who responded to but failed in the earlier recruitment may file applications again even if they did not meet our requirement of Chinese standard previously.

MRS SELINA CHOW: Madam President, in view of the fact that the appointed Commissioner is now doubling up as the head of the Business and Services Promotion Unit, will the Secretary tell us when and how this undesirable situation can be rectified?

SECRETARY FOR ECONOMIC SERVICES: Madam President, I do not think that Mr ROWSE needs to wear two hats for too long. I hope that there will be a suitable successor to him as Director of the Business and Services Promotion Unit within a couple of weeks.

MR AMBROSE CHEUNG (in Cantonese): Madam President, I support the Government's decision on the appointment of the Commissioner for Tourism. However, the structure of the tourist industry is actually transforming at the moment. With respect to the overall policy and orientation, will the Secretary establish through the Commissioner for Tourism a strategy committee comprising travel trade members, professionals and representatives from other relevant industries in order to set a direction for the overall strategy of tourism in Hong Kong?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I trust that Mr CHEUNG is very familiar with the tourist industry and the Government shares his view. We are now preparing to set up a committee on the future development strategy of the tourist industry. Since we have created the post of Commissioner for Tourism, we naturally hope that the Commissioner can spend more time on the long-term planning for the future development our tourism. In this connection, we also need more opinions from the trade and we are at present making arrangements for the setting up of a higher-level strategy committee on tourism development.

PRESIDENT (in Cantonese): Second question.

Proposal of Building a Cruise Pier at North Point

2. MR LEE WING-TAT (in Cantonese): Madam President, regarding a private developer's proposal to build a cruise pier at North Point, will the Government inform this Council whether:

(a) any assessment has been made of the future demand for cruise piers in Hong Kong; and

(b) the piece of government land involved in the proposal will be granted by way of private treaty; if so, what the reasons are and whether it has assessed if the granting of the government land concerned not by way of public tender will go against the principle of providing a level playing field in the market as well as dampen investors' confidence in making investments in Hong Kong?

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

(a) According to the "Study on the Cruise Market for Hong Kong" (the Study) commissioned by the Hong Kong Tourist Association (HKTA), the cruise market is supply-led in nature. The demand forecast for cruising indicates considerable potential for growth of the Hong Kong cruise market in the light of the overall growth in the Asian cruise market. To attract the anticipated growth in regional cruise passenger traffic, the Study recommends that a new, dedicated and more modern cruise terminal with higher standard and range of ship and passenger servicing facilities should be built as early as possible for the new generation of mega-ships.

(b) The Town Planning Board is considering a rezoning application in respect of the proposed cruise pier at North Point. As of today, the Government has not received any application for land grant, lease modification or land exchange in relation to the proposed cruise pier, and therefore has yet to make any decision on the land disposal matters concerned.

MR LEE WING-TAT (in Cantonese): Madam President, to avoid suspicions from the public about the Government granting land by private treaty for the building of a cruise pier at North Point, favouring a certain consortium, thus repeating the Cyberport saga, will the Government give an undertaking to this Council that land for the proposed cruise pier at North Point will be granted by way of a fair and open tender?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Cantonese): Madam President, the supplementary appears to be on the hypothetical side. It assumes the Government will grant land or make certain special arrangements. In fact, we need to wait until a formal application in respect of the land has been made before we can tell whether a certain development involves private land and a certain development involves government land.

MISS CYD HO (in Cantonese): Madam President, as I am asking for some data, I hope the Secretary can give me a reply in writing. I would like the Secretary to quantify the effect that a new cruise pier will have on the economy of Hong Kong, in such terms as employment opportunities, increase in tourism income and so on. I hope the Secretary can give me a written reply.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, with your permission, I would like to answer the Honourable Member's question now. As everyone knows, cruise tours are increasing popular. In fact, in the past decade, there has been an increase of about 8% in cruise tours worldwide. In Hong Kong, the increase has been about 9% during the period 1992 to 1997. Members may be aware that the HKTA has conducted a research on the prospects of cruise tours and the results show that they do have great potentials. If we can build more, better and newer facilities for ships, we may generate considerable economic benefits. According to the report of the HKTA, if a mega-ship is launched and visits Hong Kong triennially, the related incomes generated for Hong Kong will grow by 9% per annum. At present, cruise passengers contribute about $300 million annually to the tourism proceeds in Hong Kong. According to the report of the HKTA, by 2006 we may have an extra income of $300 million calculated on this basis. That means cruise passengers coming to Hong Kong can bring a total income of $700 million. These are economic benefits. For employment, the HKTA report shows that about 5 800 additional job openings may be created.

MISS CYD HO (in Cantonese): Madam President, I hope the Secretary may provide an analysis of jobs created broken down by hotel, catering and retail for example. The Secretary may give a reply in writing. But the simplest way is in fact to make public the HKTA report.

MR GARY CHENG (in Cantonese): Madam President, the Secretary has indicated there is a need to build a new dedicated and more modern cruise terminal. Assuming the present pier cannot meet the demnds, will the Government inform this Council whether the Ocean Terminal is the only pier that can provide service to cruise passengers? What facilities are there? When passengers travel to Hong Kong on cruise, where do they clear the customs, collect their luggage, and go through the immigration formalities? It seems to us the Ocean Terminal is only a shopping mall where there are no facilities for the above purposes. What ways are there to deal with such passengers in tens of thousands?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I must thank Mr CHENG for his supplementary question. I believe his question is about cruises berthing at the Ocean Terminal. Mr CHENG was right. The greater part of Ocean Terminal is a shopping mall. But if I remember correctly, there are facilities on the second floor for immigration, and claiming luggage. But the terminal indeed has room for improvement. I think we should support the idea of building more, newer and more dedicated facilities from the point of view of tourism promotion. We should be forward-looking. We should not just wait for shiploads of passengers to come. We should take the initiative of building more facilities to improve our competitive edge and attract more passengers and ships to visit Hong Kong. We will then be able to operate more routes. We should do some work proactively. One of our neighbours, Singapore, for example, has two berths presently, which can accommodate about three ships. I understand they intend to increase the number of berths to eight and build a new cruise pier that is expected to be completed several years later. In fact there are other places with more than one cruise pier: Miami has 12 berths and Vancouver has more than one cruise pier.

To give a simple answer to Mr CHENG's supplementary question, there are indeed facilities on the second floor of the Ocean Terminal to handle the clearance procedures for passengers. If ships do not berth at the Ocean Terminal, they may anchor at sea; then shuttle boats may be used to carry passengers to the shore. In that case, immigration formalities may be done for passengers on board the ship by immigration officers. So there are different ways of doing this.

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

MR GARY CHENG (in Cantonese): The Secretary has not answered my supplementary question fully. I was asking what other means the Administration had for customs formalities if the present facilities at the Ocean Terminal were inadequate. The Secretary mentioned only one other way, which was processing immigration procedures on board the ship. Would that be inappropriate? Singapore plans to increase the number of berths to eight. Will it be processing immigration procedures on board? Are we doing the processing of immigration procedures on board, which is an expedient measure, just because we do not have space for one more cruise pier?

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

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, maybe I should explain it clearly again. If ships are berthed at the Ocean Terminal, their passengers will of course clear the immigration on the second floor of the shopping mall at the Ocean Terminal. For an ocean-going vessel, there may well be over a thousand passengers and if they have to queue up to go ashore and collect their luggage, it may not be a satisfactory arrangement. But if we have a new cruise pier, the situation may be improved with more and newer facilities. Situations, for example, where passengers need to queue up for a long time carrying their luggage, to board a ship or go ashore will not take place.

MR ALBERT HO (in Cantonese): Madam President, I understand last year the HKTA, suggested some choices for the siting of the cruise pier. But since the Chief Executive made known in his policy address last year the idea of building a second cruise pier, it appeared to the public that the Government had not made any active studies to find out what should be most suitable site for the new pier. It seems everyone has been waiting for a certain consortium to apply to the Town Planning Board for approval to build a cruise pier at North Point. Will the Government inform this Council whether it has taken any initiative, or whether it is only waiting for the consortium to apply? But then when approval is given, the consortium would have an edge over others in tendering for any government land, precluding other developers from competing with it? Has the Government taken the initiative to identify an alternative site for the cruise pier? Will it introduce competition by public tender? Other than North Point, will it consider other sites to build a cruise pier?

PRESIDENT (in Cantonese): A number of Members have indicated to ask supplementary questions on this question. I hope Members can be as concise as possible; otherwise other Members would not have the time for their questions. Which Secretary would attempt an answer?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Cantonese): Madam President, the HKTA report mentions several locations for the cruise pier, including Wan Chai and North Point on Hong Kong side, and Kowloon Rock and the new reclamation at Kai Tak. There are pros and cons for building cruise piers at each of these places. On the question of which site is suitable for development, it all depends on the planning and infrastructure support of the area in question, such as roads and transport systems. At this stage, the Government has no decision yet as to which site is most suitable for the building of cruise piers. We think that we should let private organizations submit proposals from a commercial viewpoint.

MR CHAN KAM-LAM (in Cantonese): Madam President, in the development plans for Southeast Kowloon, there is a suggestion to build a cruise pier at the old Kai Tak Airport site. Indeed it has also been reported that a developer has proposed to build a cruise pier at North Point. Will the Government inform this Council what ideas it has regarding the overall plan for the building of cruise piers to satisfy the future needs of developing our tourism industry?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, my answer will be purely from the point of view of promoting the tourism industry. As I said, we should be more aggressive, we should encourage the building of more facilities for berthing ships. We hope to be able to lower our charges in view of the competition. Newer and better facilities will of course attract more mega-ships to Hong Kong. The demand depends on the kind of facilities we can provide. We must not forget that the coastline of mainland China is a very long one and therefore possesses potential for development in this respect. If we can develop a theme park, we may help with the development of a cruise pier. I think we need to try our best to encourage the building of more facilities for a cruise pier now if we want to make Hong Kong a cruising hub.

MR JAMES TO (in Cantonese): Madam President, in the case of the Cyberport project the Government said it was an infrastructure item, and it would not use land resources to subsidize private development. Will the Government inform this Council whether it will learn from the experience ─ as the Government could well have changed the rules of the game of fair play ─ so that in the cruise pier project it will grant land to one consortium or several such consortia by private treaty?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Cantonese): Madam President, please allow me to answer this supplementary question using the answer that I gave earlier. As of today, the Government has not received any application for land grant. We cannot assume now there is any way special in which government land will be disposed of. But if a certain developer owns land that it thinks is worth investment it may apply as a private developer to the Government for the building of a cruise pier.

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

MR JAMES TO (in Cantonese): Madam President, I was asking about government land, not private land. If it was private land there would of course be no need for government approval. I was asking the Government whether it would refrain from using private treaty grant if government land was involved.

PRESIDENT (in Cantonese): Mr James TO, I think the Secretary has answered your question. He said he could not come to a decision at this stage.

MISS EMILY LAU (in Cantonese): Madam President, I believe to carry out the project, it is very important that forecast is precise. I would like to ask Secretary Stephen IP about numbers. He said there was development potential for the cruise market. But the figures we have are different. The HKTA said the number of tourists coming to Hong Kong by ship was 130 000 while the number reported by Wharf was 48 000. Why was there such a big difference? Is the Secretary aware of it and does he know why it exists, and will the Government conduct an independent investigation?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I need to thank the Honourable Member for giving me a chance to clarify. I think the issue has been a cause of doubt for many people. In fact both numbers are correct. The Honourable Member said according to the calculation by Wharf, the number was 48 000 in 1997. They had a different basis for calculation. Wharf calculated on a person basis, that is, if 48 000 people came by ship and left by ship, they take two trips but Wharf would count them as 48 000. We must bear in mind that the HKTA's calculation is based on the number of trips, arrival and departure being counted as two separate entries. Why is the HKTA calculating this way? It is because many cruise passengers do not come and leave by the same ship. Most of them may come by plane and then after visiting Hong Kong for several days go elsewhere by ship. Some may come to Hong Kong by ship and go ashore for sightseeing for several days and then leave by plane. The HKTA figures are correct as they were obtained from the Immigration Department, while the Wharf figures only include those tourists who alight or board at the Ocean Terminal. When we talk about cruises, we should include ships such as the Pisces. All passengers who take the Pisces or other casino ships will need to go through immigration procedures upon entry or exit of Hong Kong. The Immigration Department will record and separate them into Hong Kong residents and overseas tourists.

Let me explain once more that among the 130 000 tourists, around 60 000 used the Ocean Terminal to enter Hong Kong or board a ship. About 40 000 were overseas tourists who may come to Hong Kong by plane and then go to Xiamen and Hainan. About 28 000 cruised to nowhere. So, the numbers are very clear: 28 000, plus 40 000-odd plus 60 000-odd, making a total of 130 000. These are all overseas tourists.

PRESIDENT (in Cantonese): As we have spent nearly 20 minutes on this question, I suggest Members follow up the matter through other channels, although many Members are still waiting to ask supplementary questions, while some other are dissatisfied with the answers given by the Government.

Third question.

Terms in the DMCs of Estates under Tenants Purchase Scheme

3. MISS CHAN YUEN-HAN (in Cantonese): Madam President, it is learnt that places such as slopes and roads and footbridges connecting different housing estates, which were originally excluded from the estate area, have been included in the Deeds of Mutual Covenant (DMCs) of the estates identified for sale under the Tenants Purchase Scheme (TPS). As a result, the relevant owners will have to shoulder the responsibility for the repairs and maintenance of these places in future. In this connection, will the Government inform this Council:

(a)	(i)	of the respective numbers of applications withdrawn by the applicants prior to the acceptance of their offers by the Housing Authority (HA) and those rescinded by the applicants after the offers have been accepted, since the launch of TPS Phase 2 due to the applicants' disagreement with such terms in DMCs; and
	(ii)	whether there have been increases in such cases, as compared to those of TPS Phase 1; and the respective percentages of these cases in the total number of withdrawn and rescinded cases in TPS Phase 2;
(b)	whether the HA will agree to amend the terms in DMCs, if the applicants consider that such terms are not reasonable; and
(c)	of the mechanism in place to arbitrate the disputes between the HA and the applicants in this respect?

SECRETARY FOR HOUSING (in Cantonese): Madam President, after two months of sale under the second phase of the TPS and as at 24 May 1999, 4 541 applications to buy TPS flats were received by the HA. A total of 43 applications (0.9%) were withdrawn before acceptance. Another 15 applications (0.3%) were rescinded after acceptance. The reasons are unknown. A survey of the reasons will be carried out by the HA early next year.

The numbers of withdrawal and recession for the corresponding period (that is, after first two months of sale) under the first phase of the TPS are 81 (0.7%) and 26 (0.2%) respectively. As regards part (b) of the question, the power to control and manage rental estates is vested in the HA under a Vesting Order issued by the Director of Lands. The boundary specified in the Vesting Order normally encompasses the housing site together with private roads, recreational areas, slopes and, in some cases, associated obligations of repairs such as adjoining footbridges. Consequently, the boundary of the government lease for the sale of flats under the TPS normally corresponds with that in the Vesting Order. In all the 12 estates under the first two phases of the TPS, the obligations of purchasers remain largely unchanged as originally required of the HA under the Vesting Order. Only some changes relating to minor boundary adjustments were made to correspond with actual structures on site for clearer delineation of management responsibilities.

As is the case with private sector flat purchasers, while TPS purchasers enjoy the benefits of ownership, they also have obligations to maintain common facilities including private roads, slopes and footbridges located within the boundary of the property. The HA has no intention to change these arrangements as specified in the DMC.

As regards part (c) of the question, Housing Department staff have explained the rights and obligations of ownership to prospective purchasers in detail. The question of arbitration does not arise as the decision whether or not to purchase a flat lies with the applicant.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, in the fourth paragraph of the main answer, the Secretary mentioned that the owners have obligations to maintain the private roads, slopes and footbridges located within the boundary of the property purchased. I do not think owners will object to this. However, if the use of the footbridges is shared with others, how will the share be determined and what are the criteria? If it involves some paths for morning exercise and slopes of other housing estates other than the above facilities, how will the share be determined?

SECRETARY FOR HOUSING (in Cantonese): Madam President, in terms of the land boundary, all the footbridges within the boundary of the housing estates should of course be the responsibility of owners. As for footbridges connecting a housing estate with another place, as mentioned by Miss CHAN, we have to look at the obligations of the HA by consulting the Vesting Order issued by the Director of Lands. The persons who intend to buy the estate flats and become owners will have the same obligations as those specified in the original Vesting Order. In this respect, the HA will place the obligations which the Government required it to fulfil on the purchasers of the flats.

The same applies to slopes. The HA used to be responsible for slopes formed as a result of the development of an estate. After the flats have been sold to the people, the new owners will bear the same responsibility. In future, residents can pay for the relevant costs with the overall maintenance fund to be set up by the HA.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han, which part of your supplementary question has not been answered?

MISS CHAN YUEN-HAN (in Cantonese): Madam President, I beg your pardon, the Secretary did not answer my question. Owners should of course be responsible for the facilities in the housing estates mentioned by the Secretary. But what criteria will be used in determining the obligations for facilities shared with other people? Just now the Secretary talked about how government departments deal with this. While I accept what the Government said, there was no mention of how the obligations for the common areas should be divided. Therefore, I do not think that the Secretary has answered my question.

PRESIDENT (in Cantonese): Miss CHAN, in my view, the Secretary has answered your supplementary question. It is only that you are not very satisfied with the Secretary's answer. Therefore, I suggest that you follow this up through other channels. I have to let another Member ask questions now.

MR AMBROSE LAU (in Cantonese): Madam President, in the third paragraph of the Government's main answer, it was said that the boundary of the government lease for the sale of flats under TPS normally corresponds with that in the Vesting Order. The Secretary stated the fact but did not say why they have to correspond. What will be the problem if they do not correspond?

SECRETARY FOR HOUSING (in Cantonese): Madam President, if the boundary corresponds with that in the Vesting Order, there will of course be no problem. As I said just now, the HA will hand all obligations over to the future owners. Mr LAU asked what would happen if not all obligations are handed over to the owners. In that case, somebody would have to take up the remaining obligations. Who is this "somebody"? It should be the HA. However, if the HA has sold the flats to the new owners, why should the HA still undertake part of the obligations? This is wrong in principle and in logic. Therefore, the HA will not reserve some special obligations for the HA. Of course, some places in the housing estates belong to the HA. The HA will calculate the proportion of these places in the housing estate based on their area and bear the costs or undertake the obligations that may arise in future according to this proportion.

DR RAYMOND HO (in Cantonese): Madam President, the maintenance costs for some of the common facilities are very expensive, especially in the case of slopes and footbridges. Recently, the Legislative Council has received one complaint. We had to go to the relevant housing estate to inspect the situation and found that the responsibility for the maintenance of a slope had fallen on the new owners. However, the slope is in fact situated behind a school, far away from the residential blocks. Therefore, we consider it unfair. No final decision has been made on this case yet. In similar cases, apart from consulting the Geotechnical Engineering Office, will the Secretary consider setting up an independent committee with some independent members to decide whether the new owners should be responsible for the maintenance of such slopes or footbridges in the future?

SECRETARY FOR HOUSING (in Cantonese): Madam President, the simple answer is that there will not be an independent committee. We do not have such a mechanism at present. As far as I know, the Government has no intention of setting up such a mechanism. Do owners want to take responsibility for the maintenance of slopes? I am sure that if one asks the owners, very few of them would say they want to take this responsibility. However, when the Government grants land for the construction of buildings or the construction of housing estates by the HA and there are slopes on the land, the relevant organizations, such as the HA or the purchasers of the land, will have to assume the responsibility for the maintenance of the slopes. The Government is not imposing an obligation on them. Rather, the Government adopts the same policies and adheres to the same principles in granting land for the construction of buildings.

MR CHAN WING-CHAN (in Cantonese): Madam President, it was pointed out in the main answer that 81 applications were withdrawn and 26 rescinded in TPS Phase 1. May I ask what the reasons were? Was it because the flats were substandard or were there other problems involved?

SECRETARY FOR HOUSING (in Cantonese): Madam President, with regard to Phase 1 of the Scheme, we have some figures and there were three main reasons. First, the persons planning or registering to buy the flats did not agree with the terms of the deeds or the deeds of mutual covenant. Therefore, they did not wish to buy the flats. We understand this perfectly. Second, they did not complete the transaction because of financial difficulty. Third, it was because of personal reasons. We do not know what the reasons were except that they were personal. Those were the three main reasons for withdrawing the applications or withdrawing from the transactions.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan, which part of your supplementary question has not been answered?

MR CHAN WING-CHAN (in Cantonese): Was there a quality problem, that is, were the flats substandard?

SECRETARY FOR HOUSING (in Cantonese): Madam President, according to the survey on TPS Phase 1, no one gave up the purchase of a flat because of a quality problem or because the flat was substandard. There were of course many other reasons. However, they concern details that I do not wish to go into here.

MR FRED LI (in Cantonese): Madam President, in paragraph three of the main answer, it was said that the obligations of purchasers remain largely unchanged as originally required of the HA under the Vesting Order. Madam President, I wish to quote an actual example of the present phase of the sale of public housing flats. I hope the Secretary will respond to it.

Madam President, the Chuk Yuen (North) Estate is a very good example. One footbridge of that housing estate connects it with a nearby Home Ownership Scheme (HOS) estate. The HOS estate was completed later and the footbridge is basically for use by its residents to go shopping at the housing estate. It is seldom used by residents of the housing estate. However, according to the lease, even this footbridge not included in the Government lease is to be maintained and repaired solely by owners under the TPS. Is this stipulation in keeping with the requirement mentioned by the Secretary in the main reply?

SECRETARY FOR HOUSING (in Cantonese): Madam President, the simple answer is yes, it is in keeping with the requirement. It is clearly specified in the Vesting Order and is within the boundary of the property that the HA hands over to the new owners. I have a plan of the North Yuen Estate on hand. As we can see, the black area that slightly juts out on the left is the footbridge, which is included in the Vesting Order issued to the HA. Therefore, the prospective owners of the TPS flats are required to be 100% responsible for this small area.

MR FRED LI (in Cantonese): Madam President, I wish to rectify the name. It should be the Chuk Yuen (North) Estate.

MR LAU KONG-WAH (in Cantonese): Madam President, in the fifth paragraph, the Secretary said that the Government has made the DMC and it is up to the people to buy the flats or not. Dr Raymond HO suggested the setting up of an independent arbitration mechanism. I think this is very important, since there are many disputes in Phase 2 of the relevant scheme. However, the Secretary said that the Government would not consider it. I find the Government rather stubborn. Other Members have quoted many examples. Therefore, I do not wish to mention the housing estates in Sha Tin. Will the Secretary reconsider the suggestion of setting up an independent arbitration mechanism?

SECRETARY FOR HOUSING (in Cantonese): Madam President, in the fifth paragraph of the main answer, I already said clearly that the decision whether or not to purchase a flat lies with the applicant. Therefore, the need for arbitration will not arise. As far as I know, there is no intention within the Government of setting up such a new arbitration structure.

PRESIDENT (in Cantonese): Last supplementary question.

MR LEE WING-TAT (in Cantonese): The Secretary is well prepared today. He has even brought the plans with him.

Madam President, in the fifth paragraph of the main answer, it was said that Housing Department staff had explained the rights and obligations of ownership to prospective purchasers in detail. At present, the design of rental flats need not comply with the Buildings Ordinance. May I ask the Secretary whether the following situation will arise in future: when the rental flats become flats for sale, the relevant exemption will lapse; as a result, the new owners will have to bear the extra costs of altering the facilities of the buildings in order to comply with the Buildings Ordinance, such as altering the smoke doors? Has the Government or the Housing Department explained these obligations to the prospective buyers?

SECRETARY FOR HOUSING (in Cantonese): Madam President, the HA has prepared many handbooks relating to these questions. When a housing estate goes on sale, there will be handbooks on the TPS explanning to the people, especially with regard to the obligations under the Buildings Ordinance mentioned by Mr LEE. In the past, all housing estates built by the HA were not regulated by that Ordinance. However, after these rental flats are sold and have become TPS flats, they will be regulated by the Ordinance. The Director of Housing is still authorized by the Director of Buildings to manage these buildings for the time being, until 1 July next year. During this period, when such housing estates go on sale, the Housing Department will check whether the flats and common areas in the housing estates have to be altered because of non-compliance with the Buildings Ordinance. If alterations are required, the costs will of course be borne by the HA. However, if after discussing with the Director of Buildings, the Director of Housing considers the conditions to be acceptable and no alteration is needed, the HA will not alter the existing facilities of the housing estates.

PRESIDENT (in Cantonese): We have spent more than 19 minutes on this question. We will proceed to the next question.

Practising Solicitors and Barristers

4. MR YEUNG YIU-CHUNG (in Cantonese): Madam President, regarding the quality and number of practising solicitors and barristers in Hong Kong as well as the fees they charge, will the Government inform this Council if it knows:

(a) the respective numbers of students who graduated with various classes of honours degrees from the Faculty of Law in the University of Hong Kong and the School of Law in the City University of Hong Kong in each of the past three years, and among these graduates, the respective numbers of those practising as solicitors and barristers;

(b) the respective numbers of law firms in Hong Kong with practising solicitors numbering over 20, between 10 to 19, between five to nine, and less than four; and

(c) the respective numbers of cases in which the public hired practising solicitors and barristers in the past year, together with the respective highest, lowest and average amounts of fees charged in those cases; how the respective average fees compare with those charged by their counterparts in South Africa and the United Kingdom?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, this question is in three parts.

(a) The first part requests statistics in respect of local law graduates. The numbers of students who graduated from the two local law faculties, and the classes of degree obtained by them, in each of the past three years are set out in a table annexed to the written copy of this reply (Annex A), which has been supplied to Members.

In order for those law graduates to practise as solicitors or barristers, they will first need to obtain the PCLL (which takes a minimum of one year), and then to undertake either a two-year traineeship to practise as a solicitor, or a one-year pupillage to practise as a barrister. We cannot therefore, at this stage, produce meaningful statistics as to how many of those graduating in the past three years are practising as solicitors or barristers. However, on the basis of past experience, it can be assumed that over 90% of these law graduates will qualify as solicitors or barristers.

(b) The answer to the second part of the question, according to statistics contained in the Law Society Annual Report for 1998, is that there are five firms with more than 20 partners, 16 with 11 to 20 partners, 37 with six to 10 partners, and 525 with five or fewer partners.

I understand these are not what the Honourable YEUNG Yiu-chung requires, but as the Law Society lacks the numbers, we need to find out the number of solicitors in each of the 600-odd firms. I will send the supplementary information to Members as soon as possible (Annex I).

(c) With regard to the third part of the question, neither the Law Society nor the Bar Association have any record of the numbers of cases in which the public hired practising solicitors and barristers in the past year.

I am advised that the Law Society does not have any record as to "the highest, lowest and average amounts of fees charged" by solicitors.

The Bar Association has recently conducted a survey on the level of fees normally charged by barristers. I have been informed that the results of the survey will be set out in a press release of the Bar Association, which will be released in the near future.

A recent survey of the fees of Senior Counsel conducted by the Bar Association indicates that the majority of those who responded (72.2%) charge a daily fee of $40,000 to $60,000, and the rest charged a daily fee of $65,000 or above. The majority (54.5%) charge an hourly rate of between $4,000 to $6,000; 11.4% charge an hourly rate of $8,000 or above; and the rest between $6,000 and $8,000.

According to data gathered by the Civil Division of my Department between 1 October 1997 to 31 March 1999, Senior Counsel engaged by that division charged an average daily refresher rate of $53,368 and an average hourly rate of $6,088. Queen's Counsel from English hired by the Civil Division of my Department charged an average daily refresher rate of approximately $35,000 (£ 2,748.90) and an hourly rate of approximately $4,900 (£ 385.70). The daily refresher rate charged by English Queen's Counsel hired by my Department was on average 34% less than that charged by their Hong Kong counterparts, and the hourly rate 19.5% less. However, these figures do not take into account passages and hotel accommodation which must be provided to overseas counsel in addition to their fees.

Apart from these fees for English counsel, I have been unable in the time available to obtain any data in respect of the legal fees charged in South Africa and the United Kingdom.

Annex A

Distribution of Classification of Awards for Graduates of the University of Hong Kong

	LL.B No. of Students
Year	1st Class	2nd Class Upper	2nd Class Lower	3rd Class	Total
1995-96	6	41	97	5	149
1996-97	9	47	83	4	143
1997-98	13	54	63	4	134

Distribution of Classification of Awards for LLB Graudates of the City University

	No. of Students				Total No. of
Year	1st Class	2nd Class Upper	2nd Class Lower	3rd Class	Graduates
1995-96	-	18	35	2	55
1996-97	2	14	41	1	58
1997-98	3	22	46	3	74

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, a newspaper report said today a colleague in this Council has to shoulder very high legal costs for a case he or she has lost. Will the Government consider, from the point of view of consumers, taking effective measures to lower legal fees charged? If not, why not?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, regarding legal fees, the Government is of the view that it should leave the supply and demand to dictate. Fees for practising solicitors are negotiated between the consumer and the practising solicitor. Fees for barristers are also determined by the market. Solicitors can negotiate fees for their clients. The Government thinks that market forces and healthy competition are the best guarantee for value-for-money service. Legal costs are an issue separate from the fees charged by solicitors and barristers of their clients. The Masters of the High Court are empowered to determine costs of each solicitor. In general, costs are fixed. For example, newly qualified practising solicitors can charge $1,600 to $2,000 at the High Court and $1,060 to $1,280 at district courts. Costs for solicitors who have been in practice for two to four years are $2,000 to $2,500 at the High Court, and $1,350 to $1,650 at district courts. Costs for solicitors who have been in practice for five to six years are $2,400 to $3,000 at the High Court, and $1,600 to $2,000 at district courts. Costs for solicitors who have been in practice for seven to eight years are $2,900 to $3,500 at the High Court, and $1,900 to $2,300 at district courts. With more than 10 years' practice, the figures are $3,200 to $4,000 and $2,100 to $2,600 respectively. Furthermore, costs for barristers are stipulated to be necessarily reasonable in the relevant ordinance, the amounts are not fixed.

Costs claimed by parties to a case are assessed according to a separte set of criteria. If the parties cannot agree on the fees and costs, the Masters will decide what amount to be charged.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung, which part of your supplementary has not been answered?

MR YEUNG YIU-CHUNG (in Cantonese): Does the Secretary's answer mean the Government will not take any measure to lower legal fees and just leave it to the market forces?

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

SECRETARY FOR JUSTICE (in Cantonese): Madam President, I have nothing to add; I have already said it must be left to the market forces.

MR JASPER TSANG (in Cantonese): Madam President, has the Government considered assessing the number of places to see if they meet the needs of the community, in the light of the quantity and quality of university graduates joining the legal profession in recent years?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, the enrolment of the law faculties in local institutions is determined by the two universities. The Government is satisfied with the arrangement. In fact, local law graduates are only one of the sources of those who join the legal profession. Many people obtain legal qualifications by other means. Some obtain law degrees overseas, such as the external LLB degree of the University of London. Some may first sit for the Common Professional Examination of England and Wales and then obtain a PCLL locally. Among the 350 PCLL students at the University of Hong Kong, only 140 possess local LLB degree qualifications. Solicitors who obtain practising qualifications overseas may practise locally after passing the qualifying examinations of the Law Society.

As regards the issue of quality, this has been a concern for the Government. Some people have shown concern for the low quality of some of those who enter the legal profession. Indeed, the Panel on Administration of Justice and Legal Services discussed the issue last Saturday. As the nature of and causes leading to the problem have yet to be ascertained, we cannot speculate on the best solution at this stage. The Advisory Committee on Legal Education proposed in April last year that the Law Society request that funds be allocated from the Government Services Support Fund to finance a one-year consultancy research to review legal education. Although the preliminary application was turned down, the Law Society and the Bar Association have joined together to resubmit an amended application, which is being considered. There is a proposal for the Government to follow up the matter about the review despite plans to ask an independent person to act as chairman for the review and to oversee the project. The plan is now underway.

MR TAM YIU-CHUNG (in Cantonese): Madam President, legal costs in Hong Kong are higher than those abroad. One very important reason is that to require the service of a Senior Counsel in Hong Kong, one must go through a solicitor then a barrister. Hence the legal costs are several times higher. Will the Secretary inform this Council whether this is a major reason? Will the Government give new thoughts to the matter as we often say we want to protect the interest of the public?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, today's question is about the quality of local practising solicitors and barristers, so I have not made any preparation for answering questions about legal charges overseas.

As regards the issue of increased legal fees due to the service of Senior Counsels, a report entitled Legal Services in Hong Kong ─ a Report on the Consultation Exercise and Proposals for the Way Forward was released in 1996, in which the Administration indicated it did not propose to take any steps to unify the two branches of the profession. The need for a Senior Counsel to join another barrister to deal with a case was also considered then.

MRS SELINA CHOW (in Cantonese): Madam President, in her main reply, the Secretary said in a survey on fees of Senior Counsels it was found that there were several levels. Will the Secretary inform this Council how many Senior Counsels and barristers there are in Hong Kong, and what the proportion of Senior Counsels among all barristers is? The main reply mentioned the fees for 72.7% of the Senior Counsels. How many Senior Counsels does the "rest" represent? Will the Secretary inform this Council how many Senior Counsels are charging the enviable fees?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, there are at present 683 practising barristers, but I do not have the number of Senior Counsels on hand now. All the fees mentioned in the main reply referred to fees charged by Senior Counsels. The figures were calculated from replies made by those Senior Counsels responding. Hence it is not possible to know from the figures the number of Senior Counsels we have.

MRS SELINA CHOW (in Cantonese): Will the Secretary provide the information in writing?

SECRETARY FOR JUSTICE (in Cantonese): I believe I can only provide the number of Senior Counsels. The number of respondents depends on the extent to which the Bar Association is prepared to give assistance. (Annex II)

DR TANG SIU-TONG (in Cantonese): From the main reply, we know there is a 10% wastage. Was it because there were an insufficient number of places for PCLL or was it because there were an insufficient number of places for traineeship or pupillage?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, I must thank Dr the Honourable TANG Siu-tong for the supplementary question. The main reply indicated we could not accurately estimate the number of graduates from the University of Hong Kong or the City University who qualify as practising solicitors or barristers. The reason is that after graduation they need to complete the PCLL and then they have to undergo training for one or two years. So we cannot get the exact number.

About the 10% wastage, I think law faculty graduates may take up other jobs than solicitors or barristers. They may for instance take up other posts in large organizations. In fact, this is often the case elsewhere, that is, law faculty graduates may not necessarily take up jobs as practising solicitors or barristers.

PRESIDENT (in Cantonese): Last supplementary.

MISS MARGARET NG (in Cantonese): Madam President, will the Government agree that the percentage of Senior Counsels among barristers has been about 10%? Can the Government confirm that the number of barristers who charge the fees mentioned by the Secretary represents only a small fraction of the 10%?

SECRETARY FOR JUSTICE (in Cantonese): Madam President, I am sorry I do not have the information on hand to give a reply to the Honourable Member's supplementary question. I will give a reply after obtaining information from the Bar Association. (Annex III)

PRESIDENT (in Cantonese): Next question.

Manufacture of Optical Discs

5. MR MA FUNG-KWOK (in Cantonese): Madam President, will the Government inform this Council:

(a) of the current number of production lines permitted by the Commissioner of Customs and Excise (the Commissioner) for the manufacture of optical discs, and the total number of optical discs manufactured by them each day;

(b) of the number of locally-manufactured optical discs exported in the past six months, according to the Customs and Excise Department's records; and

(c) whether it has assessed if the number of optical discs produced in Hong Kong tallies with the total number for local sales and export; if the numbers do not tally, the reasons for that, and whether it is related to illegal export?

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

(a) During the period between the enactment of the Prevention of Copyright Piracy Ordinance (the Ordinance) on 29 May 1998 and the end of April this year, the Commissioner had issued a total of 83 licences for the production of optical discs, involving 378 production lines. Since these lines are of different models and designs, their production capacity varies. We estimate that the average daily maximum production capacity of each production line is about 15 000 optical discs. The maximum capacity of these lines per day is therefore theoretically approximately 5.6 million optical discs. However, we do not know if every production line is in operation every day, or whether each line is being operated at its maximum production capacity every day.

(b) According to the latest figures of the Census and Statistics Department, a total of 192.7 million optical discs which were manufactured locally were exported in the six months between October 1998 and March 1999. However, the figure does not include "read-writable" blank optical discs.

(c) Since we do not know the exact volume of optical discs manufactured locally, we are not in a position to assess whether the number of optical discs produced in Hong Kong tallies with the total number that were exported and for local sales.

MR MA FUNG-KWOK (in Cantonese): Madam President, I am a little disappointed with the Government's answer. First of all, after the enactment of the Ordinance last year, the Commissioner has been empowered to inspect all production records and production information of every manufacturer who has obtained the production licence. Basing on the total quantity of imported raw material for the production of optical discs, the Customs and Excise Department should be able to estimate roughly the total volume of optical discs manufactured locally. Therefore, I find it unacceptable that the Government should answer it does not know the total volume of optical discs produced. I wonder how the Government can explain this. Moreover, I understand it from the industry that the production reached its peak in December last year and January and February this year, during which time, almost all production lines in Hong Kong were operated every day but the discs produced could not even meet all the demand. If the estimation of the total production capacity is correct, the total number of discs produced in Hong Kong could reach 1 billion, that is, 1.03 billion discs could be produced in six months. Now, the Government is telling us that only 192 million discs were exported during this period. Even if only half of the production lines were in operation, they could still produce 515 million discs. What has happened to the remaining 300 million discs? Why would the Secretary answer this way? I hope that the Government can judge it with its common sense and tell us what has actually happened.

PRESIDENT (in Cantonese): Mr Ma Fung-kwok, I would ask the Secretary to try to answer your supplementary question. But your question is very long and consists of two parts that do not seem to have much connection. However, in view of the limited time, I hope that the Secretary would try to answer it.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, first of all, Mr MA mentioned that after the enactment of the Ordinance, the Commissioner has been empowered to obtain certain information, which is correct. After the Ordinance was put in effect, when the Customs and Excise Department inspects the licensed manufacturers, it has, as a matter of fact, the power to require them to produce information on matters such as the volume of raw material consumed in a year. However, when the Ordinance was passed in the Provisional Legislative Council, Members then requested the Customs to minimize the inconvenience caused to the manufacturers during their enforcement action. Therefore, normally the Customs would not demand the manufacturers to produce all production information every time it carries out an inspection. This explains why we do not have exact figures of the volume of their production. Moreover, Mr MA has said that he estimates a total of 500 million discs can be produced by the licensed manufacturers in half a year. To this I would like to respond. Mr MA's estimate seems to be far too sweeping as I have already said in the main reply that the production lines are of different designs and capacity and not all of them started to operate from 1 January 1998. According to our information, there are at present 83 registered optical disc production companies, of which 34 started to operate after 1 September 1998. Besides, not all production lines are operated at their maximum capacity every day. All I can say is that some of the discs produced by these licensed manufacturers are for export and some for local sales.

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

MR MA FUNG-KWOK (in Cantonese): Madam President, first of all, I would like to clarify that according to the figures provided by the Government, 1.03 billion discs can be produced in six months. But what I wish to point out is that the Government has yet to answer the third part of my question. If only 17% of the production lines are in operation, this industry cannot survive, which is common sense. Even taking just half of the total production volume, that is 1 billion odd discs, as our estimation, there are already over 500 million discs produced. Now only 190 million out of these over 500 million discs have been exported, what has happened to the remaining over 300 million discs? Unless the Government disagrees to my estimation, otherwise I feel that this is only a matter of common sense.

PRESIDENT (in Cantonese): Mr MA, please sit down first. I understand that this is a matter of common sense, but the situation is very clear that when your supplementary question is too long, it is very hard for government officials to give you a complete answer. Secretary for Trade and Industry, do you have anything to add?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I have already said that not every production line is operated at its full capacity every day. Of course, we will not rule out the possibility of smuggling. If smuggling is involved and the Customs has intelligence about it, they will certainly take severe action against it.

MR SIN CHUNG-KAI (in Cantonese): Madam President, it is rather kind of Mr MA Fung-kwok to say that he is not satisfied with the answer. But I am not satisfied with the Government's answer to part (c) of the question at all. Will the Government change its present practice, in the face of the present situation of piracy, and demand all manufacturers to produce detailed data on the volume of their daily production and numbers of discs exported?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I have already mentioned that when the Ordinance was passed, Members of the Provisional Legislative Council requested us to minimize the inconvenience that would be caused to manufacturers. But if this Council now sees the need, the Government is willing to consider stepping up the control over the disc manufacturing sector.

PROF NG CHING-FAI (in Cantonese): First of all, I very much agree that it is necessary to step up the regulation but that is not the reason why I raise this supplementary question. According to Mr MA Fung-kwok, the sector that he represents also patronizes the disc manufacturers but they cannot accept orders anymore. Am I mistaken about this? If there is such a situation, that means the production has almost reached saturation. In that case, I would like to ask the Secretary where the remaining discs produced have gone?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I have already answered that we know the maximum production volume can be estimated, and we also have the figures of export on hand, but the Government has neither the figures for local sales nor the actual figures of their total output, so I am unable to answer the Member's supplementary question.

MR NG LEUNG-SING (in Cantonese): My question also concerns part (c) of the main reply. Of course the Government has yet to obtain the data of the discs produced, but as Mr SIN Chung-kai has just mentioned, if the Government feels that the sector sees these data importantly, would it try to obtain those data and after obtaining them, would it study how to stop the illegal export activities as said in part (c) of the main question?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, first of all, we will certainly crack down on any piracy activities. This is the Government's long-standing policy. Our stand is very clear. I have already said just now that should Members consider it necessary, we will consider stepping up our regulation on the production of discs. But on the question of whether we can obtain the data on the total volume of discs produced, I think that we have to think it over.

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

MR NG LEUNG-SING (in Cantonese): The Secretary has not answered whether the Government will crack down on illegal export activities.

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

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, we will definitely do our best to crack down on any illegal activities.

MRS SELINA CHOW (in Cantonese): Madam President, may I ask the Secretary how many raids have been conducted since the enactment of the Ordinance on 29 May 1998 and the issue of 83 licences? And were any of these raids conducted during the night or off-office hours to catch them by surprise so as to ensure that the licensed manufacturers were not producing pirated or illegal discs?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, since the licensing system came into full operation in August 1998 till 31 May 1999, the Customs has conducted 268 raids, out of which 131 were carried out during off-office hours, including the small hours.

MR LAU KONG-WAH (in Cantonese): Madam President, the Secretary has not ruled out the possibility of smuggling. Of the discs for illegal exports which were seized by the Government in the past, how many could be linked to the 83 licensed manufacturers? If not, where were such discs produced?

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I do not have the information on hand. May I give it to the Honourable after we have obtained it? (Annex IV)

PRESIDENT (in Cantonese): Sixth question.

Dissolution of the Provisional Municipal Councils

6. MR AMBROSE CHEUNG (in Cantonese): Madam President, the Government introduced the Provision of Municipal Services (Reorganization) Bill into this Council on 28 April this year, and intends to dissolve the Provisional Municipal Councils on 31 December this year if the Council passes the Bill. The Bill has aroused widespread concern and controversy among the public, particularly over whether it is in contravention of the Basic Law. Article 39 of the Basic Law stipulates that the provisions of the International Covenant on Civil and Political Rights as applied to Hong Kong shall remain in force, and Article 25(a) of the Covenant provides that every citizen shall have the right to take part in the conduct of public affairs directly or through freely chosen representatives. In this connection, will the Government inform this Council:

(a) whether it has assessed if the Bill contravenes Article 39 of the Basic Law, given that, within the existing three tiers of representative government, the Provisional Municipal Councils are the only statutory bodies with financial autonomy and authority to formulate policies on municipal services and monitor their implementation, and which embody the public's right to participate in the conduct of public affairs; and

(b) of the methods that it plans to use, after the dissolution of the elected Municipal Councils which have financial autonomy, to retain the public's rights to take part in the formulation of municipal service policies and to monitor the municipal services?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, we have noted that during the consultation process of the review of district organizations, the public have expressed views on quite a number of issues, but it appears that the question of whether the Basic Law has been contravened was not a particular concern to them. Regarding the questions raised by Mr Ambrose CHEUNG, our replies are as follows:

(a) We have assessed the relationship between the Provision of Municipal Services (Reorganization) Bill and Article 39 of the Basic Law.

(b) Although the Bill changes the structure and the monitoring mechanism for the provision of municipal services, the public will still be able to participate in these matters through various bodies and channels, such as:

(1) the new Environment and Food Bureau, Department of Food and Environmental Hygiene, and Leisure and Cultural Services Department will be accountable to the Legislative Council. The Legislative Council can monitor the provision of various municipal services through examining the budgets, capital works projects and requests for the creation of additional civil service posts of these bureau/departments, and by setting up relevant Legislative Council Panels to deal with the related issues;

(2) the advisory and supervisory roles of District Councils in relation to municipal services will be strengthened at the district level;

(3) a Liquor Licensing Board and a Licensing Appeals Committee with non-official members are proposed to be set up to replace the Liquor Licensing Boards and Review Committees of the Provisional Municipal Councils in issuing liquor licences and handling appeals concerning various types of licences under the Public Health and Municipal Services Ordinance (Cap. 132) respectively; and

(4) a number of new bodies (such as the Advisory Council on Food and Environmental Hygiene and the Culture and Heritage Commission) are proposed to be set up with membership comprising professionals from relevant fields and representatives of the public and communities to advise on and monitor various municipal services.

MR AMBROSE CHEUNG (in Cantonese): Madam President, from part (a) of the main answer, it is evident that the Government is afraid of giving its view on whether the Basic Law has been contravened. May I ask the Secretary whether it is because it knows that the Commission on Human Rights has explained in detail "the conduct of public affairs" referred to in Article 25(a) of the Covenant? Let me quote three sentences: "The conduct of public affairs is a broad concept which relates to the exercise of political power, in particular the exercise of legislative, executive and administrative powers. It covers all aspects of public administration and formulation and implementation of policy, at international, national, regional and local level." Madam President, my last quotation is: "The exercise of this right by citizens may not be suspended or excluded except on grounds which are reasonable and objective." Was the Secretary afraid of saying in the main answer whether the Bill contravenes the Basic Law, because he is aware that these explanations have made it clear that the people's right to participate may not be taken away?

PRESIDENT (in Cantonese); Mr CHEUNG, may I remind you to keep your supplementary question as concise as possible next time?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, I believe that our understanding differs from that which Mr CHEUNG has based to ask his question. I have always thought that we only needed to answer the questions asked by Members. We are supposed to answer Members' questions, not the questions that Members have not asked. As we can see clearly, part (a) of Mr CHEUNG's question asked whether the Government had assessed the issue. My answer was "yes". In part (a), he did not ask what our reasons were or whether the Basic Law had been contravened. Therefore, I think I have answered his question. However, if he asks this supplementary question, of course I have to answer it.

In our view, the Bill does not contravene the Basic Law or the International Covenant on Civil and Political Rights. Although Article 25(a) of the Covenant provides that the public shall have the right to take part in the conduct of public affairs, it does not specify which kinds of mechanisms or bodies must be set up, or whether those bodies should have financial autonomy or the authority to formulate policies on municipal services. The two Provisional Municipal Councils will be dissolved after the reorganization. However, as I said, the people can still directly or indirectly participate in the relevant affairs through various bodies and channels.

DR TANG SIU-TONG (in Cantonese): Madam President, in the first paragraph of the main answer, it was said that the question of whether the dissolution of the Municipal Councils was in contravention of the Basic Law was not a particular concern to the public. May I ask whether the Government has read Annex II to the Basic Law? Annex II states that the first Legislative Council shall have 30 members returned by functional constituencies. If two functional constituencies are abolished in January 2000, is that not a contravention of the Basic Law?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, some Members have asked this question and we have answered it in the Bills Committee on the Bill. However, I can repeat it again. We have considered this point and we do not think there is any contravention. The Basic Law requires us to have these representatives in the first Legislative Council. These representatives have been elected and their position and term of office have been determined according to the formation method adopted in the first election. Therefore, we do not think there is any contravention.

MR FRED LI (in Cantonese): Madam President, with regard to the decision to dissolve the two Municipal Councils, has the Government assessed the legislative intent of Article 97 of the Basic Law on district organizations and does this decision contravene the legislative intent?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, again, we have answered this supplementary question before. But I will repeat it once again. We do not think that there is any contravention. Articles 97 and 98 of the Basic Law on the setting up of district organizations are enabling articles which are not binding. They give us sufficient flexibility to reform the organizations as proposed in the Bill.

PRESIDENT (in Cantonese): Members might wonder why I hesitated for a while before asking the Secretary to answer Mr Fred LI's supplementary question. It is because the Government had already provided information with regard to this supplementary question in the Bills Committee of the Legislative Council. However, in order not to waste Members' time, I allowed the Member to ask the question.

DR RAYMOND HO (in Cantonese): Madam President, in (b)(4) of the main answer, the Secretary said that a number of new bodies (such as the Advisory Council on Food and Environmental Hygiene and the Culture and Heritage Commission) would be set up to advise on and monitor the relevant services. This involves two different kinds of work. Will the Secretary provide information soon on the future structure and membership of these bodies and who will be appointed to them, so that the Legislative Council can discuss them? These are two different kinds of framework. One is an advisory body and the other might be a statutory body.

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, the Provision of Municipal Services (Reorganization) Bill introduced into the Legislative Council contains details on the arrangements of the statutory bodies, the people that would be involved, what our criteria are and so on. As for other advisory structures, Members have asked about them in the Bills Committee and we have answered their questions. Therefore, I have either given the information to Members or am talking to Members about it.

MR AMBROSE LAU (in Cantonese): Madam President, in (b)(2) of the main answer, it was said that the advisory and supervisory roles of District Councils in relation to municipal services will be strengthened at the district level. May I ask the Secretary what the exact plan is or what will be done in terms of strengthening their advisory and supervisory roles?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, last year, we carried out extensive public consultation on this review. With regard to strengthening the roles of district boards, we asked the Home Affairs Department (HAD) to set up a working group to consider how to implement this. We are now studying the relevant details. However, I can reveal our plan now, that is, the criteria that the Director of Home Affairs is considering. The HAD proposes to give additional funding to the district boards to improve the districts' environment or organize or finance cultural and recreational activities in the districts. The HAD also hopes to consult the district boards before the Government reaches a decision on the plan on district services and respond to their views more actively. It hopes to suitably increase the allowances of district board members for the reimbursement of their expenses in order to give them more incentive at work.

MR AMBROSE CHEUNG (in Cantonese): Madam President, in answering part (b) of the question, the Secretary still evaded the question and was even trying to mislead us. The Municipal Councils have the authority to formulate policies. Through the elected Councils, the people have the right to take part in the formulation of municipal service policies. However, in the entire part (b), the Secretary talked about the monitoring mechanism only. Will the Secretary tell us where the right to formulate municipal service policies has gone? Can the Secretary respond again to the point made so clearly by the human rights organization, that "the exercise of this conduct of public affairs, the right may not be suspended or excluded?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, I will answer the second part of the supplementary question first. In my view, we should look carefully at Article 39 of the Basic Law. The article states that the provisions of the relevant human rights covenants as applied to Hong Kong shall remain in force and shall be implemented through the laws of the Hong Kong Special Administrative Region. Let us consider which provisions of the Covenant as applied to Hong Kong are still in force. I have here a document on the content of the International Covenant. In 1976, Britain ratified the Covenant subject to certain savings and declarations in several areas. With regard to today's subject, the United Kingdom made a saving about not requiring the establishment of elected bodies in Hong Kong. As for the implementation of the Bill of Rights, Hong Kong legislated in 1991 to implement the Bill. Of course, in implementing the Bill of Rights, the appropriate sections in the two relevant human rights covenants were directly copied and made part of our laws. Part III of this law is on exceptions and savings and section 13 states that Article 21 of the Bill of Rights (equivalent to Article 25 of the Covenant) does not require the establishment of an elected Executive or Legislative Council in Hong Kong. From this, it is clear that the Bill of Rights is implemented in Hong Kong with savings. Of course, even if there are savings, it does not necessarily mean that we have to adhere to them. But there are no calls for us not to do so right now. The commitments we are making already go beyond the scope of the savings.

MR AMBROSE CHEUNG (in Cantonese): Madam President, the Secretary has not answered my supplementary question. My question was about the authority to formulate policies, but the Secretary talked about the electoral system instead. I hope the Secretary will give a further answer. Let us put aside the elections for the time being. What I said was that the Government has stripped the people of their power to formulate policies.

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, let us perhaps quibble over the words. Article 25(a) of the Covenant talks about taking part in the conduct of public affairs directly or through freely chosen representatives. The verb used is "take part", which is somewhat different from the words used by Mr CHEUNG just now.

PRESIDENT (in Cantonese): We have spent 18 minutes on this question. We will draw an end to question time here.

WRITTEN ANSWERS TO QUESTIONS

Review of the Pneumoconiosis (Compensation) Ordinance

7. MR LEE CHEUK-YAN (in Chinese): At the Legislative Council meeting on 22 July 1998, the Secretary for Education and Manpower undertook to review the amount of compensation for bereavement as provided in the Pneumoconiosis (Compensation) Ordinance (PCO) (Cap. 360), and to study the proposal of adjusting the amount of compensation every 12 months. In this connection, will the Government inform this Council of the current progress and findings of the above review and study?

SECRETARY FOR EDUCATION AND MANPOWER (in Chinese): Madam President, the level of compensation for bereavement under the PCO was last revised from $70,000 to $100,000 with effect from 1 August 1998. At the Legislative Council meeting on 22 July 1998 to debate the Government's motion to revise the levels of compensation under the PCO, the Government undertook to consider the impact and feasibility of increasing the compensation for bereavement under the PCO to $150,000, that is, equivalent to the amount of compensation for bereavement under another Ordinance, namely, the Fatal Accidents Ordinance (FAO).

The Labour Department has examined the above proposal and has come to the following views:

- The FAO operates on the basis of individual tortious liability. An award of compensation for bereavement under the FAO is based on a wrongful act, neglect or default of the person against whom the compensation claim is made. The claim has to be adjudicated by the court.

- The PCO operates on a collective liability system where the award of compensation is underpinned by a no-fault principle. Compensation will be payable to eligible claimants once the relevant conditions are met and there is no need to prove any wrongful act, neglect or default on the part of any person. Furthermore, compensation for bereavement is payable in the special circumstances where the pneumoconiotic had not received any compensation under the PCO prior to his death. This compensation is paid in addition to the compensation for death (which amounts to some $2.32 million for a pneumoconiotic who is under 40 years of age at the time of death) and funeral expenses if the pneumoconiotic dies of the disease.

- Although the "compensation for bereavement" under the PCO and the FAO share the same nomenclature, it is obvious that the two compensation items operate on totally different legal concepts. Given this, it is not appropriate to simply follow the amount under the FAO.

As for the proposal of adjusting the amount of compensation every 12 months, we are studying its implications. We will consult the Pneumoconiosis Compensation Fund Board and the Labour Advisory Board of the above two proposals shortly.

Quality of Drinking Water

8. MR JAMES TO (in Chinese): At present, Hong Kong adopts the standards stipulated in the World Health Organization Guidelines for Drinking Water Quality (1993) (WHO standards). It is reported that according to the recent territory-wide test on drinking water samples carried out by the Water Supplies Department, of the samples collected from public housing, the iron rust level of 8% of them exceeded the standard; of those from private housing, 18% exceeded the standard. In this connection, will the Government inform this Council:

(a) whether it knows the countries which adopt the WHO standards and the countries which adopt more stringent standards;

(b) whether it will, in conducting regular testing if the water quality of drinking water meets the standards, consider using domestic tap water instead of freshly treated drinking water from water treatment works; and

(c) whether it has plans to conduct comprehensive sample tests on the water quality of domestic tap water, and notify those households whose water samples have iron rust levels exceeding the WHO standard?

SECRETARY FOR WORKS (in Chinese): Madam President,

(a) Singapore and New Zealand are some of the countries that adopt the Guidelines for Drinking-water quality recommended by WHO (1993). The attached table compares number of parameters under WHO's guideline values (GVs), United States Environmental Protection Agency's (USEPA) Maximum Contaminant Levels (MCLs) and European Communities' (EC) Parametric Values (PVs). It is difficult to say which standard is better than the other.

The WHO Guidelines are the consensus opinion of over 200 authoritative experts from some 40 countries based on worldwide scientific and medical information. There are 94 parameters in the WHO Guidelines and 68 in the United States Standard, while the EC Standards has 26. It is noteworthy that there are 48 parameters for which WHO has set guideline values and the United States did not set any, and 38 parameters for which WHO has set guideline values and the EC did not set any. We can only come to the conclusion that there can be no direct comparison between standards, and the USEPA and the EC Standards are not better than the WHO Guidelines in all respects.

(b) The quality of water supplied to the consumer is strictly controlled at all times through regular sampling from treatment works to connection points to ensure compliance with the stringent requirements of the WHO. There is also a water quality monitoring programme covering water samples taken at catchment intakes, pumping station receiving Dongjiang water, storage reservoirs, treatment works, service reservoirs and distribution systems as well as consumers' taps.

The quality of water drawn from consumers' taps may be affected in certain aspects by the condition of the internal plumbing owned by consumers. Our investigation on the 1 800 water quality complaints in 1998-99 revealed that almost all of these complaints arose from problems of internal plumbing, such as corroded piping and dirty water tanks.

(c) The existing water quality monitoring programme already covers the water at consumers' taps. In 1998-99, 15 888 treated water samples were taken from consumers' taps as part of the monitoring programme. If the iron levels in the tap water samples have exceeded the WHO guideline value, we will notify the consumers for necessary actions.

In addition, we have commissioned a consultancy study on the quality of potable water supply within residential buildings in Hong Kong. The conclusion drawn by the consultant is that the quality of potable water in residential buildings in Hong Kong is generally satisfactory. The problem of discoloured water is noted and it is mainly due to the rust from corroded inside plumbing, mostly unlined galvanized iron (GI) pipes. The use of unlined GI pipes in new buildings and in large scale renovation in existing buildings has been banned since December 1995.

Table Comparing Chemical Parameters of

WHO GVs, USEPA MCLs and EC PVs

Comparison		No. of Chemical Parameters
WHO GV more stringent than USEPA MCL		25
WHO GV exists for which USEPA MCL not set		48
WHO GV same level as USEPA MCL		1
WHO GV less stringent than USEPA MCL		20
USEPA MCL exists for which WHO GV not set		19
WHO GV more stringent than EC PV		4
WHO GV exists for which EC PV not set		38
WHO GV same level as EC PV		10
WHO GV less stringent than EC PV		42
EC PV exists for which WHO GV not set		13

WHO GV	=	World Health Organization Guideline Values (1993)
USEPA MCL	=	United States Environmental Protection Agency (1998) Maximum Contaminant Level
EC PV	=	European Communities Parametric Value (1998)

Termination of Property Managers' Appointment

9. MR GARY CHENG (in Chinese): In reply to my question on 12 May this year, the authority pointed out that the Building Management Ordinance (the Ordinance) (Cap. 344) has been invoked by a total number of 165 Owners' Corporations to terminate the property managers' appointment since its implementation in 1993. While 156 of them succeeded, nine of them failed. In this connection, will the Government inform this Council:

(a) of the average number of owner households in those 165 Owners' Corporations;

(b) among the property managers appointed by those 165 Owners' Corporations, how many of them were the subsidiary companies of the property developers concerned, and the average number of ownership shares owned by the property developers concerned in these properties;

(c) of the respective reasons for failing to terminate the property managers' appointment in the nine failure cases; and

(d) whether it has any plan to consult all Owners' Corporations in Hong Kong as to whether the Ordinance is still applicable to the present-day need; if so, the timetable for the consultation?

SECRETARY FOR HOME AFFAIRS (in Chinese): Madam President, my reply to the above question is as follows:

(a) The termination of property manager's appointment by an Owner's Corporation in accordance with paragraph 7(1) of the Seventh Schedule to the Ordinance is entirely the decision and internal operation of the corporation itself. There is no statutory requirement for Owners' Corporations to provide the Government with such information. So we do not have full records or details of this type of cases. As far as we know, since the Ordinance was enacted in 1993, 165 Owners' Corporations have approached various District Offices to inquire about the legal procedures for terminating property managers' appointment. In response to this question raised by the Honourable Gary CHENG, we have recently conducted urgent surveys via various District Offices and successfully obtained further information on 144 corporations (including 137 cases in which the property managers' appointment has been successfully terminated and seven unsuccessful ones).

The number of owner households for these 144 Owners' Corporations range from 15 to 3 500, with an average of 298 households.

(b) Of the property managers appointed by these 144 Owners' Corporations, about 103, to our knowledge, are subsidiaries of the property developers concerned. In respect of the average number of property shares owned by the property developers concerned in these properties, we regret that we do not have the specific details as this involves private title and requires thorough investigation into the title documents for individual buildings as well as background checks of owners and status of companies. (c) For the seven unsuccessful cases that have come to our knowledge, the Owners' Corporations failed to terminate the property managers' appointment for the following reasons:

(i) four cases failed because the shares of the owners who supported the termination of the appointment fall short of the statutory 50%;

(ii) two cases failed because the number of people who attended the meetings of owners did not constitute a quorum and thus the meetings had to be aborted; and

(iii) one case was that the manager reached an agreement with the owners at the meeting of the owners for the appointment to be continued.

(d) As stated in my reply to the Honourable Gary CHENG in the Legislative Council sitting on 12 May, we consider that the existing Ordinance works well and the procedures and provisions for terminating the property managers' appointment are appropriate and feasible. In the circumstances, I consider that there is no need to review or amend the Ordinance or consult all Owners' Corporations in Hong Kong.

Obstetric and Gynaecological Services in New Territories East

10. MR ANDREW CHENG (in Chinese): It is noted that the Alice Ho Miu Ling Nethersole Hospital (AHNH) in Tai Po has purchased some obstetric and gynaecological equipment which is worth a few million dollars, but the Hospital Authority (HA) has subsequently decided that obstetric and gynaecological services will not be provided at the hospital, and therefore the equipment has never been used. In this connection, will the Government inform this Council whether it knows:

(a) the time at which the hospital received the obstetric and gynaecological equipment;

(b) the types, quantity and value of the equipment which has been ordered by the hospital but has not yet been delivered;

(c) how the obstetric and gynaecological equipment which has been delivered to the hospital and the equipment which is yet to arrive will be disposed of; and

(d) the criteria with which the HA assesses:

(i) the needs of the residents in New Territories East for obstetric and gynaecological services; and

(ii) the ability of the HA in providing adequate obstetric and gynaecological services in New Territories East?

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

(a) AHNH has started to provide gynaecological service from April this year. Regarding obstetric service, in view of the decreasing number of deliveries in New Territories East from about 7 400 cases in 1995-96 to about 5 800 cases in 1998-99, the HA currently does not have any plans to provide obstetric service to AHNH in the near future. When the HA started to plan for the commissioning of AHNH, AHNH had ordered some equipment for its obstetric department, including specialized equipment for obstetric service. Some equipment had been delivered to AHNH in January 1996. AHNH negotiated with the equipment suppliers on numerous occasions to postpone the delivery of the remaining equipment. The last batch of equipment was delivered in February 1999.

(b) At present, there is no obstetric equipment which has been ordered by AHNH, but has not yet been delivered.

(c) In order to use resources effectively, AHNH has already redeployed all the equipment that is originally ordered for its obstetric department and is suitable for use by other departments, such as blood pressure monitors and resuscitators, to its gynaecological and other departments. For those equipment which are specialized for obstetric service, costing about $2.7 million in total, such as the fetal monitoring system, the HA is planning to redeploy them to other suitable and needy public hospitals.

(d) When the HA plans for the provision of obstetric service in public hospitals, it takes into consideration factors such as service needs and cost-effectiveness. In recent years, the birth rate in Hong Kong has been on the decline. The number of births in public hospitals decreased by 20% from about 45 500 in 1995-96 to about 36 600 in 1998-99. To achieve cost-effectiveness, the HA considers that an in-patient obstetric department should handle a minimum of 3 000 deliveries per year. This amount of workload can help to enhance the professional competence of the obstetric staff, thus ensuring service quality. The HA estimates that if obstetric service were commissioned at AHNH, the number of deliveries handled by the obstetric department would be less than 3 000 per annum. Therefore, the HA considers that it is not advisable to commission obstetric service at AHNH at this stage. The obstetric service needs in the New Territories East will continue to be met by the Prince of Wales Hospital.

Regarding gynaecological service, there has been a trend of increasing demand due to factors such as the ageing population, higher awareness among women on health and introduction of technology. To meet rising need, AHNH commissioned its gynaecological service in April this year, including the opening of 20 gynaecological beds.

Seven-day Visa-free Period for Chinese Passport Holders

11. MR HOWARD YOUNG: At present, Chinese passport holders who have a valid visa or landing permit for entry to a country or place outside Hong Kong and who have a valid airline ticket to such destination are allowed to stay in Hong Kong for seven days without an entry permit whilst en route to or from the Mainland. In this connection, will the Government inform this Council whether it will consider allowing such persons to re-enter Hong Kong after visiting Macau during the seven-day visa-free period; if not, the reasons for that?

SECRETARY FOR SECURITY: Madam President, mainland passport holders on their way to or from overseas countries are allowed stay in Hong Kong in transit for a period of up to seven days without the need to obtain entry permits, as long as they possess valid visas or landing permits and confirmed airline tickets for their overseas destinations. This entry-permit-free transit arrangement aims to facilitate their overseas travel by enabling them to connect flights or stopover in Hong Kong. This transit arrangement does not apply to journeys from the Mainland to Macau because mainland residents can visit Macau direct without transitting through Hong Kong. Under existing mainland laws, mainland residents have to apply for exit approval to visit Macau.

The Immigration Department has no power to stop any mainland visitor or transittee from travelling to Macau instead of their intended final destination. However, if they return to Hong Kong, they will have to explain to the satisfaction of the immigration officer that they had good reasons to deviate from their original travel plans.

In justified cases, they may be landed for a few days to complete their previous seven-day stay on re-entry into Hong Kong. Otherwise, they may be refused permission to land in Hong Kong. A decision will be taken in the light of the circumstances of each individual case.

Trials on Diesel Oxidation Catalyst

12. MRS MIRIAM LAU: It is learnt that in conjunction with a franchised bus company, the Environmental Protection Department (EPD) has completed a three-year trial on the effectiveness of diesel oxidation catalyst in reducing emissions from double decker buses. In this connection, will the Administration inform this Council:

(a) of the results of the trial; and

(b) whether it will conduct similar trials on other diesel-powered vehicles, such as light buses, trucks and taxis; if so, the details of them; if not, the reasons for that?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Madam President,

(a) Early this year, the EPD completed a three-year trial of retrofitting various types of diesel catalysts on five double decker buses with the Kowloon Motor Bus Limited. The objective of the trial was to ascertain the performance of diesel catalysts on in-use double decker buses under local conditions and to identify practical issues involved in retrofitting local buses with catalysts. Major findings of the trial were as follows:

(i) a properly designed and fitted diesel catalyst could reduce the emissions of local buses without any adverse effects on their engines. Installation of the catalyst was not difficult;

(ii) a catalyst could reduce particulate and smoke emissions by up to 50% and 65% respectively;

(iii) the catalyst's performance in reducing emissions could still be very substantial even after two years of service under local condition. The performance test results are consistent with those of overseas studies such as those done in London, Taiwan and Mexico; and

(iv) diesel catalyst was confirmed to be a practicable technology for controlling emissions of local buses.

The franchised bus companies have planned to fit diesel catalysts to some 2 000 in-use diesel buses in about two years' time.

(b) We are now examining the use of diesel catalysts on other heavy duty diesel vehicles of four tonnes and above. Within this year, we aim to launch a trial of retrofitting 20 government in-house heavy duty diesel vehicles with diesel catalysts and to invite private transport operators to put up similar number of heavy duty vehicles to participate in the trial.

As diesel catalysts are only currently applicable to heavy duty diesel vehicles, the Hong Kong Polytechnic University (HKPU) has specifically developed a low-cost particulate trap for light duty diesel vehicles. We are working with the HKPU and the transport trades to further develop the prototype into marketable product and an operational trial will be launched in August 1999.

SWD's Redeployment of Resources

13. MR LAW CHI-KWONG (in Chinese): The Social Welfare Department (SWD) has planned to deliver new or improved services through redeployment of resources in the next financial year. Such services will include (1) providing a Dementia Supplement to more elderly persons in residential care; (2) strengthening the SWD's Service Performance Section to implement the output monitoring system of welfare services; (3) setting up in the SWD a Contract Management Unit to support contracting out initiatives; (4) providing additional 48 integrated child care centre places; and (5) establishing five teams to examine the eligibility for admission to residential care homes for the elderly. In this connection, will the Government inform this Council of:

(a) the number of elderly recipients of the supplement mentioned in item (1) above;

(b) the estimated amount of expenditure to be incurred in the delivery of each service mentioned above; and

(c) the details of the SWD's target savings in resources in this financial year for the purpose of implementing the above plan, including the expenditure items from which savings will be achieved and the respective amounts of savings to be achieved, and whether any temporary staff have been employed at a salary equivalent to 70% of the entry point of the permanent staff; if so, of the amount of savings achieved?

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

(a) An additional 57 elderly persons, including 21 living in residential homes for the elderly and 36 in homes for the aged blind, will benefit from the provision of a Dementia Supplement.

(b) The estimated expenditure required to implement the new or improved services, in the current financial year, is $38.1 million. A breakdown of this amount is as follows:

	Services	Amount (in million)
(1)	Provide Dementia Supplement to more elderly in residential care	$2.4
(2)	Strengthen the SWD's Service Performance Unit	$9.4
(3)	Set up a Contract Management Unit in the SWD	$6.2
(4)	Provide an additional 48 intergrated child care centre places	$2.0
(5)	Establish five teams to examine the eligibility for admission into residential care homes for the elderly	$18.1
	Total:	$38.1

(c) To provide resources to implement these services, the SWD has identified savings from the following programmes, in this financial year

Programmes		Amount (in million)
(1)	reduction of 200 planned provision of Day Creche places	$1.6
(2)	absorbing the resources required for expansion of the Community Service Order Scheme to District Courts and the higher Courts from within existing provision	$2.0
(3)	reduction of planned provision of seven Children and Youth Centres	$22.6
(4)	closing down of the Castle Peak Boy's Home and the Pui-Yin Juvenile Home	$5.3
(5)	reduction of planned provision of 130 residential places for the aged blind and 60 Early Education and Training Centre places	$6.6
	Total:	$38.1

The initiatives either reflect a change in demand for the service, or the ability of existing services to absorb additional demand.

The Department has recently employed 112 Social Security Assistants on non-civil service contract terms and the temporary savings achieved are around $3 million for the current year.

Use of Mobile Phones in Petrol Stations

14. DR RAYMOND HO (in Chinese): It is reported that in Australia, a young person was killed in an explosion in a petrol station caused by the sparkle of his mobile phone which rang while he was refuelling his car. In this connection, will the Government inform this Council:

(a) whether it knows the details of the above incident;

(b) whether it knows the global number of similar accidents and the casualties involved; and

(c) whether measures have been taken to advise the public not to use mobile phones or to turn the phones off while they are in a petrol station?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) The Fire Services Department (FSD) has, through the Sydney Office of the Hong Kong Economic and Trade Office, requested the Australian Financial Review's reporter who covered the accident to provide further details, but the reporter has so far failed to do so. After the report of the incident, the Australian Mobile Telecommunications Association wrote to the above newspaper, stating that the coverage was inaccurate and querying whether the accident did occur. The Association also clarified that under normal circumstances, the wave power generated by mobile phones was too low to cause any risk of ignition. After investigation, the Fire Service of New South Wales, Australia has also declared that there is no such incident.

(b) According to the information obtained by the FSD from the fire services of other countries, mobile phones manufacturers and overseas oil companies, no such accident has happened in any overseas petrol-filling station.

(c) The FSD has requested all oil companies to display notices at prominent locations in their petrol-filling stations to remind customers not to use mobile phones within the stations. The staff of petrol-filling stations will also advise drivers to abide by the notices. These measures are devised to ensure the safety of the public. In fact, the result of an initial assessment made by a government inter-departmental working group indicates that the potential risk associated with the use of mobile phones in petrol-filling stations is very low and is unlikely to cause fire. Nevertheless, as the public has shown concern over the matter, the working group is collecting further information on the risk assessments pertaining to the use of mobile phones conducted by overseas and local bodies and will, based on information available, prepare a report to ascertain the need for further safety measures.

Body Weight of Students

15. DR TANG SIU-TONG (in Chinese): With regard to the body weight of primary school and secondary school students, will the Government inform this Council:

(a) whether the Department of Health has set standard weights for students of different ages;

(i) if so, whether statistics are available on the respective proportions of students in Hong Kong whose weights are 10% below or above the standard to all students in the territory; and

(ii) if not, whether it will consider setting the relevant standards;

(b) whether the Department of Health has assessed the impact of abnormal body weight on the physical and mental health development of the students; if so, the results of the assessments; if not, the reasons for that;

(c) whether the annual health check-up service provided by the Department of Health to students includes referring students with abnormal body weight for treatment or psychological services;

(i) if so, the operational guidelines issued to front-line health care personnel, the referral procedure and the numbers of referrals in the past three years; and

(ii) if not, the reasons for that;

(d) whether the Department of Health has drawn up measures to encourage or assist schools or voluntary agencies in organizing training courses to help students with abnormal body weight achieve normal weight; and

(e) whether the Department of Health has plans to impart upon different groups of people such as students, teachers, parents and the public, the importance of normal body weight; if so, the details of them; if not, the reasons for that?

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

(a) The Department of Health (DH) is using a set of locally developed growth standards to assess the conditions of the students. These growth standards were developed locally according to the findings of a territory-wide survey on 25 000 individuals ranging from birth to 18 years old conducted in 1993 by the DH, the Hospital Authority and the Chinese University of Hong Kong. Percentile charts developed for boys and girls include such data as height for age, weight for age, weight for height, head circumference, skinfold thickness and sexual maturation.

The Student Health Service of the DH is using the weight for height percentile chart to assess the body weight of students. A student is diagnosed as obese or underweight if his/her body weight is 20% above or below the median weight for height. Body weight within 20% of the median is considered as optimal. In the 1997-98 academic year, about 12% of students who have attended the Student Health Service Centres were found to have obesity while about 1.3% were diagnosed as underweight.

(b) The aim of the Student Health Service is to promote and maintain the physical and psychological health of school children. All students who attend Student Health Service Centres, irrespective of whether they have optimal or abnormal body weight, will undergo a comprehensive health programme to assess their physical and psychological health. It was observed that 4.8% of obese students were associated with very low self-esteem. For underweight students, 0.2% had delayed puberty. These two rates are relatively higher than those for students with normal body weight.

(c) A set of operational guidelines has been developed by Student Health Service and issued to front-line health care personnel for the management of students with abnormal body weight. Students found to have abnormal body weight will be counselled by nurses and doctors at Student Health Service Centres. Where necessary, cases will be referred to doctors in the Special Assessment Centres for detailed assessment and to dieticians for dietetic counselling. Severe cases will be referred to Hospital Authority specialists for follow-up. Students with weight problems are encouraged to attend "Keep-fit classes" organized by the Service.

In the 1995-96, 1996-97 and 1997-98 academic years, a total of 8 702, 9 125 and 6 940 students respectively needed referrals owing to abnormal body weight. In the past three years, 2 119 individual dietetic counselling sessions were conducted by dieticians, 8 376 students attended group dietetic counselling. About 2 300 cases were referred to Hospital Authority specialists for follow-up. About 2 600 students and parents attended "Keep-fit classes".

(d) The Student Health Service maintains a close liaison with school principals in the promotion of healthy eating and living habits among students. Advice on healthy lifestyles, including balanced diet and regular exercise to maintain normal body weight, is given in the Service's newsletter "Colourful Bridge" distributed to schools. Other activities to communicate with schools include organizing competitions and workshops for students. As part of the "Healthy Living into the 21st Century" Campaign, the DH has promoted healthy snacks and healthy eating concepts in some schools and their tuck-shops.

(e) The DH provides health education to the general public through various means. The Central Health Education Unit organizes health ambassador training courses for teachers, students, women and the elderly so as to help them promote healthy living habits in their schools and communities. In the past three years, more than 2 000 teacher and student health ambassadors successfully completed the training courses, who in turn organized over 600 health education activities in their schools to promote health messages among other students.

Enforcement of the Protection of Investors Ordinance

16. MR CHEUNG MAN-KWONG (in Chinese): Sections 3 and 8 of the Protection of Investors Ordinance (PIO) (Cap. 335) prohibit acts of misrepresentation in respect of investments; similar provisions are contained in section 40A of the Companies Ordinance (CO) (Cap. 32) and section 138 of the Securities Ordinance (SO) (Cap. 333). In this connection, will the Government inform this Council:

(a) of the organizations responsible for enforcing the PIO;

(b) whether it knows the number of cases, classified by investment products, involving acts of misrepresentation into which investigations have been conducted and against which prosecutions have been instituted by the enforcement organizations under the PIO over the past three years; the number of convictions, the details of the offences and the penalties imposed;

(c) whether it knows the number of cases in which civil proceedings were instituted by investors under section 8 of the PIO in the past three years; the number of cases in which the court passed judgment in favour of the investors; and

(d) how the PIO compares with the CO and the SO, insofar as protection of investors' interests is concerned?

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

(a) The objective of the PIO is to provide for the protection of investors in securities and other property. The Securities and Futures Commission (SFC) is the principal authority responsible for enforcing the PIO. The police is also responsible for enforcing the PIO in cases where the property concerned is not under the SFC's jurisdiction.

(b) During the past three years the SFC has commenced two investigations under section 33 of the Securities and Futures Commission Ordinance on the basis that there was, inter alia, reason to believe that an offence had been committed under section 3¹ of the PIO. One case involves possible misrepresentations in selling shares in overseas listed companies, and the other involves possible misrepresentations in the sales of a pooled retirement fund. Both investigations are still ongoing. During the same period there have been no prosecutions brought by the SFC for breaches of section 3 of the PIO.

On the other hand, the police have initiated two prosecutions under section 3 of the PIO against parties involved in suspected fraudulent activities involving alleged trading in Loco London Gold in Hong Kong over the past three years. Both cases were convicted guilty and the fines for the two cases were $100,000 and $75,000 respectively.

(c) Section 8 of the PIO provides that any person who, by any fraudulent, reckless, or negligent misrepresentation, induces another person to take part into arrangement as stipulated in section 3 of the same Ordinance shall be liable to pay compensation to that other person for any pecuniary loss that he has sustained by reason of his reliance on the misrepresentation.

Members may wish to know that any person taking a legal action under this section is not obliged to notify the SFC nor the police. The Administration therefore has not maintained any statistics on this area. To the best knowledge of the SFC, there has not been any action brought by investor under section 8 of the PIO during the past three years.

(d) The provisions of the three Ordinances (namely, the PIO, the CO and the SO) seek to protect investors by placing restrictions on the manner securities and other forms of investment are offered to the public in, broadly, three different situations. Each Ordinance offers protection to investors by establishing certain offences and by providing a civil remedy. There is inevitably some degree of overlap as the areas that they seek to cover often overlap.

The provisions of the CO (Cap. 32) are directed at ensuring that where a company offers shares or debentures to the public, then unless the shares in that class are already listed on the Stock Exchange, the offer document (the prospectus) must be registered with the SFC and contain certain information.

Under section 40A of the CO, any person who authorizes the issue of a prospectus which includes an "untrue statement" commits a criminal offence, unless he proves that the statement was immaterial or that he had reasonable grounds to believe that the statement was true. Moreover, the civil consequences of failure to comply with the prospectus provisions are set out in section 40 of the CO which provides for payment of compensation in certain circumstances.

The PIO is primarily concerned with marketing of securities not covered by the prospectus requirements in the CO, and with investment arrangements relating to property other than securities.

Under section 3, any person who by fraudulent or reckless misrepresentation induces another person to enter into an agreement to buy or sell securities, or to take part in investment arrangements relating to property other than securities commits a criminal offence. Section 4 of the PIO prohibits the issue of advertisements relating to any of the acts referred to in section 3. However, prospectuses offering securities which comply with the CO (or are exempt from compliance) are exempt from the provisions of section 4 of the PIO. The civil consequences of failure to comply with the same provisions as set out in section 3 of the PIO are set out in section 8 which provides for payment of compensation in such circumstances. Section 8(5) bars a right of action in any case to which section 40 of the CO applies, thus avoiding any overlap.

Lastly, the SO is primarily directed at regulating the dealing in securities of any corporation. It provides for registration of investment advisers and dealers and their representatives. The public are also protected by provisions regulating marketing of securities by dealers in section 72, prohibiting hawking of securities in section 74 and so on.

A series of offences are gathered in Part XII of the SO under the heading of "Prevention of improper trading practices" which includes section 138 under which a person commits an offence if, for the purposes of inducing the sale of securities of any corporation, he makes false or misleading statements about those securities. As the provision does not extend to statements for the purposes of inducing the purchase of securities it is of limited effect. The civil consequences of contravening section 138 are set out in section 141 which provides for payment of compensation in certain circumstances.

Customs Inspection on PLA Personnel and Vehicles

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

(a) personnel and vehicles of the People's Liberation Army (PLA) stationed in Hong Kong are subject to inspection by the Customs and Excise Department at immigration control points; if so, whether the inspection criteria for them are the same as those applied to other travellers and vehicles; if they are different, the details of the differences; if the PLA personnel and vehicles are not subject to customs inspection, the reasons for that; and

(b) the items brought into and out of Hong Kong by PLA personnel and vehicles are regulated by the law of Hong Kong; if not, the reasons for that?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) Members of the Garrison stationed in the Hong Kong Special Administrative Region (SAR) by the Central People's Government for defence duties must abide by national laws and the laws of the SAR. They are subject to more stringent control than members of the public when entering or leaving Hong Kong. As for customs procedures, all Garrison personnel and vehicles undergo customs checks at the control points when crossing the boundary. The procedure includes prior notification by designated liaison officers in the Garrison of the detailed information of the personnel and vehicles involved in the movement, verification of such information at the control points, checking of documentation and storage of data in the customs computer system. If any breaches of SAR laws are suspected, SAR customs officials will contact the Garrison Headquarters and take appropriate actions.

(b) In accordance with Article 14 of the Basic Law and Article 16 of the Garrison Law, members of the Garrison strictly abide by the provisions of the SAR laws, including those relating to immigration and customs controls.

Cyberport Project

18. MISS CHRISTINE LOH: Regarding the Cyberport project, will the Government inform this Council:

(a) whether the related environmental impact assessment (EIA) study was completed in March 1999; if so, the reasons for the Southern Provisional District Board not being informed of the findings of this study when it considered the project on 22 March 1999;

(b) of the impact of the project on air and noise;

(c) whether reclamation will be involved; if so, the extent of it; and

(d) whether Route 7 will precede the project?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING: Madam President, in respect of the Cyberport project:

(a) we completed the related EIA study and submitted the EIA report for approval on 12 February 1999. In accordance with the Environmental Impact Assessment Ordinance (EIAO), we advertised the availability of the EIA report on 12 March 1999 and made it available for public inspection and comments for a period of 30 days. The EIA report was also available at the website of the Environmental Protection Department (Address: ) and at the EIAO Register Office on the same date. At the meeting with the Southern Provisional District Board on 22 March 1999, we informed members of the availability of the EIA report and presented to them the gist of the findings in the report. The EIA report was endorsed by the Advisory Council on the Environment on 26 April 1999 and approved by the Director of Environmental Protection with conditions on the same date.

(b) Road traffic is the major source of noise in that area. The EIA report has recommended measures to mitigate the noise impact. These measures include application of noise reducing road surfacing material and installation of roadside noise barriers along some sections of the roads. During the construction stage, low-noise construction equipment will be used. With these mitigation measures in place, the noise levels received from the residential flats will be reduced to meet the criteria set forth under the Technical Memorandum on EIA Process (TM).

Dust is expected to be the major air quality pollutant during the construction phase. The EIA report has recommended dust suppression measures such as regular watering of unpaved roads and limiting the vehicular speed on the access roads. Furthermore, fill materials for the purpose of ground treatment works will all be transported by barges to avoid the dust generation from land transportation. For the operational phase, the EIA report indicates that the air quality at all the air sensitive receivers would comply with the requirements set out in the TM. Through the installation of deodorizing system, the odour impact from the sewage treatment plant can also be reduced to a level not exceeding the limit set forth in the TM.

(c) The Cyberport will be built on a piece of land reclaimed some 10 years ago. There is no plan for further reclamation for the Cyberport project.

(d) A Traffic Impact Assessment has been conducted for the proposed Cyberport development. It indicates that the Cyberport development is not contingent upon the construction of Route 7. It concludes that with the completed and proposed road junction improvement works, the Cyberport development will not generate adverse traffic impact on the road network in the Pok Fu Lam area even without Route 7. Under our tentative schedule, the southern section of Route 7 between Aberdeen and Sandy Bay would be completed by 2007 and the northern section between Sandy Bay and Kennedy Town by 2010-11. As for the Cyberport, it will be completed in phases from end 2001 to 2007.

Drug Resistance of Bacteria VRSA

19. MR LAU KONG-WAH (in Chinese): It is reported that Hong Kong has recently found its first case in which a patient was infected with Vancomycin Resistant Staphylococcus Aureu (VRSA) and died subsequently. In this connection, will the Government inform this Council:

(a) of the symptoms of a patient who is infected with VRSA;

(b) of the types of bacteria which have developed drug resistance; provide a breakdown, by the types of bacteria, of the numbers of deaths arising from infection of such drug-resistant bacteria over the past three years;

(c) of the measures in place to combat the drug resistance of bacteria; whether it will explore such measures if they are not available; and

(d) whether it has planned to enhance publicity efforts to inform the health care personnel and the general public that the abuse of antibiotics will result in drug resistance of bacteria?

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

(a) The symptoms experienced by a patient infected with VRSA vary and will depend on the site of bacteria infection. If the patient has peritonitis caused by VRSA, he would develop fever, abdominal pain, nausea, vomiting and so on. If the bacteria have entered the blood stream, the patient may experience toxic symptoms like fever, low blood pressure, rapid heart beat, confusion, coma or even death. Infections by VRSA are rare. The affected are mainly patients with immune system weakened by their own illness or treatment.

(b) Different bacteria have different patterns of resistance to various antibiotics. In general, most bacteria have resistance to some antibiotics, but are sensitive to some others. There are still many anti-microbial agents available which can be used to effectively combat "antibiotic resistant" bacteria.

Bacterial infection may lead to complications and ultimately cause deaths. The Hospital Authority maintains the statistics on mortality according to the diseases causing the deaths. There is no breakdown by types of bacteria.

(c) Different bacteria have different patterns of resistance to various antibiotics, and the patterns may change over time and as the environment changes. The most important measure to combat drug resistance is to maintain a good surveillance system. The surveillance allows the health care personnel to be updated on the latest trends of bacteria resistance to antibiotics. They may then choose the most appropriate and effective treatment for the patients.

At present, the Infection Control Team in each public hospital collects and keeps records of essential infection data and conducts regular hospital infection surveys. The public health laboratories of the Department of Health monitor the antibiotic resistance pattern for bacteria isolated from patients in clinic settings. We have plans to invite private doctors to join the surveillance network.

As regards treatment, each public hospital's Drug and Therapeutics Committee, comprising doctors, clinical microbiologists and pharmacists, is responsible for helping clinicians on the anti-microbial therapy selection process and appropriate use of antibiotics in order to improve therapeutic efficacy and minimize the emergence and spread of antibiotic-resistant bacteria.

(d) The problem of antibiotic abuses causing drug resistance has been included as part of the continuing education for doctors and other health care personnel. The Department of Health would disseminate through various means, including the Public Health and Epidemiology Bulletin and the Internet, the related information to health care workers. The topic has also been incorporated into the Department's health education messages on proper drug use and disseminated to the public through pamphlet, video and telephone information. Such publicity and patient education efforts would be further enhanced with the use of mini exhibition boards and teaching aids.

Tai Hang Sai Village

20. MR AMBROSE CHEUNG (in Chinese): From 1959 to 1962, the Government granted land to the Hong Kong Settlers Housing Corporation Limited on concessionary terms at a price below the market level and offered loans to the Corporation for the construction of rental housing flats at Tai Hang Sai. In this connection, will the Government inform this Council:

(a) of the ways in which the Government monitors the Corporation in implementing and executing the relevant grant conditions;

(b) whether it has considered establishing a mechanism to monitor the management of Tai Hang Sai Village, given that the village is similar in nature to the public rental housing under Hong Kong Housing Authority and the Hong Kong Housing Society;

(c) whether it has considered including Tai Hang Sai Village in redevelopment plans; if so, the details of them; if not, the reasons for that;

(d) whether there are organizations similar to the corporation in Hong Kong; and

(e) whether it has plans to grant land to private companies in the same manner for rental housing development in the future?

SECRETARY FOR HOUSING (in Chinese): Madam President,

(a) In 1961, the Government granted a piece of land at concessionary premium to the Hong Kong Settlers Housing Corporation Limited for developing the present Tai Hang Sai Estate in order to rehouse tenants affected by clearance of the then Tai Hang Sai Resettlement Area. The land grant provides that the Corporation shall build on the land not less than 1 600 flats for letting to persons with low income but shall not sell, assign or mortgage the land or any buildings thereon without the Government's consent. Accordingly, the Corporation constructed 1 603 flats and let them out at rents below market levels to tenants with low income. The Government has no reason to suspect any breach of conditions of land grant. If there are, we will initiate investigation.

(b) The Executive Committee of the Corporation is fully empowered to manage and let the flats. The Government has no authority to establish a mechanism to monitor the Corporation's operations. Based on information provided by the Corporation, the level of rents currently charged is in line with those of public rental estates managed by the Hong Kong Housing Authority and the Hong Kong Housing Society.

To improve the transparency and accountability of management, the Corporation has decided to introduce the following new measures:

(i) adoption of a set of eligibility criteria in allocating vacant flats similar to those of the Housing Authority's public rental flats;

(ii) setting up of an appeal panel to hear appeals lodged by tenants against termination of tenancy owing to breaches of tenancy agreements; and

(iii) establishment of an Estate Management Advisory Committee to improve communication between tenants and management.

(c) The Tai Hang Sai Estate has not been included in any redevelopment plan to be implemented by the Government.

(d) There are no organization similar to the Corporation in Hong Kong.

(e) The Government has no plan to make similar land grants for rental housing development.

BILL

First Reading of Bill

PRESIDENT (in Cantonese): Bill: First Reading.

ADAPTATION OF LAWS (NO. 15) BILL 1999

CLERK (in Cantonese): Adaptation of Laws (No. 15) Bill 1999.

Bill 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 Bill

PRESIDENT (in Cantonese): Bill: Second Reading.

ADAPTATION OF LAWS (NO. 15) BILL 1999

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I move the Second Reading of the Adaptation of Laws (No. 15) Bill 1999. The Bill seeks to effect adaptations to seven Ordinances and their subsidiary legislation relating to aviation and tourism to bring them into conformity with the Basic Law and with the status of Hong Kong as a Special Administrative Region (SAR) of the People's Republic of China. These seven Ordinances include the Hotel Proprietors Ordinance, the Civil Aviation (Births, Deaths and Missing Persons) Ordinance, the Hong Kong Tourist Association Ordinance, the Civil Aviation (Aircraft Noise) Ordinance, the Dangerous Goods (Consignment by Air) (Safety) Ordinance, the Civil Aviation Ordinance and the Airport Authority Ordinance.

Although the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance have already laid down principles specifying how terminology inconsistent with the Basic Law or with the status of Hong Kong as a SAR of the People's Republic of China is to be construed, it is considered inappropriate to retain such terminology in our statutes after the reunification. It is for this reason that the Government has moved this Bill to propose necessary amendments to the seven Ordinances and their subsidiary legislation. Most of the proposed amendments are terminological changes only. For example, references to "Governor" and "the Colony" are substituted by "Chief Executive" and "Hong Kong" respectively. Other amendments, such as amendments relating to the repeal of privileged treatment given to the United Kingdom or other Commonwealth countries or regions, will be based on principles laid down in the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance.

The proposed amendments in this Bill when passed into law shall take effect retrospectively as from the date of the establishment of the Hong Kong SAR. But we suggest to make special arrangements for the effective dates of two of the amendments. One of them is related to the professional qualification of aircraft maintenance engineers. According to the existing legislation, people granted with the relevant qualification by the United Kingdom will be recognized automatically and will be issued specific certificates. Now the Government proposes to repeal this arrangement and the proposal shall come into operation at the day on which the relevant Ordinance is published in the Gazette. As these engineers might be issuing certain operators or owners with certificates under the existing laws, imposing retrospective measures will invalidate certificates which have been issued and is therefore unreasonable.

Another amendment is related to specifications on marks inside aircraft registered locally. Under the existing legislation, marks such as "出口" need to be written in English only. In order to reflect the equal status enjoyed by Chinese and English, it is now proposed that these marks should be written in both Chinese and English at the same time. This amendment shall come into operation on a day to be appointed by the Director of Civil Aviation so as to give aircraft operators and owners ample time to meet the new requirement.

Madam President, this Bill will bring the abovementioned seven Ordinances and their subsidiary legislation into conformity with the Basic Law and with the status of Hong Kong after the reunification. Moreover, it will also obviate the need to make cross references to the Hong Kong Reunification Ordinance and the Interpretation and General Clauses Ordinance in reading the Ordinances. I hope Members can support the early passage of the Bill into law. Thank you, Madam President.

PRESIDENT (in Cantonese) : I now propose the question to you and that is: That the Adaptation of Laws (No. 15) 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.

MEMBERS' MOTIONS

PRESIDENT (in Cantonese) : Members' motions. Two motions with no legislative 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 amendment. The mover of an amendment will have up to 10 minutes to speak. The mover of an amendment to an amendment and other Members will each have up to seven minutes for their speeches.

First motion: Civil Service Reform.

CIVIL SERVICE REFORM

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, I move the motion as set out on the Agenda.

Madam President, on 8 March the Government published the Consultation Document on Civil Service Reform. The Consultation Document has caused great repercussions in the Civil Service. For the past few Sundays we can see thousands of civil servants take to the streets to vent their discontent for the contents of the Consultation Document. It can be seen that the reform proposals put forward by the Government have not gained the full support of civil servants. For the past few months, I have had contact with quite a number of civil servants and heard the views presented by many civil servant groups. Summing up their opinions, they do not object generally to the major principles of the civil service reform, but they are not satisfied with the direction and contents of the reform as proposed by the Government which they think are unfair and unreasonable. They are not satisfied because the Government has been talking about conducting consultations while in fact conducting changes in the departments. Throughout the entire process the civil servants are not given any chance at all to take part in formulating the reform proposals, nor have they been consulted. This approach is completely in contradiction to the six primary principles espoused by the Chief Executive on 3 June. These principles are: "to change amid stability; to introduce reforms step by step; to take a comprehensive overview; to hold wide consultation; to adopt practicable measures; and to ensure reform is reasonable and lawful." This great disparity between profession and practice serves only to make the civil servants fill with fear and anger.

The Chief Executive mentioned holding wide consultation, but has this really been done? I must emphasize that: when private sector organizations seek to launch some reforms, the Government demands that the employer must consult the employees and be receptive to their views. But when the Government wants to launch the civil service reform, it has not taken its staff seriously. That cannot be justified. It is really a very difficult thing for the civil servant groups to arrange an interview with Mr LAM, the Secretary for the Civil Service. It is reported that a lot of civil servant groups flocked to a seminar on civil service reform organized by a research institute simply because Mr LAM was invited to the meeting. Many a day civil servants will find it close to being an impossibility to make an appointment to meet Mr LAM. Therefore, to seek a dialogue with Mr LAM, these civil servant groups flocked to the seminar. From this we can see grave problems do exist in the consultation and communication channels within the Civil Service. Besides, civil servants are not completely convinced by the reform proposals. The reform is by its nature revolutionary, but everything from the formulation to the implementation of proposals is done by the Civil Service Bureau. It makes one cast doubts on its objectivity and fairness. To put it simply, why are the reforms targeted at the lower ranks and not at those at the very top? Why are the lower ranks completely overturned in the reform with the top officials remaining unaffected? The Government has to be fair to convince the affected party. Representatives of civil service unions from all grades should be incorporated into the reform mechanism and in the process of the reform itself. Some neutral people from the community and academics should also be included. Problems in the mechanism should first be found out and then remedied before reform is undertaken gradually. Only in so doing can the active participation of the civil servants be enlisted and the Civil Service can become a driving force for reform.

The Chief Executive has repeatedly stressed that the reform is to change amid stability and that it is to be introduced step by step. But in reality this is not the case. In the three months after the publication of the Consultation Document, enormous changes are taking place in many government departments. First the Social Welfare Department slashed the salary of newly recruited social security assistants by 30%. Then there was the wage cut in disguise and a compulsory change of the terms of the employment contract in the Post Office. Even the Auxilliary Police which falls outside the Civil Service was compelled to suspend its day-to-day duties within two days through the imposition of nontransparent and indeed uncivilized methods.

Although the Consultation Document does not touch on the issues of corporatization and privatization, many departments have already taken a very fast step towards privatization. The staff of the Housing Department are threatened with the loss of their jobs with the imminent privatization of the Department. A proposal to invite private sector participation in water supplies has been put forward in the Water Supplies Department. Such changes are taking place one after another. May I ask Mr LAM, is this "change amid stability" ? Are all these done to "introduce reforms step by step"?

The Consultation Document proposes to revamp the basic ranks numbering at 120 000 people and taking up two thirds of the Civil Service from pensionable terms to agreement terms. This is by nature a fundamental change. It has replaced the stability of the civil service tradition with instability. A huge population of civil servants are thrown into the market to compete with employees in the private sector, thus exerting great strains on the employment market. Has the Government ever considered whether the reform will bring more advantages or disadvantages to the overall interest of Hong Kong? The Government only stresses that the agreement terms will remove those with poor performance, but it has not addressed the question of whether the agreement terms will serve to retain those with outstanding performance and whether the stability and continuity of the Civil Service will be affected. In future there may be staff on pensionable terms, provident fund terms and agreement terms within a single department; there may also be two salaries for one same post. A lot of conflicts will arise in the departments as the staff are not on equal pay for equal work. Efficiency may suffer and clashes will arise.

As we all know, when the economy is robust, people who work in the private sector will get promoted faster, and they enjoy benefits like year-end double pay, dividends and bonuses; all these are far more attractive than those available to civil servants. But why are people still willing to work as civil servants? This is because they are attracted by the stability of the Civil Service and the protection offered by pensions. But if the civil servants are to be employed in agreement terms and that the mandatory provident fund is to replace the pension system, then when the economy turns for the better, there will be better chances in the private sector and the civil servants will seek employment there. As a matter of fact, many government posts require well-experienced staff who are familiar with government policies. We cannot expect to train up these people within a very short time. If the agreement terms and the mandatory provident fund system are ushered in with great haste, it will only serve to do more harm than good to a Civil Service which badly needs stability.

To sum up, what kind of reform is needed to benefit the governance of the Government of the Hong Kong Special Administrative Region (SAR) and what can be done to cultivate a sense of mission and commitment in the civil servants to the community? All these have to be discussed in the community and extensive consultation is needed. We should not be too rash about it, nor should we take any action before explaining it to the public. Otherwise something which is done out of good intention will turn out to be a disaster. And the community will have to pay a heavy price for the mistake. Recently, the Chief Executive said that the consultation period for this document had expired, but there would be a second round of consultation. I earnestly hope that the Government can really take in the advice of the civil servant groups and explain the details of the reform to them and allay their apprehensions. In the end, the civil servant groups can hopefully take part in the reform and work out a reform proposal which is acceptable to both parties and which can achieve a stabilizing effect on the long-term governance of the SAR Government. In this respect, I trust that the civil servants will join hands with the public in positively facing this reform of enormous import. I am aware that the public has expectations and demands on the civil servants, so we should make the public aware of and understand the work of civil servants in the entire course of the reform and in the services provided in future. Only by so doing can the Civil Service gain the trust and support of the public.

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

Mr CHAN Kwok-keung moved the following motion: "That this Council considers that the Government has to gain the acceptance and support of civil servants before introducing the civil service reform, and that only through the active participation of civil servants can the reform be implemented successfully; as such, this Council urges that, prior to implementing the reform, the Government should:

(a) set out clearly the details of the reform proposals, consult the civil service adequately and seriously take their views into account; and

(b) reconsider the proposals put forward in the Consultation Document on Civil Service Reform, such as appointment on agreement terms and performance pay, with a view to maintaining a stable, honest, law-abiding and outstanding civil service,

and should adopt a step by step approach in implementing the reform."

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

Miss Emily LAU will move an amendment to this motion. Mr CHEUNG Man-kwong will move an amendment to Miss Emily LAU's amendment. The two amendments have been printed on the Agenda. In accordance with the Rules of Procedure, the motion, the amendment, and the amendment to amendment will be debated together in a joint debate.

I will first call upon Miss Emily LAU to speak and to move her amendment to the motion. Then I will call upon Mr CHEUNG Man-kwong to speak and to move his amendment to Miss Emily LAU's amendment. Members may then debate on the motion and the amendments. After Members have spoken, I will first put Mr CHEUNG Man-kwong's amendment to Miss Emily LAU's amendment to vote. Then depending on the result of the vote, I will put Miss Emily LAU's amendment, either in its original form or in the amended form, to vote.

I now call upon Miss Emily LAU to speak and to move her amendment.

MISS EMILY LAU (in Cantonese): Madam President, I move that Mr CHAN Kwok-keung's motion be amended, as set out on the Agenda.

Madam President, I strongly support the civil service reform. I understand that this reform has caused many civil servants to worry. There sitting in the public gallery are many representatives of civil service unions who have especially come to listen to our debate. I believe that they are very concerned about the reform. I hope that these representatives will understand that this Council is also very concerned about the well-being of civil servants, but, Madam President, we are more concerned about the interests of the whole community. Why do I seek to amend Mr CHAN Kwok-keung's motion? Madam President, I believe that this is my first amendment to a motion since I was elected a Member of the Legislative Council. The President also knows that I do not move amendments frequently. However, if I consider it necessary to do so, I would do it.

What is it in Mr CHAN's motion that makes me feel the need to amend it? One of the points is that Mr CHAN suggests that the Government has to gain the acceptance and support of civil servants before introducing the civil service reform. I feel that he is overly serious about this. Madam President, I certainly hope that civil servants will accept and support the reform, but is it a must? Should they be given the absolute vetoing power. In that case, we might have to discuss with the over 6 million people of Hong Kong. Therefore, I propose that it should be changed to fully considering the views of the public and of the Civil Service.

Mr CHAN also suggests that the Government reconsider the proposals such as appointment on agreement terms and performance pay, which I do not quite follow. A reconsideration may result in many conclusions. Or perhaps Mr CHAN has not come to any conclusion yet. Madam President, there are several points in my amendment that are very clear and I will explain them in detail. I feel that the merit of my amendment is that it is clear cut. I put forth a few significant topics in very plain terms and let Members decide whether they support the direction. In fact, I believe that it is a global trend to reform. Madam President, I believe that civil servants will not deny this themselves. Actually, when the consultation paper was first published, they also showed their support to the reform. But perhaps they feel that the pace of the reform is too fast, or there are some other things that worry them. I reckon that we should also address their concern.

Madam President, there is nothing like my first point in Mr CHAN's motion. I hope that Mr CHAN will support this point, which is about the accountability of senior civil servants, including the Secretaries and Bureau Secretaries, as it is very important. When the Secretary for the Civil Service makes the response later on, I hope that he will tell us whether they will be covered as well. I believe it is certainly the heart-felt wishes of everyone in Hong Kong to know the answer. It is just impossible that when we talk about reforming the Civil Service, we would leave out the most senior civil servants, directorate officers or leaders, maintaining that they do not have to be accountable to the public. I noted that the Secretary told the newspapers yesterday that this involved the political structure and political issues could not be dealt with by administrative and managerial means. He might be talking about the ministerial system or similar matters. But Madam President, this will not do. Even though we do not know when Hong Kong will have a ministerial system, he cannot put it so bluntly at this stage that senior and the highest-ranking civil servants, including the Secretary himself, do not need to be accountable to the public. Madam President, what we wish to see is a clear accountability system where even the most senior civil servants will be punished if they make mistakes. We can see blunders committed, from the avian flu incident, the management of the new airport, the computer of the Hospital Authority recently, even to the Urban Services Department, the Water Supplies Department and hospitals. But we seldom see the officials in-charge bear any responsibility in regard to these incidents. In particular, the Legislative Council's inquiry into the new airport fiasco has clearly pointed out the existence of this problem. In the report of the Select Committee, we remarked, "In so far as Chairman/Airport Development Steering Committee (ADSCOM) failed to lead ADSCOM to fully assess the readiness of the new airport before deciding on a July airport opening date and, having so decided, failed to ensure that ADSCOM seriously consider all the signs of risk which might give cause for a deferral of the Airport Opening Day, she remains responsible." But we have not seen anyone bear any responsibility, Madam President. Concerning the Secretary for Works, Mr KWONG Hon-sang, the Select Committee concluded, "In so far as his roles as the co-ordinator of the airport project and professional advisor to ADSCOM and the Airport Authority Board, the Secretary for Works failed to fulfil these roles." The next one is Mr KWOK Ka-keung, the Director/New Airport Project Co-ordination Office, whom we bluntly put as having failed to discharge his duty. These are all incidents involving directorate officers, but I do not see any one of them admit his/her accountability whatsoever. This is the first point that I have brought up to which I believe Honourable colleagues also agree.

The second point is to streamline the disciplinary procedures. We have talked about this many times in this Chamber. There are some in the Civil Service who hold a post but do no work. I believe that the civil service union representatives in this Chamber would also agree that this kind of civil servants should not be excused. Nevertheless, to take disciplinary action against them, as a certain head of department puts it, is no different from fighting with a lion with his hands tied, so he would not do such a thing. Madam President, all trade union representatives here would agree that the Administration must streamline the disciplinary procedures. But we also know that some directorate officers do not want to play the bad guy. A certain directorate officer once told me that it would be useless even if the procedures were streamlined because he would not put down any negative remarks in the appraisal report as the report would be read by the appraisee and he would raise questions after reading it. That being the case, it would be very hard for us to deal with this problem. We can establish a system, however if some people do not wish to be bound by this system and wish to seek other powers instead, including the power to impose management-initiated retirement which I will speak on later, there will be even greater trouble. Of course we do certainly wish to have a streamlined system.

I also propose that we should not implement the appointment on agreement terms across the board. Of course, people would ask whether I support the system of appointment on agreement terms. I do support it and it is also being implemented now. But I think that it should not be implemented too hastily, too quickly. I understand that many civil servants aspire stability, which is their heart-felt wish, but I feel that if the direction is right, I will support it. I also support the open recruitment of civil servants, of the most senior levels in particular, so as to enable people of high calibre to join the Government to assume those posts. Therefore, I do support this point.

Madam President, another point is the introduction of the provident fund system to replace the pension system. This is also a global trend. I believe that Members are also aware how heavy a burden civil service pensions have on the community. Hence in this respect, I fully support that the Government should study this system. I am also aware that this is a very complicated issue but I hope that the Government will study it and come up with a proposal as soon as possible.

Madam President, the fifth point is the performance pay, which I understand is the hardest one and also arouses the greatest worry of the civil servants. I do support this concept. An academic once told me that he also considered this feasible but it would be very difficult to implement. We have also read from the Government's paper that this is also implemented in the United Kingdom and is also met with much difficulty. We fully understand that. Therefore, the first thing that must be done is to establish a fair and open performance appraisal mechanism before introducing this. If it is impracticable and impossible to formulate such a mechanism, as what our colleague, Mr LEE Cheuk-yan, put it, and if there is really no way to formulate such a mechanism, then the performance pay of course cannot be implemented. I believe that the Secretary also accepts this. But we still have to work in this direction. I hope that civil servants' automatic pay increment should be abolished. The President is also aware of this. In particular, they enjoy two increments a year, one according to the increase of their salary points and another according to the inflation. Many people do not understand what it is about and I believe that we should study this.

Madam President, there are two points which I have not put in my amendment but I would still like to bring them up. One is the management-initiated retirement which I have mentioned before. The management-initiated retirement scares many civil servants and we, the Frontier, do not agree to it either. But I feel that in regard to directorate officers, if we look for more flexibility, we can study whether this can be pursued because the directorate officers belong to the management level and we should consider how we can inject new blood into this echelon. Let us consider that if there are certain directorate officers who are slack in their duty but cannot be removed from their posts, can we pursue imposing this exit mechanism on them? I believe it can be done and I very much hope that we can introduce it to the management level and we are in the best position to do it to this echelon.

Finally it is about the fringe benefits. Madam President, there is actually no need to put this in the amendment. Everyone will agree that some benefits are out-dated, excessive and out of line with the private market, which I believe we have to review, especially in the respect of allowances. Madam President, you may have heard it time and again before. What I would like to particularly bring up is the acting pay, that is, the allowance received for acting for a post. Several months ago, I also raised a question on that and learnt that $700 million was given out as acting pay last year. This is a huge amount and it appears to me that there are few such allowances given out in the private sector. I suggest we should look into this. Another point is leave. Civil servants enjoy much leave. Other than the annual leave, ordinary civil servants seem to enjoy over 40 days of other leave as well. I believe that everyone would find these benefits outdated.

Madam President, I hope that civil servants do understand that it is not the intention of us, the Frontier, and other colleagues who support my amendment to undermine their morale. But we also hope that civil servants in Hong Kong will keep abreast with the time. I would like to tell everyone that I hope the Government will carry out the reform step by step and will fully consult the civil servants during the process. Therefore, when I heard from Mr CHAN that the Secretary refused to meet with the civil servants, I felt indignant. I hope to hear the Secretary's response on this later on.

With these remarks, Madam President, I move the amendment.

Miss Emily LAU moved the following amendment:

"To delete "the Government has to gain the acceptance and support of civil servants before introducing the civil service reform, and that only through the active participation of civil servants can the reform be implemented successfully; as such, this Council urges that, prior to implementing the reform, the Government" after "That this Council considers that" and substitute with "the civil service reform"; and to delete "(a) set out clearly the details of the reform proposals, consult the civil service adequately and seriously take their views into account; and (b) reconsider the proposals put forward in the Consultation Document on Civil Service Reform, such as appointment on agreement terms and performance pay, with a view to maintaining a stable, honest, law-abiding and outstanding civil service, and should adopt a step by step approach in implementing the reform" and substitute with "(a) include the system of accountability for senior civil servants; (b) streamline the disciplinary procedures; (c) not implement employment on agreement terms across the board; (d) consider the introduction of a provident fund system; and (e) establish a fair and open performance appraisal mechanism before introducing performance pay; and as a stable, honest, law-abiding and outstanding civil service is of great importance to Hong Kong and the civil service reform will have far-reaching implications, this Council urges the Administration to fully consider the views of the public and of the civil service"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Miss Emily LAU be made to Mr CHAN Kwok-keung's motion.

I now call upon Mr CHEUNG Man-kwong to speak and to move his amendment to Miss Emily LAU's amendment.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, I move that Miss Emily LAU's amendment be amended as set out on the Agenda.

Madam President, serious blunders made by the SAR Government after the reunification in regard to the avian flu and the opening of the new airport have made the public question the ability of senior government officials in governance. That is the most important reason why the Civil Service needs reform. However, facts in the past three months since the proposal for civil service reform was made by the Government have told us that this is a "reform of the lower ranks but not the upper" and "penalties are not imposed on senior officials". The reform is directed only at the rank and file civil servants and the Government has forgotten one of the most important targets, reform of the senior civil servants.

There have been many absurd things about the SAR Government after the reunification. For example, in the incidents of the avian flu and the new airport fiasco, no officials were penalized for dereliction of duty; also, newly recruited directorate grade officers and Administrative Officers do not have to suffer a pay cut while the low-ranking staff of the Social and Welfare Department and the Post Office have to accept a 20% to 30% pay cut; again, the Government offered a 25% gratuity to Mr BARMA, the chairman of the Public Service Commission, in renewing his appointment, but when the Government employs non-civil servants on contract terms, the maximum gratuity offered is only 15%. All this has clearly indicated that the rank and file staff are the focus of the reform and the purpose of the reform is to lower their pay. In this torrent of reform, senior civil servants can, however, stay clear of the strong wind and rough water. Such a reform has gone against the public will and the principle of fairness.

Madam President, the Democratic Party does support the civil service reform but only when the order of the reform is right. The reform should be directed at the senior civil servants in order to build up their accountability and a system of reward and punishment among them. Those who perform well should be rewarded and promoted while those who perform poorly should be penalized and even demoted. If senior officials who are charged with significant responsibilities fail to discharge their duty, the harm done to society will be grave. The new airport fiasco could paralyze the air cargo industry and undermine the economy of Hong Kong and the avian flu could even kill. Thus blunders like these must be dealt with severely. Of course, the public is equally concerned about some loafers among the rank and file civil servants, holding posts without doing any work. It would be most gratifying if a disciplinary mechanism is established in the Civil Service to sweep away all the lazy bums, high or low-ranking, in the corridors of government by fair and efficient means. The Democratic Party considers that to set up a system of accountability for senior civil servants and re-establish the discipline of basic rank civil servants are the two most urgent tasks in the civil service reform.

Madam President, the civil service reform must also entail on assessment of the political environment. The critical political crisis before us is the unemployment, retrenchment and pay reduction caused by the economic recession. If the civil service reform is linked to the reform of government departments, beyond the civil service institutions such as a comprehensive privatization or an expedition of the same, thus causing the dismissal or retrenchment of some civil servants, it will lead to a deterioration of the whole wave of pay reduction. This could trigger off endless disputes and conflicts by wage-earners across the territory, including civil servants, employees of subvented and private organizations who would fight to keep their jobs. It may lead to the most acute political conflict after the reunification. If that happens, it will be the greatest misfortune of Hong Kong. Therefore, the civil service reform must be implemented step by step. It cannot be carried out in haste, or spread out across the board, and the Government cannot launch any programme by force before a consensus is reached. Neither can it turn the reform into a revolution.

As regards the reform at present, the establishment of an accountability system for senior officials and re-establishment of discipline of the basic rank civil servants are the greatest consensus in society. Other than that, reform proposals covering the proportion of appointment on agreement terms, the replacement of pensions by provident fund, performance pay and management- initiated retirement are all highly controversial. Therefore, the Democratic Party proposes to set up an independent review committee to fully consider the views of the public, the civil servants and the Government concerning the above controversial topics before deciding whether and how the reform should be implemented. A more important reason for the establishment of this committee is to carry out the "reform of senior Civil Service". We cannot depend solely on Mr LAM Woon-kwong and the upper echelons of the Government to administer the reforms from top down, for there is bound to be conflict between their role and their interests, them being the senior officials. The Democratic Party thinks that since the existing Standing Commission on Civil Service Salaries and Conditions of Service only takes care of the salaries and benefits of civil servants, and the Public Service Commission only deals with the appointment and promotion of senior officials, they have nothing to do with the establishment of an accountability system of senior civil servants and the reward and punishment system, therefore they cannot shoulder up the important mission of reforming the senior civil service ranks. Hence, we must establish an independent committee to take charge of this duty.

Therefore, the Democratic Party suggests in this amendment the setting up of an independent committee, which is not a needless duplication at all but a practical need instead. I hope that Members will support it. The Democratic Party also supports Miss Emily LAU's amendment because it allows us room for further discussion of the controversial topics. As for Mr CHAN Kwok-keung's motion which urges "the Government to gain the acceptance and support of civil servants before introducing the civil service reform", I find this to be relatively one-sided. Prior to the reform, the civil servants must certainly be fully consulted, their worries looked squarely into, and their co-operation sought, but at the same time the interests of society on the whole must also be maintained. We cannot just stress the interests of one party but neglect the rest. Therefore, the Democratic Party cannot support it.

Madam President, I must make it clear here that the Democratic Party supports the reform but we think that it must be made in accordance with the priorities and the political environment must also be taken into account. We deeply believe that to make a reform successful, we cannot ignore the reality, and neither can we launch an all-out attack. Otherwise, it will only end up in a failure. History has given us too many examples of haste making waste and we do not want to follow these old paths and make the same mistakes. With these remarks, Madam President, I beg to move.

Mr CHEUNG Man-kwong moved the following amendment to the Miss Emily LAU's amendment::

"To add "set up an independent review committee to study the above issues," after "this Council urges the Administration to"; to delete "and of" from "fully consider the views of the public and of" and substitute with ","; and to add "and the Government, and submit a report and make recommendations thereafter" after "the civil service"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Mr CHEUNG Man-kwong be made to Miss Emily LAU's amendment. We now proceed with the debate.

DR RAYMOND HO (in Cantonese): Madam President, one very important factor for Hong Kong's success is our highly efficient, honest, clean and dedicated Civil Service. But in the face of challenges arising from the ever changing social environment, our Civil Service must progress with the times to meet the needs of future development here. Therefore, the civil service reform is a very important matter to Hong Kong which must be carried out with great care, otherwise, it will only end up in a blunder.

Other than affecting the 180 000 serving civil servants over the territory, the civil service reform will also affect the quality of public services provided by the Government in future. Moreover, civil servants and their families together also make up a significant portion of the local population, so the reform is also related to the interests of every citizen in Hong Kong. It is far more than simply a labour issue between the employer and the employee. In view of this, I have tried to find out the views of various sectors in society, including civil service organizations and groups, on the reform through different channels, and take this chance to reflect their views.

It is undeniable that the objectives presented in the Consultation Document on Civil Service Reform are acceptable to the public at large. But other than the direction of the objectives, the document has given few other details in regard to how they will be achieved. There are no concrete details on the terms of employment on contract basis, the mechanism for selecting and appointing candidates to fill posts at supervisory ranks, management-initiated retirement and performance pay. Without these, civil servants are prone to worry about the reform. The Government has explained that the reason for not laying down any specific plans in detail on this is that it hopes to formulate a concrete plan after consulting the civil servants and the general public. However, before finalizing the consultation on the reform, the Civil Service Bureau has already jumped the gun by implementing some provisional measures, including hiring officer grade staff in the disciplined service on contract terms, which gives people an impression that "it has everything set before the consultation is finished".

On the other hand, the privatization and corporatization of some government departments represents a significant change in the system. Yet, nothing about that is included in the Consultation Document. With more and more plans about the privatization or corporatization of government departments being pushed out, it easily makes one suspect whether the Government is sincere about the consultation, and whether its aim is so simple. Actually, the privatization and corporatization of government departments not only affects the interests of the serving civil servants but also the quality of public services in future. That the Government separates the privatization and corporatization of departments from the civil service reform has also intensified the civil servants' worries about the reform. Therefore, before the privatization and corporatization plans are really put into effect, the Government has to conduct an in-depth consultation among the civil servants and the general public instead of depending solely on the consultant's report and its proposals. Moreover, in considering the privatization and corporatization plans, the Government has put too much emphasis on the financial issues, overlooking the importance of the service quality.

As regards the recruitment of civil servants on agreement terms, we must ensure that the stability of the Civil Service will not be affected. In fact, this arrangement will subject the Government's recruitment to the periodic economic cycles. As a result, when the economy is robust, people of high calibre would choose to work in the private sector, and they would choose to work for the Government only when the economy slows down. On the other hand, the suitability of the contract system to the disciplined services also warrants an in-depth study and discussion before anything can be finalized. When the agreement system is implemented, there will be a discrepancy between the employment terms of the newly recruited staff and that of the serving pensionable staff. This will lead to the situation of equal work being rewarded with unequal pay, which would easily affect the workers' morale and performance.

The competitive appointment system proposed in the Consultation Document will help to attract people with high calibre to join the Government and encourage the civil servants to vigorously strive for the better. First of all, in addition to allowing capable people to join the Civil Service, the same principle should also apply to the promotion and deployment of serving civil servants and also to the senior civil servants. For example, the Government can consider changing the existing entry system of the administrative grade to allow more senior civil servants of professional grades to join the administrative grade and serve in the departments that requires their relevant professional expertise, thus enabling the Civil Service to handle new challenges more professionally and efficiently.

In fact, the Government can also consider opening up posts at D2 level or above, such as those in the works-related departments, so that qualified professionals in these departments can also compete for them. Of course, in implementing the competitive appointment system, the Government must take full account of the worries of the serving staff about the prospects of their promotion and give them appropriate encouragement to ensure that the relevant appointment is conducted in a fair and open manner.

In respect of the exit arrangements, the Government intends to make new arrangements for redundancy procedures and management-initiated retirement. I think we must carefully study the implementation details and consult the employees about them in order to avoid any abuse and unfairness which would affect the efficiency and morale of the civil servants.

As for the pay principles, in the review on the entry pay, the Government has to ensure that the civil servants' pay will not deviate too far from that of the private sector, and at the same time it has to ensure that the salary level of the new recruits is fairly set in comparison with that of their serving peers. Moreover, some foreign countries have also encountered certain difficulties in the implementation of the performance pay system. Canada, a case in point, has encountered quite a number of difficulties in the implementation of this system over the past decade or more. Making reference to the experience of these countries, we must carefully study the issue before we should come to any final conclusion about it.

Madam President, I so submit. Thank you.

MR CHAN KAM-LAM (in Cantonese): Madam President, the Financial Secretary has once said that the quality Civil Service in Hong Kong is one of the three underpinnings for Hong Kong's success. Before the reunification, the civil service system of Hong Kong was regarded highly. Everyone considered the stability, high efficiency of the Civil Service was one of the important factors contributing to the smooth transition of Hong Kong, and the integrity of our Civil Service was superior to most countries in Asia. After the reunification, mishaps such as medical blunders, the avian flu, the fiasco at the opening of the new airport came one after another. Worse still, "the roof leaks while it continues to rain". What followed was the publication of the Audit Commission report which revealed the civil servants' misconduct of "slack performance, loafing and cheating the Government of allowances and so on. Criticisms and reports about the senior civil servants' impotence and slackness in discharging their duties can be heard every day. The Civil Service which used to be highly regarded as intelligent, brilliant and highly efficient seems to have suddenly fallen into a deep abyss. Having repeatedly blundered in a number of significant policies, the civil servants are subject to even more severe criticisms from all sectors of society.

There is no denying that after the Asian financial turmoil, the economy of Hong Kong is undergoing an adjustment and the public has suffered heavy financial losses. At the same time, with society becoming more and more open, the people have higher expectations of the civil servants than before. Being in today's position and looking forward to the 21st century, the SAR Government has followed the global trend of proposing to reform the Civil Service. While this reform is unavoidable, it should aim at keeping the Civil Service abreast with the progress of society to meet its ever increasing demand.

The civil service reform has met with strong opposition from many civil servants since its announcement. Civil service unions have repeatedly taken to the street to protest against the reform, which is indeed unprecedented and has not been anticipated by the Civil Service Bureau. The opposition is stronger than what has been estimated. One of the most controversial issues may well be the introduction of employment on agreement terms and the performance pay system.

Under the present civil service system, 97% of the civil servants are employed for life, and hence it is no exaggeration to say that getting a job in the Civil Service is like being given an "iron rice bowl" as one needs not fear anything as long as he works hard after he joins the Civil Service. There are bound to be merits and demerits in any system. The present system of permanent appointment can no doubt stabilize the operation of the Government but unavoidably reduces the flexibility. It takes far too long and the procedures are far too tedious to take disciplinary actions against or demote non-performers or those who have committed serious misconduct, and the appraisal is far too lenient to reflect the actual performance of the civil servants to fairly mete out rewards and punishments.

Indeed, the agreement terms system is nothing new. Some government departments have implemented this system according to their needs and the practical situation. Therefore, we agree that the present appointment system should be improved basing on the existing foundation to meet the needs for higher efficiency in civil service management and better adaptation to the rapidly changing market. However, the Democratic Alliance for the Betterment of Hong Kong (DAB) does not agree that the agreement terms should become the mainstay of the appointment system. Nor does it agree that this system be applied to workers in basic ranks, because this will be unfair to civil servants in these ranks and will also create division among the Civil Service. Therefore, we suggest that a provision be added to the employment terms of workers in basic ranks so that when the contracts of these workers expire, the Government can consider changing the employment of those who have performed well from agreement terms to permanent ones.

Another item of reform that has aroused tremendous controversy is the introduction of the performance pay system. Traditionally, it is difficult to quantify the output of civil servants, and as the duties of civil servants are vastly different from their private sector counterparts, it is very hard to evaluate the civil servants' performance by means of business performance. Take the countries in the world that have implemented the performance pay system as an example: the United Kingdom launched this system in 1993 but the result has been dissatisfactory since 60% civil servants on average are still appraised as performing well each year; and as regards the situation in Australia and the Untied States, surveys have found no evidence that there is any direct relation between the implementation of the performance pay system and civil servants performing better or their efficiency becoming higher.

Looking at this issue from another angle, I think that in order to truly implement the performance pay system, the Government must formulate a clear and objective appraisal system, and the appraisers must discharge their duty with objectiveness and try to avoid taking a subjective attitude. At the same time, an appeal mechanism must also be set up to handle the appeals in accordance with the principle of fairness and impartiality. Therefore, the DAB considers that there are enormous practical difficulties in the execution of the performance pay system in the Civil Service and the Government has to consider it very carefully.

There is a clear division of labour among civil servants of different grades and different departments. All civil servants are basically able to work according to law, honest, just and highly obedient. The Government has all along had a relatively good relation with civil servants. All this should be maintained and carried forward. For a reform to be successful, it requires the support and consensus of workers, which is of paramount importance. This time, the reform of the Civil Service has indeed got to the interests of the Civil Service and society as a whole and must therefore acquire the support and recognition of civil servants, in addition to the co-ordination effected by various new initiatives. At the same time, the Government should also fully consult all parties involved and only when it has come up with a set of well-planned arrangements suited from top down shall the reform be launched.

Madam President, I would like to quote from the letter of a government employee association that I have received today to indicate that civil servants are actually in support of the reform to the existing system. One of the paragraphs reads, "We support the basic principles of reform, namely, change amidst stability, step by step, comprehensive overview, wide consultation, practicable measures, and reasonable and lawful, as put forward by the Administration. We also agree to the objectives of reform, which are, to create an open, flexible, equitable and structured civil service framework, an enabling and motivating environment for civil servants, as well as a proactive, accountable and responsible culture. We support this civil service reform of the Government's."

With these remarks, Madam President, I support Mr CHAN Kwok-keung's motion.

MR AMBROSE LAU (in Cantonese): Madam President, the Civil Service is an important force contributing to the long-term stability and prosperity of Hong Kong. That is why specific provisions are laid down in the Basic Law to deal with matters relating to civil servants. All civil service reforms must accord prime importance to the stability of the Civil Service.

On the basis of past experience, the Hong Kong Progressive Alliance (HKPA) maintains that the system of permanent and pensionable establishment practised by the Government all through these years is essential to the maintenance of the stability of the Civil Service. In times of economic prosperity, in particular, the system of pensionable establishment can serve to reduce manpower wastage. This can in turn retain people with expertise and experience, in addition to helping maintain a clean administration and enhance the sense of belonging within the Civil Service. Therefore, the HKPA views that the Government should preserve the system of pensionable establishment. But the Government can surely introduce a suitable degree of flexibility into the system of pensionable establishment, so as to cater for the variegated needs of the huge Civil Service. Agreement terms can be introduced as an important supplement to the existing recruitment system. But they should not be applied across the board to all "basic ranks". Instead, modifications should be made to suit the specific circumstances of different grades, posts and types of duties.

Madam President, civil servants are both the targets and backbone of civil service reform. Their understanding and support are essential to the success of all civil service reforms. For this reason, the HKPA has come to the view that when trying to implement any reforms, the Government should regard civil servants as its partner. Before any reforms are actually implemented, the Government must conduct sufficient and frank negotiations and studies with civil service unions, so as to work out a feasible scheme. Only this can bring forward solidarity in the whole Civil Service, and only this can enhance the efficiency and effectiveness of our public service, thus creating a still better tomorrow for the people of Hong Kong.

Madam President, I so submit.

MRS SELINA CHOW: Madam President, I rise to support the amendment moved by the Honourable Miss Emily LAU on behalf of the Liberal Party, and to oppose the original motion, should the amendment be defeated. We are also opposing the amendment to the amendment.

We cannot agree with the Honourable CHAN Kwok-keung that the proposed civil service reform should only be introduced after the support and acceptance by civil servants can be ensured.

It goes without saying that it would be ideal for any reform to be accepted and supported by the staff at which reforms are being targeted, but this is easier said than done, as such moves, though regarded as necessary by the employer and considered by the public to be in their interest, are more often than not resented by the affected party. This is quite understandable. After all, it is their interest, their career and their future which are being placed in uncertainty.

For this reason, the Liberal Party calls on the Secretary for the Civil Service to be sensitive to those concerns, and to allay fears wherever possible. This could only be achieved by communication and dialogue. However, the ultimate objective of reform should not be distracted or abandoned.

The Liberal Party agrees that senior civil servants, being the management of the Civil Service, do have to be accountable to the public at all times. It is fair to say that there has been some improvement in this area in recent years. However, public accountability is more than just PR, and goes beyond the individual. It is the adoption of a philosophy, and it requires the acceptance of the entire staff, and for this, the seniors have to strive and ascertain.

While on the subject of senior civil servants, we would like to voice our support for contract appointments, and the widening of the net for directorate grade staff to beyond Administrative Officers (AO) only. Historically, the AO elite force has dominated the top echelon of the Civil Service. Admittedly, they are the creme de la creme of our graduates. However, there is a perception that some directorate posts which are off limits to professional officers are given to AOs who may not be qualified for them. In fact, experience has demonstrated in the recent past that such appointments have failed to win the approval of the departments or the public alike. Surely, it would be in the public interest for the Government to appoint the most capable man for the job, and not to restrict the option to AOs only. In fact, we hold the view that nothing should stop the recruitment of AOs from the private sector on contract terms, particularly for jobs which might require expertise more easily obtainable outside of the Government, such as commercial or marketing capabilities.

One of the most controversial issues in the civil service reform proposal is the replacement of permanent pensionable appointments with contract terms. The Liberal Party endorses this broad direction, but considers that there should be some exceptions to the rule where security of tenure would be necessary to ensure a long-term and stable career path for the officers, so as to instill stronger commitment and dedication. We believe that the disciplined services would benefit from permanent appointments, however, we believe that alongside should be the civilianization of those posts within these services which do not strictly require the rules of the discipline force.

We are only too aware of the psychological threat that the replacement of the iron rice bowl with a ceramic one might have on civil servants. We fully support the Government in its determination to be a good employer, and therefore, there must be safeguards for fair treatment and appraisal of performance. However, we do not see why employment practices which have worked well in the private sector should not be adopted for government servants as well.

The introduction of performance pays is another issue which has generated much debate. The Liberal Party is in principle supportive of the concept of reward on merit. However, a system to link pay with performance is only workable if the system is fair, open, and the process of appraisal is free of favouritism and corruption. There is, I believe, genuine worry among the junior ranks, that to place the authority to appraise in the hands of single individuals might lead to much effort devoted to shoe-shining than to serving the public. An efficient mechanism recognized to be fair and open is therefore necessary if the policy of performance pays is adopted.

The Liberal Party advocates that as part of the civil service reform, there must be clear objective on the part of the Government to bring about the economical use of public resources while upgrading the quality of services rendered by departmental staff. To this end, there must be some "reward" for departments which have spent less than originally estimated for the delivery of the same services planned. The present practice of having unspent sums clawed back to general revenue without encouragement or recognition is certainly not conducive to prudent spending. Instead, it serves as an undesirable incentive to spend it all before the deadline of 31 March.

At the end of the day, the most important change that this reform must bring about is to bring the thinking of the civil servants in line with the public they serve. This objectivity requires a cultural change that could only be achieved by training, flexible employment terms, inspiring management, and a system free of cumbersome bureaucracy.

Before I close, Madam President, I would like to express our objection to the Honourable CHEUNG Man-kwong's amendment to Miss Emily LAU's amendment. We consider the proposal to set up a review committee an unnecessary step which would only delay the process of reform. Therefore, we object to it.

MR NG LEUNG-SING (in Cantonese): Madam President, the civil service reform is an issue which has attracted great public attention recently. Heated debates arise in the community on certain proposals made in the Consultation Document published by the Government. There are a lot of views put forward by the civil servant groups as well as the experts and the academics. Certain proposals in the Consultation Document seem to have attracted more criticisms, such as the introduction of the agreement terms and the adoption of performance pay. To enable the reform to be implemented smoothly and fulfil its objectives, various sectors of society must make contributions and offer their suggestions. Any constructive advice from any sector in society would be beneficial to the reform if it is made with certain specific measure in mind. On the other hand, we should not doubt the rationale behind the reform and the urgency of the reform schedule simply because of the diversity of opinions which exists. Nor should we miss the major direction of the reform.

Before we discuss how the reform should proceed, we have to make one thing clear, and that is: Is there any need for reforms in the Civil Service, given the progress of the community and the earnest expectations of the public? I think the issue should receive great attention in this motion debate. The proven civil service in Hong Kong is clean and efficient ─ a merit that cannot be denied. We must admit that most of the civil servants are committed and hardworking and they have made tremendous contributions to the development of society. But as the civil service establishment becomes increasingly massive, it has departed from the modus operandi of small government in a large society. Public spending in the Civil Service has been constantly rising. The recruitment mechanism and that for punishment and reward are becoming more fossilized, witnessing the forming of certain bad bureaucratic practices. All these should not be tolerated in this cosmopolitan city of Hong Kong. Therefore, we must implement the civil service reform in order to take us onward to the next millennium and to make our city remain vibrant and competitive. This is also what the taxpayers expect. But all these discussions on the various reform measures will be meaningful only when we have established the general direction of reform.

I believe that the civil servants are definitely not complacent with the present state of affairs, nor are they resistant to change. Most of the civil servants I know and have made contact with are willing to take on the reform. They are prepared to be the driving force for it. They should be encouraged to air their views on the specific measures proposed. They should also be encouraged to take an active part and through various channels in order that the reform can proceed smoothly.

Among the specific reform measures, the introduction of the agreement terms is an important step to raise the efficiency and flexibility of the human resources management system. It must be carried out in the appropriate departments and in as much a reasonable manner as possible. An across-the-board kind of approach must be avoided. A rigid ratio should not be imposed. For example, in the disciplined forces and in certain sensitive positions and departments, there must be reasonable and proper arrangements in the appointment system. A consensus on that can be reached quite easily in the community.

In the administration and operation of government departments, in particular in respect of human resources management, there are many areas where the private sector can be used as a reference and vice versa. As for the reward of those with outstanding performance in addition to the basic salary, the effective sanction of those caught in dereliction of duty after the disciplinary procedures are streamlined and so on, there are technical problems which remain to be solved, but they are not insurmountable tasks. These measures are meant to create a working environment in which reward and punishment are meted out fairly and where the staff are encouraged to commit themselves to their work. They are also aimed at raising the accountability of the Civil Service. Public discussion should be encouraged on this issue of where the reform should be heading. It is hoped that the reform can be taken forward with the support of all those concerned.

Madam President, I so submit.

MISS MARGARET NG: Madam President, an efficient, stable and clean civil service is necessary to Hong Kong's continued success. Hong Kong has always enjoyed an excellent Civil Service, many members of which have been meeting the call of their duty invariably and cheerfully, without complaint or fanfare, year in, year out. I wish to take this opportunity to pay tribute to them. Rank and file though most of them may be, unglamourous though their tasks, they are our unsung heroes. Long may they stay with us.

Like even the best and world-conquering army, our Civil Service, too, will grow unwieldily and out of keeping with the community they serve, if they do not periodically renew themselves.

Two circumstances conspired to hasten the reform of Hong Kong Civil Service: the relatively unchecked growth in pay and in numbers in the last years of the British Administration, and the drastic economic downturn immediately thereafter.

We all remember those hectic years, in terms of economic growth, and in terms of the hundred and one things which had to be done by 1 July 1997. There was also the overriding political consideration in securing a smooth transition, and morale within the Civil Service must not be placed under any risk. Although the British Administration was fully aware of the need for "trimming down", it would have been unthinkable to tackle any large scale reform or review.

But the truth remains, sooner or later, we have to face the facts, and pick up the surgical knife which has to excise in order to restore health and vitality.

The two most visible problems are the level of salaries and the size of the Civil Service. The deeper issues are productivity and culture. The means as suggested in the consultation paper of the Secretary for the Civil Service is a major restructuring. It is an ambitious plan. In the light of the response of various groups of civil servants, many people are beginning to think that the plan is too ambitious, trying to do too much in too short a time.

Madam President, I agree with the motion and the amendments. The Honourable CHAN Kwok-keung puts it more strongly. He says that the Government must first gain the acceptance and support of civil servants. The Honourable Miss Emily LAU says that the Government should consider their views while also considering the views of the public. Obviously, co-operation and a high measure of consensus is essential to lasting success. But reform there has to be. The reform must go ahead, or the whole community, including civil servants and their families, will pay a heavy price. Salaries and cost must come down. You cannot do so without freezing or even cutting the level of pay of at least a large part of the Civil Service. The numbers have to be reduced. Large numbers of staff doing less than an honest day of work is not only a burden on resources, but a poison to morale. Meanwhile, because costs of service provided by the public sector are high, the anomaly becomes daily more apparent and less acceptable, of grassroots private sector citizens having to take both a decrease in income and an increase in fees, charges and other expenses, introduced by the Government which has to make both ends meet.

So what is the reform we have to introduce, for which we hope to consult and convince the Civil Service?

First, I think we have to realize that a good civil service need many different kinds of people. There are routine jobs which require a willingness to follow form and rules. There are supervisory jobs which require the ability to manage and organize. There are positions of leadership, of creative thinking, or of professional expertise. You plainly need different terms of employment to attract different types of people and allow them to work in such a way as to achieve maximum results.

Secondly, we have to accept that different departments of the Government may have to operate in different ways. What suits one department may be wrong for another. It is particularity, not uniformity, which is needed. Just to name one example, the Department of Justice, or the Legal Aid Department, has very special requirements which have little in common with, say, the Education Department or the Department of Health.

Therefore, I have doubts as to whether the approach of the Secretary for the Civil Service is correct. He envisages agreement terms for the basic ranks, and permanent terms for the supervisory grades. But is it not more reasonable the other way round? Because the work on the level of basic ranks is more routine, where consistency and smoothness are at a premium, there, stability is the most important, and job security, reasonable pay and benefits are the right attractions for people to go on doing them. Because they are of the greatest number, stability among them would also mean stability for a sizable sector of society.

On the other hand, on the supervisory and higher level, the job is likely to offer greater satisfaction, and requires multi-facetted skill and knowledge, which are required to be renewed from time to time. Is it not here that cross-fertilization with the private sector is the most desirable, and failure to catch up most rightly penalized? Is not on this level that competition is the most realistic and practicable?

Pay structure may follow the same thinking. The "double increase" of automatic annual increment plus annual pay review can no longer be justified. Instead, like the private sector, annual increment must be calculated on the basis of performance and economic conditions. So the incentive for the basic ranks is a better salary increase on the recommendation of those who supervise them. On the other hand, as one goes on at the supervisory level, the more senior in rank, the more one must be prepared for wider fluctuations of increase or lack of it according to more exacting criteria of performance.

Flexibility to meet the different needs and requirements of different departments also applies in terms of size of staff and establishment. As I have said earlier, the Department of Justice and the Legal Aid Department are unique. Here, the work requires professional qualification, the workload fluctuates, but each piece of work can be extremely urgent and is generally self-contained. There, one can aim at a very slim core supplemented by "free lance" through briefing out. The mechanism should be provided for pay for very specialized professional skills, such as law drafting or international negotiations, to be adjusted to the market rate. Professional quality is a greater concern than stability.

Madam President, I think that the Civil Service, on whatever level, must be suffused with ...... May I finished this sentence?

PRESIDENT (in Cantonese): Miss NG, your time is up.

MISS MARGARET NG: ...... must be suffused with a sense of pride.

PRESIDENT (in Cantonese): Your time is up. Sorry, we must conduct the debate in accordance with the recommendation of the House Committee.

MISS CHRISTINE LOH: Madam President, civil service reform is in part to get the Government to do its job better. I am concerned that in spite of the Enhanced Productivity Programme headed by the Chief Secretary for Administration and also now the review on pay and on training headed by the Secretary for the Civil Service, they will not reach the ultimate target of getting our Government to do its job better. The reason I say this is that in order to get the Government to do its job better, we really need a review of how the Government is organized. We need to review how decisions are made and implemented to look at productivity enhancement. Simply by cutting 5% or above from the annual budget will not achieve that target. To look at just the rank and file's pay and their training will again not reach that ultimate target. So I am afraid that we need to do a lot more if we want to get the Government as a whole to do its job better.

I think the problem with the current reform is that it is not being seen within the political context. It is essentially managerial and administrative in nature. It is dealing with the bureaucracy and we have a colonial style bureaucracy. This is a bureaucracy that favours seniority. This is one where it is difficult to get rid of people. It is one where it is very difficult so far to have an infusion of new blood into the system which the Honourable Miss Margaret NG has just talked about. What do we see in the senior ranks of the Government today? It is in the senior ranks that key decisions are made. If there are problems at the bottom within their own bureaux or departments that are not fixed, it is because the head person is not fixing them. We see the most senior ranks of our Civil Service almost everyday in this Council. But excuse me for being blunt, I think that some of them do not deserve to head the Government. They do not deserve to be there.

I agree with Miss Margaret NG that there is no shortage of people who are devoted to their work and who work extremely hard. But I think that there are also many people who, perhaps, have been over-promoted. We have to question whether the traditional colonial Administration Officer system puts the best people there to do the jobs that they are required to do. We have too many people who are at Secretary level but are not trained to do specialist jobs. It is a pity, but this is the system that we have to deal with. I am pleased that the Government is willing to look at it. But, Madam President, the question is that we are not looking far enough or deep enough. And therefore, if we are not willing, or if we do not have the courage to look at how the Government is structured, how can we get better decisions to be taken? We are going to have the rank and file as well as the public continued to believe actually that the top ranks are just covering their own backsights, that they are trying to get the lower ranks to bear the brunt of the civil service reform and not for the senior ranks to become politically accountable for their decisions.

I was shocked when it took three reviews for the senior ranks of the Civil Service to come out after the airport debacle to say, "Yes, maybe something is wrong and we will look at it." It took the Chief Executive-appointed inquiry, it took a select committee from this Council and it took the Ombudsman report. What else do we need? Where is the political accountability? Madam President, what we have in the Civil Service is what I called "bureaucratic accountability". Civil servants account to the persons above them. They account to their senior officers. They come out to the Legislative Council and give an explanation for action or inaction. What they do not do is to have to answer politically. They do not have to answer to the public for incompetence, for negligence or for the wrong decisions. Nobody seems to have to take accountability of mistakes. Is that the way we want our Administration and political system to continue? If not, if we want people to be politically accountable, I am afraid that we have to look at political reform.

Let me just make three points because I agree with much of what the Honourable Miss Emily LAU and Miss Margaret NG have said, and I do not wish to repeat what has already been well put.

First of all is that, yes, the Government should look at how they can get rid of civil servants who are incompetent. However, the stability in terms should be provided for people at the bottom. People at the top have to take the risk. Therefore, I think that Miss Margaret NG and I are entirely at one. The way the Civil Service Bureau is going about it is exactly the wrong way round.

Secondly, I think that the Civil Service Bureau itself must have greater transparency and scrutiny. After all, it is the Civil Service Bureau that controls posting and promotions. And we all know how important they are to all ranks of the Civil Service. The Secretary may say to me that we already have the Public Service Commission. Well, I think that this Council knows well enough so far that the Public Service Commission cannot provide the level of scrutiny, transparency and independence that it is required. I am not just speaking for this Council, but for many civil servants that it is important that the Civil Service Bureau itself should have a higher level of accountability and scrutiny.

And lastly ─ I am doing this again, Madam President, and you must excuse me for repeating myself ─ I call on the Chief Executive to actually put in place a constitutional convention. It is not enough to just look at bureaucratic reform and we need to look at political reform at the same time, if we are truely to have a politically accountable system.

I will support the amendment of Miss Emily LAU but I have reservations about the amendment of the Honourable CHEUNG Man-kwong, simply because by narrowing down the areas again that we are discussing, I am afraid that this would just cause further delay for what is already a narrow part of the civil service reform.

MR LEE KAI-MING (in Cantonese): Madam President, the publication of the Consultation Document on Civil Service Reform has aroused great echoes among the Civil Service and heated disputes in the community. In particular, the public has divergent views on the reform to the senior civil service ranks, the appointment of the disciplined service officers on agreement terms and performance pay. At this time when the consultation period is coming to an end, I appreciate that Mr CHAN Kwok-keung has moved the motion to let Members express their views and I support his motion.

Madam President, there are continuing changes in the course of development and reforms drive progress. Civil service unions, academics and the community have reached a consensus on the statement "it is essential that the Civil Service keeps pace with the community it serves" in the Consultation Document. Nobody strongly opposes the reform and some only oppose a "false reform". People generally agree to the proposals on simplifying disciplinary punishment, dismissing and replacing redundant staff, removing black sheep, encouraging civil servants to improve efficiency, introducing a mechanism to award the diligent and punish the lazy, introducing provident fund and a limited agreement system as well as making it more flexible for the entry and exit of qualified personnel. It can be said that some contents and proposals of the Consultation Document are supported by the public.

However, it may be said that the Consultation Document is published at a most inopportune time. Certainly, the Government does not think so. The Government has made these reform proposals in the adverse circumstances of an economic downturn, a high rate of unemployment, and when layoffs and wage reductions have become the order of the day. Its purpose is to highlight the superior pay and benefits of civil servants and the difference between the working conditions of civil servants and those of employees in the private sector to gain the support of public opinion and the public. The Government is undoubtedly successful on that count. However, in an economic slump, a reform will on the contrary makes civil servants worried and hesitant, and they will worry that their pay and benefits will be reduced or their job will be insecure. At last, over 10 000 civil servants took to the streets and held one demonstration after another to show their strong opposition.

Madam President, it is even more astonishing that the Government has adopted a series of reform measures even before the end of the consultation period. For example, it has announced a civil service pay freeze and benefits reduction. While it stops appointing permanent civil servants, it appoints staff on short-term agreement terms that are less favourable than the original standards. The Social Welfare Department and the Post Office even give newly appointed staff on agreement terms 70% pay. Some of the measures are even not included in the Consultation Document. For example, departments are encouraged to implement contracting-out, corporatization and privatization. How can people not doubt the sincerity of the Government in consulting them while it does one thing under cover of another? How can civil servants not protest for their immediate interests? How will these tally with "change amidst stability" and "step by step" as proposed in the Consultation Document?

Fine words often fail to cover up the cruel reality. The unfairness of the reform is shown in the generosity shown to senior civil servants. I have no intention of dividing the senior and junior ranks of the Civil Service but this is a fact. Let me take the pay and benefits and end-of-agreement gratuities of staff on agreement terms as an example. The directorate grades will continue to have 25% or more end-of-agreement gratuities while the professional staff will have to be content with not mere than 15%, dropping from their previous 25% or 20%. Worse still, the general grades will be given not more than 10%. Why can the treatment of directorate grades remain unchanged while that of technical grades and general grades is reduced to such an extent? No wonder junior civil servants feel aggrieved. How can we say that the Consultation Document treat all civil servants equally?

It is stated in the Consultation Document that "with the responsibilities of serving a community of over 6 million, stability in the overall operation of the Civil Service is very important", but some Members have said that we do not need to gain the support of civil servants. How will the Civil Service operates in a stable manner if civil servants do not support this reform? How can what is stated in the above statement become true? How can the spirit of the Consultation Document be realized? Today, civil servants are worried about the reform and many staff unions have expressed invaluable views on the Consultation Document. I hope that the Government will readily accept good advice, dispel civil servants' worries, and strike a balance between the interests of the public and those of civil servants so that the reform will be carried out in accordance with the principle of fairness without affecting the stability of the Civil Service and social stability while complying with the provision "with pay, allowances, benefits and conditions of service no less favourable than before" of Article 100 of the Basic Law.

With these remarks, Madam President, I support the original motion.

MR EDWARD HO (in Cantonese): Madam President, civil servants all over the world give people an impression that they are holding "iron rice bowls". The Government must be very brave indeed when it proposes to reform the Civil Service. It is stated in the Consultation Document that "the great majority of civil servants enter at the lowest rank of different grades and are appointed on permanent and pensionable terms. They can normally expect to keep their jobs regardless of their performance unless they have committed serious misconduct". These are the so-called "iron rice bowls". This appointment mechanism is totally different from that of the private sector and runs counter to the teachings of contemporary management studies.

In fact, it is extremely important for the Government, which is composed of civil servants, to maintain a certain degree of stability and continuity. However, we cannot accept and must change the fact that civil servants "can normally expect to keep their jobs regardless of their performance".

The question under debate is not whether if the Civil Service should be reformed. But rather how reforms can be made to ensure that the SAR Government "has a clean, trustworthy, quality and efficient Civil Service". To achieve this aim, we must make efforts to carry out an effective reform as well as maintain the good morale of civil servants in the course of and after the reform.

The Honourable Mrs Selina CHOW of the Liberal Party has expressed her views on the civil service reform and I will focus on professional services.

Madam President, about half of the members of the functional constituency I represent are civil servants while the rest come from the private sector. Evidently, the views of the two parties may be different or antagonistic. I am therefore obliged to express my personal views only.

The major work and mission of many government departments is to provide professional services. For example, the Architectural Services Department, Planning Department, Buildings Department and some sections of the Housing Department as well as other departments mainly comprise professionals who perform professional tasks other than support staff. The Consultation Document on Civil Service Reform published by the Government has failed to offer any commitment regarding the reform of these professional departments and their professional staff.

First, the Government should carry out a fundamental reform to allow professionals in the Civil Service to enjoy equal opportunities in being promoted to the highest echelon of the Government. Under the system that has been adopted by the Government, Administrative Officers will be appointed to take up leadership posts. I do not doubt their abilities but this system has obliterated the opportunities for professional officers with leadership and abilities. If necessary, these professional civil servants should be given training as executives or policy makers. I believe they should be competent. However, the Civil Service's neglect of the value and contribution of professionals over the years has greatly affected their morale.

Second, departments should be led by professionals so that experts can lead experts. Therefore, I do not think it is suitable for an Administrative Officer to take up the post of the Director of Buildings in the past. Under the Buildings Ordinance, the Director of Buildings is the Building authority. Therefore, it is utterly inappropriate for a non-professional Administrative officer to take up the post.

There is another problem that emerges in a government department directly related to my functional constituency and it may as well emerge in other departments. There are many professionals such as architects in the Architectural Services Department and Housing Department, and the architect profession is concerned about the morale of architects in these two departments. I think that the abilities and performance of architects should be appraised from various angles. In m profession, the ability to design is very important. Take a doctor as an example, I believe his medical skills are very important. But in the government structure, construction professionals with unique design talents are in a very disadvantageous situation and they have less opportunities of promotion than architects who have management abilities but not design abilities. This system is greatly different from that of the construction industry in the private sector and it totally neglects the importance of archectural designs. I hope that the Government should review and be concerned about this.

Madam President, the arguments I just made may also be applied to other departments providing professional services. My constituents are all professionals, and the fact that the above problems are not mentioned in this Consultation Document proves that professionals in the Civil Service are not given due regard.

Another problem is that although I do not oppose in principle that the Government should consider the introduction of outsiders to directly compete with civil servants in the selection of candidates to take up supervisory posts in order to absorb outstanding qualified personnel from different strata. If the Government is a good employer, it should actively develop a succession plan in various departments so that in-service civil servants who are capable and have good performance will be given greater chances of promotion in order to maintain good staff morale.

With these remarks, Madam President, I support the original motion and Miss Emily LAU's amendment.

MR CHAN WING-CHAN (in Cantonese): Madam President, the civil service reform must be carried out orderly and progressively, and the original system should be perfected without affecting the stability and quality of the Civil Service. For example, the excessively complicated disciplinary procedures in the past can hardly eliminate black sheep and affect the efficiency and operation of the Government. Therefore, the Government should take this opportunity to enhance the discipline and quality of the Civil Service. But this market-type reform casts off the unique features of civil servants and rigidly follows the example of the private market. This is a revolution, not a reform. First, the Government proposes to appoint basic rank staff on agreement terms. This will reduce the stability and sense of belonging of basic rank civil servants as well as the Civil Service as a whole. The basic rank civil servants face and serve the public directly as executors of policies and they are familiar with the operation of the Government down to every detail, accumulating rich experiences throughout the years. If their jobs are not secure, it will definitely affect the quality of their services and jeopardize the interests of the general public. The pension system is the core of the civil service system and the general grades account for two thirds of the total number of civil servants. If so many civil servants are not employed on permanent terms, the skeleton of the Government will become slack.

On the contrary, the Government will allow supervisory grades to be appointed on permanent terms in future. Let us refer to the examples of foreign countries. Basic rank civil servants in some countries such as Britain and New Zealand are relatively more secure but most managerial staff are appointed on agreement terms. Britain carried out a civil service reform in 1988 and set up new departments to take charge of certain traditional government services. The officers in charge of these departments are appointed on three to five years' agreements and open recruitment is made for outsiders to compete for the vacancies. The British Government also enhanced their accountability and monitored their performance.

That the reform proposed by the SAR Government has targeted at basic ranks is utterly unfair. If the Government is bent on having its own way, it will not only affect the stability of the Civil Service but also lead to division and grading.

Moreover, I would also like to discuss the issue of performance pay. The Administration says it will first look into the models adopted by local and foreign public bodies before implementing this controversial proposal. Madam President, a lot of countries overseas such as Britain, the United States, Sweden and Australia have adopted performance pay systems but almost none of them has been successful. In Britain, for example, since the implementation of the performance pay system across the board in 1996, the management are in general inclined towards appraising staff generously. For example, 99% staff were appraised as highly satisfactory and most of them were given comparable pay rise. Therefore, the performance pay system has become an empty frame devoid of any practical meaning. In fact, it is hard to quantify the performance of civil servants and there are hardly any objective criteria to measure their performance.

The western countries have not successfully carried out a civil service reform. If Hong Kong errs in implementing a reform, department heads may abuse their powers and hide the truth from their superiors and mislead their subordinates. This may create a "shoe shining culture" among civil servants. The result may be just the opposite to the Government's intention of increasing efficiency.

All in all, the Government should not carry out the reform with undue haste. It must act prudently and fully consult civil servants as the reform can only be implemented after a consensus is reached between both parties. If it implements the new system rashly and thereby leads to abuses, it will be caught in a quagmire.

Madam President, as the last point, I think there must be some truth in the strong demand made by the civil servants and staff unions to retain the pension because this very system is at the core of the Civil Service. An extensive consultation should also be conducted among civil servants especially the civil servant groups in respect of the civil service reform. The Government should regard civil servants as partners rather than the targets of a revolution. To implement a civil service reform smoothly and make the reform a success, the Government should first obtain the co-operation, recognition and support of civil servants at large. I urge the Government to bear in mind that it must not take any hasty action.

With these remarks, Madam President, I support the original motion and oppose the two amendments. Thank you, Madam President.

MISS CHOY SO-YUK (in Cantonese): Madam President, civil servants in Hong Kong generally have excellent quality but we cannot deny that there are still unreasonable rules and regulations in the Civil Service left over from the colonial era. Besides, the Civil Service has become overstaffed and some black sheep are sticking to their old ways and perfunctory manner under the ossified system. As a result, high efficiency is not achieved throughout the Civil Service which fails to effectively tackle unexpected crises. Thus the public and conscientious civil servants should welcome a civil service reform.

But I have reservations about the Government's proposal to implement a system of appointment on agreement terms among the basic rank staff that account for two thirds of the total number of civil servants. The pensionable and permanent terms offered by the Government have effectively absorbed and retained qualified personnel and the high pay offered has maintained a clean culture. The Government needs to retain the pension system but it can introduce an agreement system on the basis of the pension system to enhance the flexibility of manpower management. But the Government must further consider if a dividing line drawn between the basic rank staff appointed on agreement terms and the supervisory ones appointed on pensionable terms suits best the actual operation of the Civil Service? In my opinion, the Government may consider appointing staff on agreement terms or pensionable terms mainly on the basis of work types and the specific needs of different grades and ranks. For example, it may appoint on agreement terms staff for routine work and work that emphasizes performance or considered not suitable to be taken up by the same person over a long period of time, while appointing on pensionable terms staff for work that emphasizes continuity and professional or special skills.

The performance pay concept merits a trial. However, I hope the Government will note that it is not easy to implement this as it will inevitably make supervisors more influential in terms of the promotion and pay adjustment of their subordinates. Subordinates may then become yes-men to curry favour with their supervisors, they may work with less zeal and less initiative, and the result may be just the opposite to what is intended.

Therefore, the Government must ensure that the appraisals are conducted in an objective and impartial manner and with suitable transparency. For example, appraisal reports should be suitably open while the responsibilities for assessment should be shared among a few supervisors or different departments. As performance pay involves a material change in civil service management, the changes should not be made rapidly and across the board but we should systematically choose certain testing points for reform in an orderly and progressive manner.

At present, civil servants are given multifarious allowances, for example, "call duty allowances", "hardship allowances" and "special allowances", which have become excessive and tedious. I do not oppose giving civil servants suitable allowances but the Government should simplify and rationalize the system to make it in keeping with the times. It should also make stringent checks of the expenditures on various allowances so that civil servants will not take the allowances for granted and make their claims arbitrarily. For civil servants who do not observe discipline and are negligent in their duties, the Government should implement the proposal in the Consultation Document to simplify the disciplinary procedures for civil servants, establish a standing independent secretariat and a reasonable and highly transparent mechanism to allow all civil servants to clearly understand the disciplinary procedures and principles so that the relevant systems will be more acceptable to them. Moreover, the Government should assist through training heads of departments to learn managerial skills and absorb the latest management knowledge so that they can monitor the discipline and performance of their subordinates more effectively.

Madam President, Administrative Officers are elite of the Civil Service but they often fail to fully master their work as a result of frequent transfers. In general, they cannot concentrate their service on a certain post for long. Although this arrangement helps train up Administrative Officers as versatile staff, the training they received in individual posts is not cost-effective enough as a result of frequent transfers. The Government should therefore review the arrangements for training and transferring Administrative Officers so that they can have ample time and opportunities to accumulate professional knowledge and experiences, so that they can deal more effectively with problems that are becoming increasingly complicated and professional. Furthermore, the Government should recruit experts in the community to fill highly professional posts so as to enhance its ability to handle professional and technological matters and promote training for civil servants in the relevant areas.

We can see from the responses of civil servants to the Consultation Document and the large scale demonstrations held that civil servants are worried by this reform. Before implementing the reform, the Government must ensure that it has sufficient communication and understanding with civil servants to avoid complications in the course of the reform for otherwise it will affect public services in Hong Kong.

Madam President, I so submit.

MR LEE CHEUK-YAN (in Cantonese): In such a short span of time as two months, the civil servants have held no less than five rallies and procession demonstrations. Three of these are related to the issue of privatization and two to the reactions to the Consultation Document on Civil Service Reform. These demonstrations have fully shown the uncertainties and worries of civil servants about their jobs and the great dissatisfaction they have for the reform proposals. Why do civil servants feel so dissatisfied? I wish to express their discontent and the reasons for it on behalf of the Hong Kong Confederation of Trade Unions and the civil servant trade unions affiliated with it. I hope that Honourable colleagues will not lend their support to the Government so readily.

The thrust of their discontent is on the question of their rice bowl. We can just take a look at the situation in Hong Kong to get a feel for it. The current unemployment rate is at an all-time high for more than 20 years, reaching as high as 6.5%. Society is enveloped in a fear for wage cuts, benefit slashes and loss of jobs. Under such circumstances, the Secretary for the Civil Service has proposed this reform. Is he trying to take advantage of the situation like other unscrupulous employers? The Government has set up a Task Force on Employment charged with the task of solving the unemployment problem, but on the other hand, it has introduced this Consultation Document and called for privatization. What it is doing is aggravating the unemployment question and making its own staff, the civil servants, join the ranks who pass their days in fear of unemployment. This is a direct hit at the morale of the civil servants and it destroys the stability of the Civil Service. It leads to fear for massive unemployment. It is also a definite blow to social stability. The Government has been trying to restore confidence and stimulate the economy. But what it is doing now is exactly the opposite. Would you not think that this is a foolish thing to do? Why is the Government doing this? Is it blinded by the interests of the commercial sector, so much so that it has to put its sense aside and suppress the wages in support of the sector?

You may ask, "LEE Cheuk-yan, why are you talking about unemployment and wage cuts?" The reason is very simple. The Secretary for the Civil Service, Mr LAM Woon-kwong, said that serving civil servants would not be affected by the reform. Actually, he was trying to pacify and divide the civil servants. If we look at the reform, we shall be able to see the real motive behind it. There are a few half-masked, if not hidden, items on the agenda.

The first of these half-masked items is that the Government's intention to proceed with privatization. Although the Secretary said that privatization was unrelated to the reform, they were just proceeding at the same pace, I think there is a definite link between them. They are even linked. Why am I saying that the reform is paving the way for corporatization, privatization and contracting out of public services? It cannot be simpler. Let us take a look at the reference to the streamlining of redundancy procedures in the Consultation Document. Why do redundancy procedures have to be streamlined? This is because staff have to be laid off. Why do they have to be laid off? It is because privatization has to proceed. I asked a question in the Finance Committee yesterday, "How many people are expected to be laid off with the implementation of the privatization policy?" Nobody could give me an answer. Now every civil servant is asking the Government, "How many people are going to be laid off after privatization and corporatization?" Is the streamlining of the redundancy arrangements not preparing the way for corporatization? Why not? Are their rice bowls not in the danger of being broken?

The second big question is that employment by agreement terms is proposed in the Consultation Document. Why does it have to be done? Will it become an agreement system under corporatization? If this is so, then it has something to do with corporatization. So if the Government says that there is no connection between the two, I think it is hard to convince the people. Moreover, all of us and the civil servants can see that with the privatization of the Housing Department, the staff there are already very worried. The authorities seem to be ready to wield their knife at any time, and the staff of the Housing Department are feeling the chill down their spine. For the other civil servants, they are struck by the fear that someday they will come under the same knife. Those at the Housing Department are live examples, and can the rest of the civil servants not shudder in fear? If the reform is to take on, the entire Civil Service will be overwhelmed with fear.

The second hidden item on the agenda is the problem of salary which I have said just now. Is the reform not another tactic played by the Government together with the business sector to suppress wages? If I am a private sector employee, I would be very worried. For when such a problem exists in the public sector, the private sector will not be spared. Please take a look at the agreement terms and the performance pay mentioned in the Consultation Document. The aim of introducing the agreement terms is to facilitate the movement of staff. Why? This is to facilitate the constant recruitment of new staff whose salary is definitely lower. This makes salary in the Civil Service constantly on the low side. But such a volatile staff movement will lead to more civil servants going to work in the private sector. Salary will likewise be suppressed in the private sector. In the end, everyone's salary will be suppressed. Another deadly weapon of the Government is performance pay. This is to throw away the Pay Trend Survey mechanism and the pay scales. There will be no more increments and the rate of salary increase will depend on performance. In the end, there will be reward and no punishment. But is it really the case? How can it be possible that there will only be reward and no punishment? It will be less reward and almost no punishment. That is it. That is what the private sector companies are doing. Besides, when performance pay is implemented, how are the supervisors going to assess the performance of their subordinates? It makes one worry whether there will be a shoe-shining culture of flattering the superiors and a culture of cronyism. Recently I heard Prof John BURNS say in the Hospital Authority that all the pay performance systems in the world were unworkable. Not a single one was successful. Then why does Hong Kong still want to adopt such a system?

On the other hand, I hope that the reform proposed by the Government is not like making or repairing a car behind closed doors, that is, to divorce oneself from reality. Now that parts of that car may have to be replaced, some engine oils may have to be added. But what the Government is now doing is to remove the engine, or even dispose of the car in a heap of scrap metal and crush it to pieces. It is crushing the rice bowls of the civil servants to pieces as well. Is there really a need for the Government to do such a thing? I hope that the reform will start from the bottom up, and more civil servants can take part in it ......

PRESIDENT (in Cantonese): Mr LEE, your time is up. Please sit down.

MR LEE CHEUK-YAN (in Cantonese): Only when this is done can there be a real reform. Thank you, Madam President.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, the Civil Service is a team which implements government policies. It plays a vital role in maintaining social stability. Since the Government published the Consultation Document on Civil Service Reform in March, various civil servant groups have reacted strongly to the reform proposals. The media and the academics also intensified their attack on the reform, maintaining that great care must be taken in the course of implementation. As a matter of fact, the Civil Service is oversized and certain departments have been accused of being inefficient. Reform is therefore inevitable. As the Consultation Document has pointed out, "the public have not been happy with the handling of a number of specific incidents by the Government". The Audit Commission has exposed some cases of alleged loafing of some civil servants. Public opinion also points out that the civil service pay is too high. These are all factors justifying the proposed reform.

Though the reform is well-intended, the specific measures are open to discussion. The Consultation Document focuses on four major areas of review. But there is only a framework to each one of it and the details are lacking. There is no mention of information like the impact of reform on civil service pay and the scope within which the management-initiated retirement is applicable. Bits and pieces of these measures are given just like squeezing a toothpaste tube. There is not a word on corporatization and privatization when they are so very much in the limelight these days. One cannot help but feeling uneasy about it. Therefore, I hope that the Government can list out the reform proposals before undertaking the reform so as to remove the apprehensions and misunderstanding between the Government and the civil servants.

Among the four major areas of review mentioned in the Consultation Document, the most difficult one is on performance pay. Its objective is to reward good performance and punish slackness. However, it is really a brain-racking problem to put it into practice. For there are no sales figures for civil servants and hence performance is hard to quantify. If the idea is to put into practice, a fair, transparent, objective and quantifiable performance appraisal system must be devised. An appeal mechanism must also be set up to handle complaints.

Another proposal which receives great attention is the issue of employment on agreement terms. In recent years, some government departments have alaready adopted agreement terms in their employment of a certain number of staff. This practice is meant to suit the needs of individual departments concerned and enhance the flexibility in recruitment. I think much still has to be considered concerning the Government's proposal that as much as two thirds of the civil servants should be on agreement terms and such terms are to be applied only to those in the basic ranks. Although Mr LAM has said on public occasions that the two thirds is not a sacrosanct figure, I think in the interest of the stability of the Civil Service and since it will affect the continuity of government policies in enforcement, employment on agreement terms should not be adopted as the mainstay of civil service appointment. Madam President, if any reform is to succeed, it must have the support and participation of all parties concerned, in particular that of the principal force that will participate in the reform. Why is emphasis put on securing the acceptance and support of the civil servants? It is because the Civil Service is the major force of reform. The proposed reform ties with their personal interest and the success or failure of the reform hinges on their support. Therefore, their support is of vital importance. Just imagine if we have only a blueprint of a reform and some people who have brilliant ideas in devising plans for it, but not the support and acceptance of the general Civil Service, the reform is doomed to fail in the end. The Government should conduct sufficient consultation on the various coupling measures to take the reform forward. The reform must start from the top and gradually reach the lower ranks. This will remove the division and suspicions between various streams of civil servants. If not, the highly stable Civil Service which we now have will become a highly volatile one in future. This is something the public will not be happy to see.

Madam President, I so submit to support the motion moved by Mr CHAN Kwok-keung.

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

MR LAU CHIN-SHEK (in Cantonese): Mr Deputy, in my 30 years of experience in social service there is not a time like this when the Government is lighting fire and causing so many troubles in so many places, thereby creating so many conflicts in society.

When the Chief Executive, Mr TUNG Chee-hwa, assumed office, he was full of fire and was bent on carrying out a major surgery to end the many problems in society. In less than two years after the setting up of the Government of the Special Administrative Region, he was out there lighting fires all over the place. These include: the setting of the housing provision target of 85 000 units, slashing the Comprehensive Social Security Assistance payments, launching the medical services reform, scrapping the two Municipal Councils, reviving the appointed seats in the district boards, seeking an interpretation of the Basic Law from the Standing Committee of the National People's Congress, engaging in a complete overhaul of the Civil Service, pushing for the privatization of the public sector bodies and even renaming the former Government House.

The numerous reforms proposed by the Government have shaken the interests of all strata in society. Many of the fires so lighted can no longer be adequately described as controversies. They are really dividing up our society and overturning it.

The most dangerous thing at present is the rashly-launched so-called civil service reform.

The telltale facts are there for all of us to see. Now if a civil servant group wants to take to the streets, there will at least be 8 000, if not 10 000 people out there. And most of them do not come out by themselves alone, they will bring along their entire families to voice their discontent against the Government. The anger and worries, the feelings of uneasiness and helplessness have told the truth of the tale.

Just a few days ago, in a demonstration held by the Water Supplies Department, the most striking thing was an eight-year-old girl handing a petition letter to "Grandpa TUNG". It shows that the civil service reform has not only affected the one hundred thousand or so civil servants, but their families and children as well.

Such a strong rebound on the part of the civil servants is because what the Government is trying to do now is to shatter their rice bowls. And who will not come out and fight back? What makes the civil servants all the more furious is that the Government has been shifting the focus of attention from discontent against the policies made by those top officials to the problem of slackness among civil servants. This is a calculated diversion of public discontent and a creation of public outcry against the civil servants.

The creation of a divisive society and the opening of fire on the Civil Service which used to be the most stable part in society are all engineered single-handedly by the Government. Discontent among civil servants has reached such a grave situation that it cannot be easily dispelled by any of Mr TUNG's tactics or any of his determination or his being bent on having his own way.

Mr Deputy, we used to react favourably to reforms, for we are the ones who demand for progress. But the reform proposed by the Government is an unjust one. I would like to raise two points that warrant our consideration.

First, just as I have said, if there is a need for civil service reform, the most important thing is to deal with the problems in decision-making by the department heads and to push for political accountability on the part of the officials at the top, including the Chief Executive himself. But the reform which the Government is talking about is just suppressing those at the lower ranks. The directorate grade staff are spared. Not only are the department heads able to turn themselves away from the reform, they are made the grandiose designers and enforcers of it. Those in the middle and lower levels will bear the blame for all those faults in policy-making made by the Government.

If the civil service reform is to be implemented on a full scale, as many as 120 000 civil servants will be affected. Their employment terms will have to be changed from pensionable to agreement terms. But at the same time, those at the top will still be sitting securely in their lucrative positions. Those at the bottom will ask: Why is it that there is no reform at the top where reform is needed so badly? Why is reform to be carried out among the weakest, that is, those in the middle and lower ranks?

Second, besides being the largest employer in Hong Kong, the Government has also entered into a kind of social contract when it employs the civil servants on pensionable terms. It is not merely an employment contract. It cannot therefore be altered unilaterally. But recent moves made by the Government show that it is not only unwilling to listen to the civil servant groups, it is also bent on having its own way.

The kind of services provided by the Government cannot be compared to those provided by the private sector at all. The pension system enjoyed by the civil servants now is an important foundation of the provision of a stable range of services by the public sector. It is precisely the preservation of this system that can ensure that civil servants will be willing to commit themselves to making public service as their lifelong career. The maintenance of this system is more than an employment contract between the Government and the civil servants. It is also an important social contract between the Government and the public at large for the simple reason that a stable Civil Service will create a crucial stabilizing effect for society as a whole. Now that the civil servants who used to be considered as the most stable group in society are feeling so insecure and so worried about their jobs, they will of course refrain from any massive spending or home ownership. How on earth can our economy recover quickly? When even the most secure people are feeling so insecure, whom then can we rely on to make a recovery?

I so submit. Thank you, Mr Deputy.

MR MA FUNG-KWOK (in Cantonese): Mr Deputy, after the publication of the Consultation Document on Civil Service Reform, there are some explicit responses. First, a stable, clean and law-abiding Civil Service is very important to Hong Kong and their excellence can only be maintained through continuous reforms. Therefore, most people including civil servants think that a reform is essential. Second, most civil servants are dissatisfied with the specific policies of reform and question the motive of the Government. Lastly, the public is in general concerned about the initial idea of the civil service reform. We all hope that the Government will conduct an extensive consultation and amend the unreasonable parts of its original idea and realize the aims of the civil service reform that makes changes amidst stability.

Mr CHAN Kwok-keung's original motion stresses two principles of the civil service reform, that is, to consult the Civil Service adequately, gain the acceptance and support of civil servants and adopt a step by step approach in implementing the reform. I think his motion reflects public opinion. The amendment moved by Miss Emily LAU contains some specific ideas that have been discussed by the community for a long time. I agree to most of these ideas.

I shall talk about the causes of a civil service reform first, that is, why a reform is essential. Three principles are stated in the preamble of the Consultation Document. Looking at these principles now, I think they are too vague and they fail to tell the public explicitly the background of the reform. Perhaps the officials concerned have not pondered over the major premise of this reform. The Government must answer the question "why should a reform be made?" in detail before discussing "how will a reform be made?". To answer the first question, we have to comprehensively analyse and review the past and present of the Civil Service, ascertain its merits and credits, and point out the problems that call for a reform. Many civil servants think that the Government is intentionally discrediting them in order to implement a reform and to a very large extent, the reform is intended to cut expenses. Obviously, there is already a distrust between the Government and civil servants even before the implementation of the reform. This is not a good beginning. The Government should take the initiative to analyse the issue clearly and give a convincing answer to the question "why should a reform be made?". This is the first task for the Government.

Next I will talk about "how will a reform be made?", starting with appointment on agreement terms. The Government intends to appoint the basic rank staff on agreement terms and upset the ultra-stability of the Civil Service. No doubt, iron rice bowls have created lazy civil servants who are not enterprising. This should be changed, but people doubt if appointment on agreement terms can solve the problem. Some opined that appointment on agreement terms is only an expedient measure that avoids the important and dwells on the trivial. A feature of the existing Civil Service is that it is highly difficult to dispose of an incompetent civil servant. Sometimes, it takes a few years to handle such a case and if it is not handled properly, the manager who has reasons for dismissing a subordinate may on the contrary be blamed. With the change to appointment on agreement terms, the manager at a higher level can avoid confronting an incompetent subordinate he can hardly deal with. Such a subordinate is just like bean curd that has fallen into ashes, we can neither blow or hit it. Handling such bean curd is really a bitter job. But looking at the agreement system deeply, we may as well have to put up with an incompetent civil servant appointed on agreement terms until the end of his agreement before terminating our relationship with him, and public money will be wasted in the process. Therefore, some civil servants think that a reasonable dismissal mechanism under the pension system is better than an agreement system. Certainly, this dismissal mechanism must include simplified and stringent disciplinary procedures as well as a non-disciplinary administrative elimination mechanism. In fact, the Government can consider following the example of the private sector in implementing long-term continuous appointment on agreement terms. This system can strike a balance between the aims of maintaining manpower stability and timely invigoration of staff. Irrespective of which agreement system is adopted in future, the majority of civil servants should not be appointed on agreement terms because the Government is after all not a commercial organization and civil servants should still uphold the spirit of serving the community wholeheartedly.

Moreover, the agreement system proposed by the Government is targeted at the lower ranks but not the high-ranking civil servants holding supervisory posts and above, for the reason of maintaining the stability of the Civil Service without affecting their loyalty. I do not think this is a proper approach. If the Government thinks that the agreement system is a panacea for improving administrative efficiency, it should not apply the system to the basic ranks only. On the contrary, the Government should apply it to some supervisory grade staff and above while appointing the basic rank staff on pensionable terms. It is simply because the pension system may not be helpful to the career development of individual civil servants at intermediate to senior levels. Many senior civil servants who have left the Civil Service may have good chances of further development, but junior civil servants who leave the Civil Service halfway do not have good chances of securing better jobs. Therefore, to maintain the morale and stability of civil servants, I suggest that some senior civil servants should be appointed on agreement terms while junior civil servants should continue to be appointed on pensionable terms for the time being. In addition, the Government should work out a schedule for the gradual transition of the pension system to a provident fund scheme system. This is beneficial to both the Government and individual civil servants. As many Honourable colleagues have explained the reasons, I will not repeat the points they have made. I only hope that the Government will make specific policy proposals for implementing a civil service reform.

Finally, I would like to discuss the civil official system. The Government states that "comprehensive overview" is a principle of the reform. Has the Government considered changing the Administrative Officer system? Why does it not review the merits and demerits of this system? In the past 10 or 20 years, has the status of Administrative Officers been inappropriately exaggerated? Is it time to reform the civil official system? Will it be more effective if we let specialists replace versatile officers in managing certain departments? Will it be more reasonable if we allow experts to be leaders and non-professional Administrative Officers to play a supplementary role?

Mr Deputy, in the past, Administrative Officers had little chance to make policies within the government structure and their policy-making abilities were naturally not so strong. Now, we need senior civil servants with policy-making abilities to serve the public. As their responsibilities are more important than those of the junior grade staff, if they make wrong policies, the consequences will certainly be more serious. Therefore, it is fully justified for a reform to make changes amidst stability with reforming the senior ranks as the first step. Let us start with perfecting Administrative Officers at the senior level.

I so submit.

MR SZETO WAH (in Cantonese): Mr Deputy, Chief Executive TUNG Chee-hwa has repeatedly described the Hong Kong Civil Service as a world-class Civil Service, which is highly efficient, clean and of very high quality. In his words, the Civil Service of Hong Kong should be the best in the world. But then, when his words are still fresh in people's minds, he has suddenly announced his intention of reforming the Civil Service. So, with his sudden volte-face, our government departments are now described as the dens of idle loafers; in particular, middle and low ranking civil servants are now depicted as skivers. What kind of skulduggery is he up to again?

With the exception of Miss Elsie LEUNG, all incumbent top-level government officials actually belong to the same team who worked for the former government before the handover. They themselves were thus also involved in the drawing up and implementation of the existing civil service system; and, all those civil servants now being described as idle loafers have been working under these officials' very guidance and supervision. "Those below will follow the bad example set by those above", as the saying goes. These top-echelon officials are in fact the architects of the existing system and are thus the worst of all idle loafers. So, why are they not being dealt with first? The civil service reform must start from the top. Why do we not dismiss or demote some of them first? Is it really necessary for the Housing Department to have some 100 directorate officials? Why do we not first conduct a review on streamlining its set-up?

All matters and institutions must be reviewed regularly, so as to seek progress through reforms. The Civil Service is naturally no exception. But the civil service reform will have implications for social stability and the interests of many. It is thus much more complicated than the simple profit-and-loss concern of a private sector commercial organization. For this reason, civil service reforms must be handled in an impartial, sensible and satisfactory manner; thus, high ranking officials, whose interests are also at stake, should not be put in charge of the reforms, or else it will be difficult to rally public support. Worse still, the culprits may well get away while the innocent are victimized. For these reasons, we maintain that an independent committee with real authority should be set up to work out some feasible reform schemes; such a committee must conduct extensive research and in-depth analysis, and go about the whole thing step by step; it must not try to steal a march and force people to accept any fait accompli.

The Chief Executive once said that Hong Kong would be the first place to recover from the Asian financial turmoil. He no longer says anything like this now. Perhaps, he should really revise the fable about the running race between a tortoise and a hare, and learn from the tortoise; this is the best strategy he should adopt. The economy of Hong Kong is still very sluggish, with high unemployment, widespread wage reductions, weak consumption desire and dwindling confidence. The implementation of any drastic civil service reforms at this very moment will only make it more difficult for our economy to recover and further weaken people's confidence. The lower and middle classes must remain clear-headed. They must realize that civil service reforms will certainly result in layoffs and salary reductions for middle and low ranking civil servants, and this will definitely affect the interests of the lower and middle classes. They must remain vigilant and guard themselves against any incitement.

Over the past few decades, the economy of Hong Kong has been prospering, and the lower and middle classes have thus been able to share some of the fruits and improve their living. But now, the Chief Executive has tried to capitalized on the financial turmoil, and he has taken the lead in calling for wage deductions under the pretext of enhancing our competitiveness. Can we possibly enhance our competitiveness solely by wage reductions? The age of cheap labour has long passed, and the only proper way to enhance our competitiveness is to increase our productivity. Are they trying to capitalize on the current economic conditions and deprive the lower and middle classes of the fruits of success which they used to enjoy? The so-called civil service reform is directed at the lower and middle ranking civil servants. So, are these reforms actually aimed at adding force to the attempts of depriving the lower and middle classes of their fruits of success? The Water Supplies Department supplies water to the people, and its services are therefore vital to the community. That being the case, why does it have to be privatized? Is it meant to let businessmen control the very survival of our community? Is this an important indication on the further development of businessmen ruling Hong Kong? With government departments being privatized one after another, just who will be in control of this city when we look at it later?

When I was young, I happened to read a reportage article entitled "Indentured Labourers" written by XIA Yan in the 1930s, and the contents of this article is still fresh in my mind. In a semi-feudal and semi-colonial society like China at that time, the system of indentured labourers, based as it was on a series of sub-contractorships, was not only a means of exploitation, but also a way of dividing up workers for easy control and suppression. I notice that the Chief Executive is now trying secretly to govern Hong Kong with such a system, so as to strengthen his so-called "executive-led" government. Where is Hong Kong heading along this path of retrogression?

Mr Antony LEUNG, Chairman of the Education Commission, once remarked that the Professional Teachers' Union (PTU) and the Education Department (ED) were two big mountains standing in the way of our educational development. Well, perhaps, he really regards himself as the Foolish Old Man of the late 20th century. Why is it that the PTU and the ED have come to be regarded as Mt. Tai Heng and Mt. Wang Wu? Let me, as a man of integrity, try to guess his secret motives. First of all, an almost utopian plan, packaged as "the objectives of education", was put forward to arouse the discontent of parents with our education system. Then, in the name of such a utopian plan, some so-called reforms have been proposed to deprive teachers of their legitimate interests. And, since there are both government school teachers and subsidized school teachers, the PTU and the ED have come to be regarded as two big mountains to be removed.

I have already warned the Executive Committee of the PTU and its 70 000 or so members, asking them to follow the issue of civil service reform closely, because as the saying goes: "Once the lips are gone, the teeth will be in danger". Once again, we are now faced with a threat similar to the salaries row concerning Certificated Masters/Mistresses in 1973. We must not lose guard but must prepare ourselves well for the oncoming struggles. Someone have already sounded a loud warning that the Education Commission has finally thrown down the gauntlet. Who will the Commission attack? What kind of a war will follow? "With so many storms and rains yet to come, out country is bound to suffer". So, Mr TUNG and his advisers must think twice before they act; they must be cautious with what they do.

I so submit.

MR LEUNG YIU-CHUNG (in Cantonese): Mr Deputy, the Consultation Document on Civil Service Reform released by the Government in March this year stresses the importance of enhancing the efficiency of civil servants. I am sure that all in Hong Kong, including civil servants themselves, will not dispute this very objective. The only problem is how the Government is going to achieve it. Following the release of the Consultation Document, civil service unions have staged quite a number of processions, and each of these processions were attended by more than 10 000 people, evidencing the strong discontent with the proposed reforms within the Civil Service itself. In the course of these processions, many civil servants described the reform proposals as "exploitation disguised as reforms". The responses of civil servants can show us that the reform proposals are plagued with problems. As a result, even though existing civil servants are not supposed to be affected, at least apparently, there is still a feeling of widespread panic among them, and they have all joined hands to voice their opposition.

Why are all these lofty proposals regarded by civil servants as "exploitative"? Well, if we care to analyse the relevant background, the contents of the proposals and the actions taken by some government departments during the consultation period, it will not be difficult for us to find out the answer.

According to the Consultation Document, the principal reason for reform is the public discontent with the performance of the Government in some recent emergency situations. This is of course true, but this is certainly not the only reason, because members of the public are equally dissatisfied with the long-term policies of the Government. In particular, they are dissatisfied with the total failure of the Government to revitalize our economy and ease the unemployment problem. Who should really be held responsible, both for the failure of long-term financial policies and specific blunders such as the new airport chaos? The 180 000 middle and lower ranking civil servants? Or, the handful of top civil servants responsible for policy-making and management? I am sure that members of the public know the answers very clearly. But what are the responses of the Government? In the case of the new airport chaos, although the Select Committee of the Legislative Council has named several top officials who should be held responsible, the Government still insists that no individual government officials should be blamed. And, now, all the fault has been laid on the middle and lower ranking civil servants who constitute the backbone of the Civil Service. Having done so, our top civil servants are able to continue their office as "competent and able" leaders. That being the case, how can civil servants in general not help grumbling?

No doubt, members of the public do have many grievances about the ways in which lower and middle ranking civil servants perform their routine, day-to-day, duties. The most obvious examples are poor quality of services and "skiving". But as pointed out by Mr SZETO wah, this is not the fault of these civil servants only; the top officials responsible for managing them should also be blamed. How can these top officials be spared? Can they really deny any responsibility?

To civil servants in general, the most unacceptable aspect of the proposed reforms is precisely the fact that while the lower and middle ranking civil servants are targeted as the main subjects, absolutely nothing has been said on the ways in which top officials can be properly supervised, can be made more accountable. Worse still, top officials will continue to enjoy pension benefits while most of their other colleagues are forced to accept employment on agreement terms. In other words, even if there were any further blunders like the new airport chaos in the future, top officials would still be able to work without any fear of losing their jobs.

The unsatisfactory performance of civil servants is actually nothing new at all. So, we cannot help wondering why the Government has chosen to implement such reforms at this particular point of time. Right after the release of the Consultation Document, even before the completion of the consultation exercise, the Government hastened to suspend the employment of new civil servants on pensionable terms. Then, the Social Welfare Department started to recruit social workers by offering just 70% of the usual salaries, as if to scramble for the lead. Well, the Government must have noted that given the high rate of unemployment now, job-seekers in general, including professional social workers, do not actually have a very high bargaining power. For this reason, it knows that even if it takes advantage of job-seekers' difficulties and drastically reduce the salaries and fringe benefits of its new recruits, it will not face any recruitment problems.

But we must note that the Government is actually the largest employer in Hong Kong, and if it can be so mean in its job offers, it will inevitably produce far-reaching and negative impacts on the entire labour market. All private-sector organizations will definitely follow suit. With such a collusion between the Government and commercial firms, the salaries and benefits of all "employees" in Hong Kong will be exploited more seriously than ever before. It is small wonder that civil servants and even the general public have all looked upon the proposed reforms as "exploitation disguised as reforms".

The hasty move of the Government to put forward the proposed reforms is obviously a reflection of the fact that after committing a series of "errors" in the past two years or so, the TUNG Chee-hwa Administration is now very eager to demonstrate that his is still capable of providing able leadership. His approach to this issue is markedly similar to how his Administration handled the reductions of CSSA payments and the right of abode issue ─ in all these cases, the targets are first bad-mouthed, in the hope that the public can be won to his side and support the relevant measures when they are introduced. But having so bad-mouthed and betrayed his employees, can an employer still command any loyalty from them? Can an employer get any support from his employees when there are so many untold motives behind his reform proposals?

Mr Deputy, though I have made so many criticisms, I am certainly not opposed to the civil service reform. Rather, my point is that we must make sure that all such reforms must be genuine reforms. As to the question of how we should go about the whole thing, I would say that we need to conduct more in-depth studies. But I must point now that all reforms must involve the participation of rank and file staff. Such participation should not be embodied only in the reform process; more importantly, after the implementation of the reforms, the rank and file staff should be given more opportunities to take part in the decision-making process and to communicate with their supervisors. This is in fact a major trend in modern personnel management. In any case, we must not allow top-level staff to have all the powers, to brandish the "Sword of Imperial Sanction", when dealing with their subordinates, as is now proposed in the reforms.

There will be a lot of conflicts of interests if top officials are to be entrusted with the task of reforming the Civil Service, and this will also fail to win the wholehearted acceptance of rank and file civil servants. Therefore, all reform proposals should be drawn up by an independent committee. And, such a committee should decide which scheme to adopt only after conducting an extensive consultation exercise among civil servants and members of the public.

Mr Deputy, I so submit.

MR TAM YIU-CHUNG (in Cantonese): Mr Deputy, the topic of the next motion debate will be Chinese medicine — a topic on which I do not intend to speak. But for the topic now under debate, I would like to apply some Chinese medical concepts, to make a pulse-diagnosis for the Secretary for the Civil Service and to give him a prescription, in the hope that this can give him some help.

Immediately after its release in March this year, the Consultation Document on Civil Service Reform was warmly received by public opinion and the different sectors of the community (including Members of this Council). And, most civil service unions also expressed their support for the broad principle of reforming the Civil Service. I am sure that Mr LAM was certainly very encouraged at that time. But over the past few weeks, changes have occurred, as civil servants and their family members turned out to voice their strong discontent and worries about the proposed reforms. This is indeed something which the Government should think seriously about.

The Consultation Document is merely a document on the broad principles and directions of civil service reform, and it does not set out any details and specific arrangements. This has led to many speculations and the widespread circulation of some so-called insider information. As a result, civil servants have become extremely worried about the impact of the proposed reforms. And, the situation is somewhat worsened, as the Housing Department starts to pursue the possibility of corporatization actively; this has set a rather "bad" example, causing widespread panic among civil servants and making them worried about their interests and "rice bowls" under the proposed reforms.

The proposals of the Government on the corporatization of the Housing Department and the privatization of the Water Supplies Department all involve changes in job nature and the scaling down of establishment, and these proposals may also lead to a corresponding reduction of civil service posts. But throughout the entire process, the Government has failed to effect any genuine communication and negotiation with the staff side, thus resulting in a lack of mutual trust.

The Consultation Document was released right at this juncture, and it advocates the employment of civil servants on agreement terms. The Document recommends that civil servants of the basic ranks should be employed on fixed-term agreements, with renewals only for those with satisfactory performance. Many civil servants consider that the employment of civil servants on agreement terms will not constitute a stable administrative framework. They argue that this proposal is nothing but a prelude to privatization, because once the Government decides to terminate its agreement with a certain employee, it does not need to give any specific reason or compensation. They therefore think that there will be no job security.

On the one hand, civil servants are already worried that the proposed employment of civil servants on agreement terms may well lead to job insecurity and spates of dismissals and wage reductions, which will in turn brought forward corporatization and privatization and quicken their pace. On the other hand, as the Housing Department launches its corporatization scheme in full swing, they also see that the interests of many of its staff may be affected. So, they may well think that they cannot possibly escape the final fate of privatization or corporatization, whether they work hard or not. That being the case, how can they be expected to support the reforms proposed by the Government?

From this, we can see that if we do not make it very clear that civil service reforms are not the same as corporatization and privatization, and if we do not set out the details of reforms clearly, we will not be able to allay the anxieties of our civil servants. Recently, the Social Welfare Department has sought to reduce the salaries of its contract staff. This has led many people to think that the Government is trying to create a fait accompli, and with this fait accompli, it will go ahead with the proposal of employment on agreement terms regardless of the outcome of the consultation exercise. The Government must not overlook the significance of this feeling, because if the mistrust and resistance of basic rank civil servants are really intensified, all reforms will be doomed to fail. Every system has its strengths and weaknesses. The system of employment on agreement terms as proposed will definitely be very useful in enhancing the flexibility of personnel management in the Civil Service and bringing civil servants' salaries closer to market levels. But it will be very unfair if this system of employment is applied without any variation and adjustment to all basic rank civil servants, and a very divisive effect may result if only basic rank civil servants are targeted. Some may even have the misunderstanding that this is a means employed by management to purge their eyesores. Many academics and civil service unions have pointed out that if we seek to implement the employment of all basic rank civil servants on agreement terms without any modification, we will certainly ruin the long-standing stability of the Civil Service. What is more, we will have to bear many other risks, such as a resurgence of corruption and abuses of authority and the wastage of staff training resources.

No doubt, some segments of the existing Civil Service are much too ossified and enclosed, and there is thus an urgent need to phase in a flexible and open system of appointment and dismissal. That said, I must add that all civil service reforms and changes should not be considered solely from the perspective of personnel management, because the resultant changes will inevitably produce far-reaching impacts on the corporate culture of the entire Civil Service. That is why we must avoid any rash action. The Government must seek to maintain the stability of the Civil Service, while making sure that our public services and the interests of existing civil servants are not adversely affected. In addition, it must also make sure that the reforms eventually implemented will be able to enhance both the efficiency and quality of government services. Therefore, the Government should really go about the whole thing with a cautious attitude; and it is highly essential that it should conduct sufficient consultation and give due respect to the views of the staff side before introducing any measures.

Mr Deputy, I so submit.

MR ANDREW CHENG (in Cantonese): Mr Deputy, many people have all sorts of questions in mind about the true motives behind the civil service reform proposed by the Government. Does the Government really intend so much to make our civil servants genuinely efficient? Or, rather, is it just trying to follow the trend of the private sector labour market under the beautiful pretext of reforms, so as to save money for the Treasury and reduce the pressure of a deficit budget?

I agree that the Civil Service is in need of reforms, but such reforms should be focused on quality. The existing Civil Service of Hong Kong has been operating for decades, and we can hardly convince anyone if we now say that it does not have any merits at all. The existing civil service system can at least provide civil servants with stable employment, secured incomes and retirement protection. Besides, it has also significantly reduced the desire of civil servants to change their jobs, while maintaining the integrity and stability of the civil service system.

But precisely because of such a corporate culture, which attaches paramount importance to stability, and also because of the complicated disciplinary procedures, some lazy civil servants have been able to make use of the loopholes of the system as a shelter for their perfunctory performance. This has led to the decadence of the Civil Service, which has come under severe public criticisms. But I do not think that such criticisms are in any way fair to all those other industrious and dedicated civil servants.

I am of the view that all civil service reforms should be focused on "quality". Attempts must be made to improve the accountability of all ranks of civil servants, including those at directorate levels. Besides, we must also set up a clear system of rewards and punishment and streamline the existing disciplinary procedures. All the work related to this kind of quality improvement should, I think, be undertaken by an independent and credible committee. We must never give top government officials a "free hand" and allow them to issue any high-handed orders which pressurize their subordinates into accepting the proposed reforms. Such a one-way and top-down approach will only arouse the discontent of civil servants and destroy the civil service system in its entirety. The numerous processions staged by civil service unions recently should really be taken as a warning by the Government.

Mr Deputy, I do not think that we can possibly succeed in improving the quality of our Civil Service simply and only by introducing "privatization" and "employment on agreement terms". What is most important is that we must try to find out why the quality of our civil servants has declined, and we must also identify all those problems which have come under frequent public criticisms. Following this, we should administer the proper remedies by introducing the reforms required. This is the only way to root out all the problems. Unfortunately, however, our top government officials are very self-opinionated, and they all insist that "privatization" and "employment on agreement terms" are the panacea for all the illnesses of the Civil Service. But I must say that all these changes, whether from "government control" to "privatization" or from "pensions" to "contracts", are nothing but technical adjustments. Those who insist on their viability have completely ignored the fact that the loopholes in the existing civil service management culture in relation to accountability, rewards and punishments, supervision and disciplinary procedures are actually largely responsible for staff problems such as laziness, irresponsibility and misreporting of hours worked and work done. The civil service management culture is full of loopholes basically because all those in the supervisory ranks are not the people who actually pay the salaries of their subordinates, and in a mammoth institution like the Government, even if a subordinate performs very poorly, the effect may not be felt so very easily, as when a tiny screw comes off a large machine. A responsible supervisor can of course seek to reflect the truth when writing appraisal reports, but some irresponsible supervisors may simply choose to muddle along.

Mr Deputy, I once worked in the Independent Commission Against Corruption, and it can thus be said that I was once a civil servant myself. I once heard a true story. A certain supervisor was not satisfied with the performance of one of his subordinates, and he wanted very much to get rid of him as soon as possible. He thought about the matter over and over again, but only to find that under the civil service system, it was difficult, if not impossible, to dismiss an employee. So, eventually, he hit upon a "very good idea". He decided to write a very good appraisal report for the problematic subordinate, and even went so far as to recommend him to other government departments. So, believe it or not, despite his problems, the subordinate concerned later even managed to become a high-flier in the government bureaucracy. Mr Deputy, as the real employers of all civil servants, I mean, you and I and the people of Hong Kong, we may find this story totally incredible. But this is really a true story. So, if we do not correct such a management culture, if we simply seek to change the appearance of the civil service system as commanded, all reforms will just be old wine in a new bottle, and no progress can be achieved at all, because the management culture will still be characterized by a lack of accountability and commitment.

Mr Deputy, a more serious problem is that the proposed reforms have led to widespread panic among all those civil servants who are dedicated, hardworking and impartial. Their morale and performance are both adversely affected, and they have started to fight back. At a time when Hong Kong is now facing an economic downturn and a myriad of other problems, does the Secretary agree that we should have a Civil Service characterized by solidarity? Or, does he wish to see antagonisms and bitter quarrels within the Civil Service? Well, as we can all see, the Secretary is such a lone fighter today. Mr Deputy, I wish to offer the Secretary a piece of advice: While water can keep a boat afloat, it can also turn it over. If water stands for our civil servants and the boat for government, then we can say that a sound civil service system characterized by solidarity and a sense of belonging will enable the SAR Government to implement its policies many times more efficiently; on the contrary, a divided Civil Service plagued with antagonisms and a lack of any sense of belonging is bound to make life much more difficult for the Government.

Mr Deputy, I so submit.

MR BERNARD CHAN: Mr Deputy, the Government's determination to reform the Civil Service had once received extensive support in the society. Many opinion leaders, including some Honourable colleagues here, applauded the long-awaited move as a bold stride to strengthen the public service. But shortly afterwards, while thousands of civil servants took to the street to air their fury, the Government's determination was accused of causing social unrest and creating bad examples for the private sector. The opposition said that a lower level of benefits would drive the civil servants to greater temptation of corruption. These claims cast serious doubts as to whether our civil servants are a professional workforce under strict supervision.

I am of the opinion that how the Government has handled the issue deserves much criticism. Instead of drawing clear boundaries of reform and issuing unequivocal instructions, the Government is ambivalent about the degree and pace of reform. What really hurts is the sense of insecurity and the breeding rumours. Now a strong opposition is formed and the Government is called to soften its stance.

If we trust that the direction of reform is correct, I see no reason to abandon the plan. I support the Honourable Miss Emily LAU's amendment, which suggests more flexibility in handling the case while maintaining the cause for reform. Now, it is time for civil servants to demonstrate flexibility as well. In the face of a flagging economy, I see no way the public sector can evade the tides of reform across the board. It has been argued that reforms in the public sector would prompt similar changes in the private sector. While the private sector has gone through many of the same changes, it is not likely that public sector reform is the sole reason. The painful adjustment in the business community is straight reflection of the gloomy economic climate. The lowering of the cost of business is a way to achieve competitiveness amid devalued economies nearby. If we cast aside warnings from the economy and remain complacent with our past success, we are doomed to lose control of public expenses. If this happens, we will eventually lose out in the regional competition as well.

It is essential to revamp our civil service system to see if we are hiring multiple workers for one job and giving reasonable level of remuneration. Ten years ago, the Government was short of applicants for Assistant Social Work Officers and Executive Officers. The starting point for these two grades were raised from Master Pay Scale point 16 to points 18 and 17 respectively. Incredibly, the temporary measure has lasted for 10 years disregarding the serious oversupply of graduates during these years. Now, we are hiring fresh social work graduates at HK$23,000, which is the price of a senior executive in the private sector. Can we still afford such a luxurious level of payment? Or shall we overhaul the system and see what has gone wrong?

I believe that dialogue, rather than wars of words, will be conducive to alleviating the tension between the Government and civil servant groups. It is important that Hong Kong stays flexible and remains willing to adjust to the confines of the situation. I hope that the public sector will become our vivid example in coping with the change.

With these remarks, Mr Deputy, I support Miss Emily LAU's amendment. Thank you.

MR JASPER TSANG (in Cantonese): Mr Deputy, I hope that the Secretary, Mr LAM Woon-kwong, will tell us later if the Government is willing to pledge that the civil service reform will be implemented only after it has gained the acceptance and support of civil servants, or the Government will implement the civil service reform even though civil servants do not support it.

Mr Deputy, some of the Honourable colleagues who proposed and supported the amendments have indicated clearly that they oppose Mr CHAN Kwok-keung's original motion. Is it because they do not like the words "has to"? Do they think that it is too rigid and inflexible if the civil service reform "has to" gain the acceptance and support of civil servants? Some have given reasons to illustrate that civil servants' views may not be consistent with those of the public as employers' position is very often different from that of employees.

If Honourable colleagues who intend to vote in support of the amendments are worried about the thing that "has to" be done, I hope that they will ponder the following: First, do we believe that the civil service system has unfairly and unreasonably given most civil servants excessively preferential treatment? Second, do we believe that most civil servants are lazy, of poor quality and bad? Third, do we believe that the interests of civil servants and those of the public are antagonistic? If we think that the existing system has unfairly and unreasonably given most civil servants excessively preferential treatment, we will surely believe that any reasonable reform will jeopardize the interests of most civil servants and they will therefore oppose it. Is this our logic? If we think that reasonable treatment is given to civil servants under the existing system, and their treatment is commensurate with their responsibilities and performance, there is no reason why we should believe that a reasonable reform will jeopardize the interests of most people. So, why do we believe that a reform will certainly be opposed by most civil servants?

Concerning the second issue I raised, do we think that most civil servants are lazy, of poor quality and bad? Whenever we say that we have to reward the diligent and punish the lazy, many civil servants think that they will be punished. Whenever we say that performance pay has to be implemented, they will think that they will certainly be paid less for they have poor performance. Whenever we say that the disciplinary procedures have to be simplified, they will think that they will be punished for they are bad and they often make mistakes. Are these true? If not, when civil servants have queries, say, about performance pay, and express their views on whether the system can be improved or if the efficiency of the Government will really be improved or if there is a more reasonable and fairer system, why do we think that they are opposing the reform for their personal interests? Do we think that the interests of civil servants are basically antagonistic to the public interest? Members may say that this may not be the case, but when a reform is proposed, everybody will first consider his personal interests before the public interest. We should not forget that the Civil Service is greatly different from the employees of a company or in the private sector. If the morale of civil servants are affected, the general public will be victimized first. If we implement a reform which is not supported or resisted by most civil servants, will this have positive or negative effects on public services? How should we prioritize the interests of civil servants and the public interest?

Many Honourable colleagues speaking before me have indicated that they support civil servants (probably because many representatives of civil servants are sitting in the public gallery). As far as we have observed, civil servants opposed the civil service reform or the measures of the reform in the past few weeks. Do we think that it is unreasonable of them to oppose measures that are reasonable or do we find their opposition reasonable? If we really support them and if we believe that the existing system has not unfairly given civil servants excessively beneficial treatment, or if we think that most civil servants are not lazy, of poor quality or bad, and the interests of most civil servants are consistent with the public interest, why do we worry that the reasonable, fair and good reform proposed by the Government will not be supported by civil servants? Should a reform affecting the entire Civil Service be implemented only after the Government has gained the acceptance and support of civil servants? Why are we not willing to accept this? What do we fear? While Honourable colleagues have proposed reasonable reforms, are they not confident in the reform package they have proposed? Do they fear that they will not be supported by civil servants?

Certainly, nobody will think that the Civil Service's support means support by every civil servant. A reform will naturally jeopardize the interest of individuals and those who are lazy and of poor quality will not want a reform. We all understand this, needless to say. The problem is, is this the case of the Civil Service as a whole? I hope that Honourable colleagues will think twice before voting on the motion because their votes represent their evaluation of the Civil Service as a whole. Thank you, Mr Deputy.

MR AMBROSE CHEUNG (in Cantonese): Mr Deputy, the civil service reform has changed from a benevolent act to a turmoil and gradually from victory to failure. The experience we gained from this civil service reform is that we are not only dealing with a system but 190 000 civil servants who are members of the public. Besides dealing with a system in a rational manner, we should also does so from a human angle. It is worth congratulating the Government on having chosen the right items and battlefield at the inception of the reform. Initially, the public, all sectors of the community and even civil servants supported this reform. If we ask civil servants if they are willing to enhance efficiency by simplifying the civil service structure, I am sure they will say "yes". If we ask them if they are willing to eliminate surplus manpower at a reasonable pace, I am sure they will say "yes". If we ask them if they are willing to accept simplified disciplinary procedures that duly mete out rewards and punishments, I am sure they will say "yes". The Government was actually victorious at the very beginning in the battlefield of this reform. But why has the tide changed? Despite the initial victory, the Government saw fit to make a hot pursuit and hankered for even greater greatness and success, sort of running out of control as far as time is concerned. We will see how "anxious" the Government is when we examine the schedule of the reform. Why is the Government so anxious? Why do we have to be that anxious? Do we have the prerequisites for being anxious?

If the economic situation is generally stable, I believe that we will be able to withstand a reform even if it is made anxiously, but we should actually not be anxious under the present circumstances. As Honourable colleagues have said, an economic downturn, a high rate of unemployment, the Government's briefing work out, the corporatization of departments, partial or full privatization will certainly affect the daily living of civil servants and make them very worried. Let us consider "stability" and "efficiency". It is best for the two to supplement one another and the Government also seeks changes amidst stability. But if we can only choose between "stability" and "efficiency", the Government has no alternative and it has to choose "stability" because efficiency cannot be achieved without stability, and I have never seen efficiency enhanced in an unstable situation.

Approaching the issue from this angle, what is the reason behind the change of this benevolent act into a turmoil? The vital point is whether the reform is fair. Why do we think that it may not be fair enough? Let me give a few examples to explain this. First, we may say that the reform is unfair for it is focused on the lower and middle rank civil servants. Second, the Government has not dealt with the existing civil official and expert systems, therefore, experts in the Civil Service see little chance of promotion. If we consider the three reports on the new airport incident mentioned by Honourable colleagues, we can see that we have criticized and voiced dissatisfaction with the co-ordination by senior government officials. Who should be sanctioned at the end? The management of the Airport Authority who are professionals. But senior government officials do not think so. The Government's view is that although there might be erroneous judgments and dereliction of duty, it is not necessary to take strong actions. Besides, the Government has shyed away from the issue of "political appointment". Senior government officials often say that civil servants should be apolitical. I agree that lower and middle rank junior civil servants should be apolitical but senior civil servants should definitely not be apolitical. We require a Policy Secretary who formulates policies to keep reviewing the policies and brief this Council on the demerits of such policies. Is this system neutral? How neutral is a Policy Secretary who formulates, examines and reviews policies? "Political appointment" is precisely needed under such circumstances. This system should be implemented to detach senior civil servants from the civil service structure and turn them into "ministers". Subsequently, the Government should enhance their accountability by means of "political appointment" and make them responsible for the policies made.

Lastly, let us consider if this benevolent act can avoid a turmoil. Taking Chinese medicine may not effectively alleviate such symptoms for it takes longer for Chinese medicine to produce effects and gradual nursing is needed. Western medicine may have to be used and the Government must take specific drugs at once to reverse the direction of the reform. Nevertheless, the most important point is that the Government should be willing to listen. Thank you, Mr Deputy.

MR MICHAEL HO (in Cantonese): Mr Deputy, the Democratic Party supports a civil service reform but we definitely oppose across-the-board or expedited privatization or appointing a large number of civil servants on agreement terms. We oppose the Government's attempt to fish in troubled waters.

I want to remind the Government that it should not have a blind faith in privatization or regard it as a panacea. Private companies are so-called highly efficient often because they have rectified abnormal inefficient practices. In other words, if the Civil Service can be better managed and supervised, it can also rectify inefficient practices. Obviously this is a management problem, rather than a question that can be answered by privatization alone. If we believe blindly in and implements privatization, we have actually taken the wrong road even if the Government can solve the problem.

Some people have suggested that enhanced efficiency after privatization will save costs but this is an uncertainty. Many companies that brief out work give their staff very low and exploitative pay. They are cutting costs by exploiting the employees, but cost-effectiveness is not increased. The Government should not be indifferent or regard this as a means to increase cost-effectiveness. It is a great pity that the Secretary has just left the Chamber.

The remarks made by the Secretary for the Civil Service recently give people an impression that he wants to appoint a large number of civil servants on agreement terms. This reform deviates completely from the fact that for great many years, the majority of civil servants are employed on pensionable terms. I hope I am mistaken and that the Secretary will clarify this point when he comes back. If his assistant had heard my remarks, I ask him to tell the Secretary that I hope that my understanding is not right.

We support the reform and a disciplinary mechanism for the Government to take reasonable disciplinary actions against staff who are lazy and those who have performed unsatisfactorily. I believe that trade union representatives will not harbour lazy staff. We do not want the incident reported in the newspaper a few years ago to recur. It was reported that a civil servant had managed to leave the territory during the time when he was supposed to be on duty. But that particular person has yet to be dismissed although the department concerned has been dealing with the case for a few years. Leaving one's post during office hours is a serious dereliction of duty subject to disciplinary action. However, I have a feeling that that the Government strongly wants to appoint a large number of staff on agreement terms is out of its assumption that it will be easier to dismiss those who hold down a job without doing a stroke of work after they have been appointed on agreements that are renewable every few years. Is this true? I must say that this simply will not work.

If a management reform is not made on the Civil Service, as the top and middle management do not want to play the bad guy, they are not willing to give those who performed badly poor reports. On the contrary, some even give these people fairly good reports so that they will be promoted more quickly and leave their departments. In fact, many people have heard such cases.

If the culture of not wanting to play the bad guy is not changed, what is the use of appointment on agreement terms? Upon the expiration of a person's agreement, the management can also decline to play the bad guy and give the person a good report, as a result, the incompetent person will have his agreement renewed. The problem will remain unresolved if the system is changed but not the culture or management. If the culture is not changed and if the Government still fails to identify and find the causes of the problem or suit the remedy to the case, the problem will continue to be there. Most probably, the reform led by the Secretary, Mr LAM Woon-kwong, has already taken the wrong path. But they may not have taken the wrong road for they may only want to seize the opportunity to fish in troubled waters.

Mr Ambrose CHEUNG said earlier that this proposal was initially a benevolent act. In fact, I suspect that this proposal was initially a benevolent act that was subsequently abused; or that this proposal was initially not a benevolent act at all, but rather a means used by the Government to achieve its aim.

Mr Deputy, most staff in the Civil Service are appointed on pensionable terms. Today, we are discussing the pension system at least because we think that most people should be employed on a long-term basis while appointment on agreement terms should be used in respect of or applied to a small number of special posts. What is the case with the pension system? I hope Members will consider supporting Mr CHEUNG Man-kwong's amendment. Miss Christine LOH and Mrs Selina CHOW have said that they do not want to delay the reform. But some of the specifics have not been finalized. For example, will the change from pension to provident fund jeopardize the interests of staff? This depends on the percentage of provident fund contribution for the higher the rate, the more insignificant the damage.

I so submit.

MR JAMES TIEN (in Cantonese): Mr Deputy, there are 190 000 civil servants in Hong Kong and they form a fairly large proportion of our working population.

I understand that there is an economic downturn and a high unemployment rate. Under these circumstances, the Government's intention to reform the civil service structure make many civil servants worried. They worry that some staff will be dismissed if the Government has to cut down on manpower or some departments have to reduce costs, and the dismissed staff can hardly find other jobs. With the exception of this year and last when the economic situation was poor, the unemployment rate in Hong Kong used to be very low, 2% to 3%, in the past. At that time, the business sector wanted to retain quality workers while we often criticized the Government for recruiting too many people. The Civil Service drew in many qualified personnel and private bodies could hardly develop. When the business sector sought labour importation, we were certainly opposed by Honourable colleagues. Many people also opposed the import of qualified personnel. To balance the long-term development of society, it is very difficult to determine when reforms should be made. In Hong Kong, civil service pay accounts for over 60% of the recurrent public expenditure and their wages take up most of the resources paid out of taxpayers' pockets. If we show great foresight and prospect the overall economic development of Hong Kong 10 or 20 years from now, can we implement a reform in a better way? Honourable colleagues may agree that we have not studied the civil service structure for 20 years or so while reforms have been made in the development of all other public bodies such as the Hospital Authority, the Housing Authority or the industrial and business sectors. In the course of reform, there will certainly be a lot of difficulties at the start and some staff will be laid off but they will find other jobs very soon. Therefore, a reform may not necessarily lead to layoffs.

I believe that most civil servants are good and only some are poor. As the business sector is offering performance pay, why can this not be done to civil servants? I do not think this is impossible. I agree that the Government is a huge organization, but 190 000 civil servants do not take up the same post. They are dispersed in many departments and offices. A lot of the departments and offices can be compared to the business sector. For example, the work of the Trade Department officials is more or less the same as that of factory owners and exporters. Do we think that it is impossible to measure the performance of a director? I do not think so. The performance of a directorate staff can be measured. With awards and punishment, excellent civil servants will perform better. If a review is conducted on the entire structure, good and outstanding civil servants who are hard-working will be promoted or be given pay adjustment, and this complies with the principle of good management. The business sector has been adhering to the principle for many years, and it has been proved that it is feasible in Hong Kong. I do not think carrying out a reform will lead to the layoff and demotion of civil servants or prevent their promotion.

Mr Deputy, I would also like to say that Mrs Selina CHOW has expressed her views on the "user pays" principle on behalf of the Liberal Party. The Council has been discussing this topic these few days. We all know that the Government has provided the public with many services. At the meetings of the Panel on Financial Affairs recently, most Members agreed to the "user pays" principle. It seems that the public and the industrial and business sectors are users and they have to pay, but we are meeting some expenses incurred by civil servants. If they utilize resources better and in a more economical and efficient manner, can we users pay less? Should we only consider the views of 190 000 civil servants and neglect the interests of the remaining millions of people and the business sector? If a department can still perform well after a wage or manpower reduction to the benefit of the community, then according to the "user pays" principle, the public and the business sector can spend less. I believe most people will support this. We do not think that the business sector and the public have to pay under the "user pays" principle regardless of the resources civil servants use on a piece of work, so long as they do it well.

Mr Deputy, Mr Jasper TSANG just asked if we opposed the original motion because of the wordings "has to gain the acceptance and support of civil servants" in Mr CHAN Kwok-keung's motion. This is a fact but I believe that most reforms cannot be carried out if they have to gain the support and acceptance of 190 000 civil servants. In fact, any party with vested interests will look at reforms from a negative angle. We think that it will be more appropriate for reforms to be made after the Administration has been urged to "fully consider the views of the public and of the Civil Service" as stated in Miss Emily LAU's amendment. As for the establishment of an independent committee as suggested by Mr CHEUNG Man-kwong, I think that it will have a buffer effect. The Democratic Party initially supported this reform. But then they thought better about it and felt hard at ease to find an execuse to oppose it. Now they have come up with this suggestion of conducting a review first and then hold meetings to discuss the issue before making a decision a few months or a year later.

Mr Deputy, the Liberal Party supports Miss Emily LAU's amendment.

THE PRESIDENT resumed the Chair.

MR ANDREW WONG (in Cantonese): Madam President, at the Budget debate on 25 March, I expressed my views very clearly in four paragraphs, but as we have one motion and two amendments today, I have to state my position clearly.

As to the motion and the two amendments, the amendment of Mr CHEUNG Man-kwong is most desirable for the following reasons.

Members may not be aware of the mechanism by which the civil service system was reformed and the pay of civil servants adjusted in the past. As far as I can recall, suggestions were made by independent committees for the Government's consideration. The first salaries committee was established in 1947 after the war while the second was established in 1959, the third in 1965 and the fourth in 1971. Unfortunately, the Government decided to establish the Hong Kong Standing Commission on Civil Service Salaries and Conditions of Service in 1979 in place of those committees. To date, the Standing Commission has been operating for 20 years but it has obviously not achieved anything, therefore, the Civil Service Bureau has to propose a reform. Regardless of how good the contents of the proposals are, for them to have credibility, they should be made by independent parties. This is a material reform. So regardless of why the Democratic Party has made its proposal, or why it has sought to amend Miss Emily LAU's amendment, or why it has proposed at such a late juncture in order to shirk the responsibility or to stay out of the limelight, I think the amendment to the amendment merits support on the basis of its wordings because the matter is not that simple and we cannot have it our way.

Mr CHAN Kwok-keung's motion is also desirable but it is a pity that Mr TSANG has made an overstatement. Mr CHAN's motion states that "...... has to gain the acceptance and support of civil servants, ...... and that only through the active participation of civil servants can the reform be implemented successfully .....". This is an ideal but not a prerequisite. If Mr CHEUNG Man-kwong's amendment is not approved, I will consider supporting the original motion but I cannot support Miss Emily LAU's amendment simply because I do not agree to the direction proposed in her amendment. Miss LAU has made five points:

First, the system of accountability for senior civil servants. I do not want to elaborate on this as I have discussed the ministerial system for many times. Mr Ambrose CHEUNG has pointed out clearly that it is a problem with the absence of a political appointment system. Only when most senior civil servants are politically appointed ministers can the civil service system remain neutral and apolitical. If all senior civil servants are appointed on agreement terms, and they may be dismissed at any time, is that not exactly the same as political appointment? If they cannot be appointed or dismissed at any time and a senior civil servant can only be asked to leave upon the expiry of his agreement, this is not right for senior government officials can appoint persons of perceived correct political stance. This is very dangerous. Madam President, the senior government officials in the Civil Service must be really neutral and able to express their views to the Government and the Chief Executive without fear and favour. This is a very simple accountability system. If we fear that civil servants may make serious errors, we need only enhance and simplify the disciplinary procedures. Therefore, I fully support the second point of Miss Emily LAU's amendment and I trust that this point will be supported by Members. Although civil servants may worry if there will be problems with overly simplified procedures and if they will be unfair, I believe enhancing and simplifying these procedures and adding an appeals procedure instead of procrastination will be accepted by civil servants.

Third, not implementing employment on agreement terms across the board. This is almost the same as supporting the implementation of appointment on agreement terms. I consider there is a major problem with this because the implementation of appointment on agreement terms, be it senior or junior civil servants, will make the active core members always on tenterhooks and fear that their agreements may not be renewed and thus they cannot remain politically neutral. I do not think that appointment on permanent terms should apply only to high ranking civil servants; it should also be applied to civil servants in the lower ranks. Putting it simply, I support the horizontal appointment of more civil servants at various levels so that specialists outside the Civil Service can have an interchange with those within the civil service system. There will not be problems. Obviously, the pension system will no longer be adopted and a provident fund system will be established. Therefore, I find it strange why we have to consider the introduction of a provident fund system for this system can be implemented at any time. With the old pension scheme, an employee who applies for retirement when or before he is 55 will receive pension after his application has been approved. Under the new pension scheme, an employee will receive pension when he is 60 but he is entitled to pensions benefits when he has served in the Civil Service for a full 10 years but he will only receive his pension when he is 60. The new scheme is more flexible. To carry out the reform further, it will be better if pension schemes are replaced by a provident fund scheme. Now that we have decided to adopt the Mandatory Provident Fund scheme, maintaining the pension schemes for civil servants will be like pushing a square peg through a round hole.

The fifth point, point (e), almost confirms that it is right to offer performance pay but it will be better if there is a fair and open performance appraisal mechanism. This will simply not work, I must say. If we want to stabilize the Civil Service, we must have a pay scale. Certainly, it does not mean that we should give civil servants an automatic pay increase and increment every year even with a pay scale. If the performance of an employee is unsatisfactory, he will not be given a pay increase. Therefore, we should consider and target at the problems with the civil service system and propose solutions instead of carrying out a material reform. This is a material reform and if this proposal is made by the Civil Service Bureau and adopted by the Executive Council, it will be an extremely serious mistake in my view.

Madam President, I urge the Government to consider this further and I would like to ask through you the Administration to reconsider this or think twice. If Mr CHEUNG Man-kwong's amendment is not passed. I wonder if an independent committee can be set up to make some recommendations.

Thank you, Madam President.

MR ALBERT HO (in Cantonese): Madam President, perhaps let me first respond to the queries raised by Mr Jasper TSANG as to why we will not support Mr CHAN Kwok-keung's proposal that any reform has to be accepted and supported by civil servants before it is introduced. As pointed out by Mr Andrew WONG just now, this proposal is open to several interpretations. First, it may be regarded as stating that the reform must be supported if it is to be successful. But it appears to me that it should not be interpreted in that way. My understanding of the wording is that this is a prerequisite. If so, then I think there is a problem with it. But is it like what Mr Jasper TSANG has described? He raised several questions and requested us to answer them and then he drew the conclusion that we were wrong if we did not support the motion. He raised three questions. First, do we think that civil servants are given excessively favourable treatment? Secondly, are most civil servants lazy? Thirdly, are civil servants and public interest antagonistic? If the answers to these questions are in the affirmative, then we should introduce the reform without having to gain the support of civil servants. Negative answers to these questions mean that we should secure the support of civil servants. This appears to be his logic. In my opinion, such logic seems to have oversimplified the issue. Moreover, these questions are also one-sided. I take great exception to the views that civil servants are well treated, or most civil servants are irresponsible, lazy, or more extremely, civil servants and public interest are antagonistic. We, of course, do not think so. Nevertheless, that does not mean that we consider the existing system flawless or there is no need to launch a comprehensive review in order to explore various reform options. These are two completely different things. This is the first point. As all of my answers to those three questions are in the negative and civil servants are not like that at all, there is therefore no need for me to assume or worry that civil servants will certainly oppose any reasonable reform which is introduced at an appropriate time and pace in an appropriate form. Why do we not strive for this instead of stipulating in such rigid wording that support has to be obtained and making this a prerequisite?

I wish to point out that any reform is bound to run into difficulties if we seek to secure 100% support from those affected by the reform. Take the system of accountability for senior officers for example, I would like to ask Mr TSANG whether he would introduce such a system only after senior officers had agreed to do so. The answer must be "no" because this must be dictated by principle. If we see the need to introduce a system of accountability for senior officers, we will do it even if senior officers or directorate officers are against it. Thus our consideration of some matters should be based on some independent arguments. Another example is the proposal for the fixed scale of fees charged by lawyers which we discussed earlier in this Session. Although barristers were affected the most by the proposal and solicitors were generally opposed to it, in the end, we supported the passage in this Council of this proposal to abolish the fixed scale of fees system after detailed deliberation. Different views are sometimes unavoidable as a result of a conflict of interests between a particular sector and the public. It is therefore inappropriate to lay down a prerequisite in such a rigid manner. However, I would like to stress in a frank and straightforward way ─ especially in the presence of so many representatives of civil service trade unions ─ that we by no means agree that the reform should be implemented without having to take into account and carefully consider civil servants' views. On the contrary, I consider it more important to make every effort to secure their support and agreement. But this should not be a prerequisite even though we should strive for them. In my opinion, it would be perfect if we could express such spirit in the wording. I believe that our stance has been clearly spelt out in my speech today. I also believe that even Miss Emily LAU will not oppose our position that it would be perfect and important for any reform to have the full support of the affected party. As a matter of fact, any reform should not depend solely on the meting out of rewards and punishments because human beings are unlike animals. Morale, moral commitment, the culture and tradition of a system are all very important to people. Success will be hard to come by if civil servants of different ranks are not completely convinced and united. I believe that the Government must address these problems. What it should not do is to force through some unpopular and morale-blowing proposals at an inappropriate time and in the face of a lot of misunderstandings and anxieties. Otherwise, it is more than sailing a boat against the current, it may result in the boat being overturned by the water. The last thing I want to see is an unnecessary line of division between us as a result of our decision not to support Mr CHAN Kwok-keung's motion. I believe that Mr CHAN Kwok-keung and I share the view that this goal is important and we should strive for reform which is reasonable, appropriate and necessary, and implemented at an appropriate time and pace. I believe that the public and civil servants share the same view on this premise.

I have said so much that I do not want to repeat those points already put forward by my colleagues from the Democratic Party. Nevertheless, I would like to stress one point again and that is, it is absolutely not acceptable for directorate officers to decide how to reform because they are an interested party. It is equally unacceptable for the reform and review to be confined to civil servants of lower and middle ranks only without affecting officers of higher ranks because this is unfair.

I wish to speak on one more point. Mr Andrew WONG seemed to have his own understanding of employment on agreement terms (that is, one of those items in the amendment moved by Miss Emily LAU). The Democratic Party's position is very clear, that is, agreement terms should not become the mainstay of employment, rather, they should play a supplementary role. A stable Civil Service depends very much on a system offering permanent terms of employment and we must emphasize this. Furthermore, we strongly oppose the implementation of privatization at such an inappropriate time.

Another point concerns an independent review committee and this is very important. Such a committee will enable experts, scholars and politicians outside of the Government to participate along with civil servants in the studies of certain complicated issues, such as the comparison between a provident fund system and pensionable terms, and performance pay. We must carefully study these controversial structural reforms and have thorough debate before implementing them. Of course, certain reforms can produce instant results, such as the enhancement of civil service efficiency, and the streamlining of disciplinary and appointment procedures. We all agree that these reforms can be implemented expeditiously as they do not involve structural changes and they are not significant reforms either. I hope we will adopt such an attitude so as to make the reform a success in the end.

Thank you, Madam President.

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

MISS CHAN YUEN-HAN (in Cantonese): Madam President, from a macro point of view, the civil service reform is a question of public administration and policy changes. It is a serious matter which will affect the future operation of the SAR Government and the provision of public services. As we embark on the reform, we should take into account the fact that the implementation of reforms will inevitably affect the remuneration, benefits, working environment, productivity and efficiency of the existing civil servants. I can be dead sure about it. As the reform will have far-reaching implications for civil servants and the community, Mr CHAN Kwok-keung therefore emphasizes in his motion that it is essential that the reform has to be accepted and supported by civil servants.

Madam President, Mr Albert HO argued that unilateral changes to employment terms should be allowed as long as they were acceptable to the public regardless of the serious controversy and reactions that it would cause. Such an argument is, in my opinion, false reasoning. Why do I say this? As a matter of fact, the successful implementation of reform in a big company, private company, must be accepted and supported by its employees. Otherwise, the reform will become neither fish nor fowl and even deal a heavy blow to employees' morale. Many companies, be they big or small, will take this into very serious consideration when launching reforms. Regarding the argument about whether the acceptance and support of civil servants should be a precondition or made part of the reform, I think this is nothing more than sophistry. If we are of the view that the reform affects both sides, then it must be agreed by both sides. Therefore, I am very disappointed at Mr Albert HO's earlier remarks though I admire Mr SZETO Wah for his speech in which he called on more than 70 000 teachers to get ready in the face of the Government's reform. His remarks are full of righteousness.

This reminds me of the protests led by Mr SZETO about salaries of certificated teachers back in the seventies, which was also mentioned by Mr SZETO himself just now. What happened then? The Government then adopted some measures to deny certificated teachers' right to equal pay for jobs of similar nature. Moreover, there were some other problems. At that time, some senior teachers bravely asked for a dialogue with the Government but their request was turned down. Their request for fair treatment was refused by the Government. Their request for communication was also turned down. What happened eventually? Students and teachers staged strikes. I trust that Mr CHEUNG Man-kwong must know this page of history very well.

Had the Government then made efforts to strive for the acceptance and support of employees as we call on it to do so today, the situation I mentioned above would not have arisen. Therefore, I wish to advise the Government that the consequence could be very serious if it excluded one of the most important partners involved in the reform and refused to patiently listen to their views. Mr Peter WONG Hyo, Chairman of the Hong Kong Chinese Civil Servants' Association, told me that before the Government unveiled the Consultation Document, Mr LAM Woon-kwong told him that the reform would not be significant and there would be no problem. However, the proposals made in the Consultation Document turned out to be structural changes. How could the Government have done this? The Government has not fully taken into account other views, nor has it looked at the issue from a comprehensive angle. What has prompted civil servants to take to the streets every week? Why have some people used such terms as "flames of battle raging everywhere" and "with bared lips, the teeth feel cold" (meaning sharing a common lot)? As pointed out by Mr SZETO, it would be unthinkable for people like us, who are involved in social and trade union activities, not to be aware of such important principles.

I agree that other Members have the right to move amendments at today's debate, but I hope Members will support the original motion moved by Mr CHAN Kwok-keung as his motion brings out the focal point of the entire reform. As I have said just now, an important objective of social activities during the seventies, eighties and nineties was to strive for fairness, respect, reasonableness and communication, which are our important principles. However, some people said today that they were opposed to Mr CHAN Kwok-keung's motion in order to expand the scope of the subject. If they oppose the original motion, please do it unequivocally by stating that they do not agree that workers should be given the right to bargaining and reasonable status. I think it will be all right for them to do so. Having been involved in the labour movement for several decades, I consider any sophistry unacceptable. I have several friends in this Chamber, who have been working in the social movement together with me. I wish to remind them of our struggle for the interests of teachers and various organizations in the community in the past. How could they use such terms as "interested parties" at today's debate?

Madam President, I hope those colleagues who are against Mr CHAN Kwok-keung's original motion will search their consciences and vote for Mr CHAN Kwok-keung's original motion after listening to what I have said, I hope. They should not affirm civil servants' role in an abstract way while denying their right to bargaining in reality. This will not do

As a matter of fact, civil servants are not against the reform. According to many views expressed to us, what civil servants demand is a place at the negotiation table. It is as simple as that. However, what have senior government officials done? I have received some complaints against Mr LAM Woon-kwong but there are more complaints against Mr MILLER, Director of Housing. Several other Legislative Council Members from the Hong Kong Federation of Trade Unions and I had met him before the so-called consultancy report on the Housing Department was published. We told him that he should consult staff unions in his department. But what did he say? "It is not necessary. I will submit the consultancy report to the Housing Authority and I will report back after the Authority has decided on the course of action." What sort of position do staff members of the Housing Department occupy in his eyes? As he has adopted such a bad attitude towards his staff, how can Mr LAM, as the head of civil servants, tolerate such an arrogant director of a department? This is what I wish to point out.

The specifics of the overall civil service reform should be drawn up through consultation among all the parties concerned. Due to the time constraint, I will not go into the details here. In my opinion, it is essential for the Government to respect civil servants and let them join in at the negotiation table and the discussions. I believe that civil servants will fight for their interests in the same reasonable way as other trade unions do, or like us in our fight for public interest in social movement. Their bargaining grounds have taken into account public expectations of them. The success of the reform hinges on public support, which civil servants fully understand. Therefore, I do not think there is any cause for concern. For people like us who are involved in social movement, it is more understandable in this respect that a balance will be struck in the end and a settlement will be reached.

Madam President, I so submit and support the original motion ......

PRESIDENT (in Cantonese): Miss CHAN, your time is up.

MISS CHAN YUEN-HAN (in Cantonese): ...... and urge all colleagues to support the original motion. Thank you.

DR YEUNG SUM (in Cantonese): Madam President, I have listened carefully to Miss CHAN Yuen-han's speech in which she seemed to imply that our refusal to support Mr CHAN Kwok-keung's motion amounted to opposing civil servants' right to collective bargaining, to disrespecting civil servants' status and the importance of dialogue. In my opinion, such arguments are nothing more than false reasoning.

I also wish to respond to Mr James TIEN. The Democratic Party has all along supported the civil service reform in principle in the hope that civil servants will constantly improve themselves. However, we firmly oppose several proposals. In the current economic climate, a full-scale expansion of privatization will, in our opinion, aggravate unemployment and produce adverse effects on other areas. We therefore oppose unequivocally the move in this direction.

Moreover, the full-scale introduction of employment on agreement terms will also seriously undermine the stability of the Civil Service. We consider the stability and morale of civil servants very important. If the Government noted a short supply of experts in certain fields and hoped to employ such experts on contract or short-term contract terms, we would consider supporting it. But they should account for a small number of civil servants only. We are firmly opposed to the full-scale introduction of employment on agreement terms. Of course, the introduction of a provident fund scheme could be considered.

Why should we need an independent committee? In fact, Mr Andrew WONG has explained this. We wish to assure Mr James TIEN that this is not a delaying tactic used by the Democratic Party to stall the civil service reform. The problem is the public will have doubts about the credibility of any arrangements made by senior officials with their own interests in mind. Right? We are particularly against the Government's proposal which affects civil servants of lower and middle ranks only while officers of higher ranks are able to get away with it. If reforms affecting officers of higher ranks are carried out by themselves, the public will question their credibility. Why do we need an independent committee? Because such a committee will be highly respected and its independence will enable it to monitor the interests and reforms of civil servants of lower, middle and higher ranks. This is our main argument in the hope of enhancing the credibility of the reform so as to convince all parties.

I so submit. Thank you, Madam President.

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

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Mr CHAN Kwok-keung, you may now speak on the two amendments to your motion. You have up to five minutes.

MR CHAN KWOK-KEUNG (in Cantonese): This is the first time I have initiated a motion debate and I have been longing for this for too long. As I have moved a motion for the very first time, I am also glad to see that Miss Emily LAU has also proposed an amendment to a motion for the very first time. This is fair enough. I have never expected that my motion would have attracted amendments by so many "hunters". No, I should call them "Big Brother" and "Supreme Sister" respectively. I mean no discrimination against Mr CHEUNG Man-kwong. Why do I call him "Big Brother". This is because he is not the leader of his party, so I call him "Big Brother". But "Big Sister Emily" is the "Line Leader" (in Cantonese, the pun for "line leader" means evening the surface of the wall with plaster) because she is the "Head" of the Frontier and therefore the "head of line" of the Frontier. (Laughter) That is why I call her "Supreme Sister". Someone said to me: "CHAN Kwok-keung, you are in for a big hit. You used to be a nobody. But this time two heavyweights from two major political organizations have moved amendments to your motion and you are sure to be in for a meteoric rise to fame." I am interested to see whether this will come true. To be honest, I admire them very much as they are eloquent speakers. Their words can both shake and magnetize high ranking officials. But I am a mere nobody whose words do not carry any weight and nobody will ever take me seriously. I hope that my speech this time will at least make Secretary LAM consider reforming certain unfair phenomena.

Madam President, I remember that on one occasion when you, "Big Sister Emily" and I talked about the prevention of disturbance at the public galleries. I said: "We could install a glass screen to separate the public galleries from the floor so that those people could not throw objects down at us. In this way, we could be shielded from the disturbance caused by them and their verbal abuse against us while they could still listen to the proceedings of the meeting. Isn't it a great solution?" "Big Sister Emily" rebuked me: "You must be crazy. How come we should become so undemocratic! We must maintain transparency, be open and close to the public. How could we do that!" As "Big Sister Emily" was so insistent, I gave up my suggestion. "Big Sister Emily" later told me: "In Germany, they even tolerate people showering faeces." I believe the President will remember such remarks. At that time, I replied: "Let me and 'Big Sister Emily' sit together to experience what it is like being poured faeces and to smell the faeces to see what they were like." This is what Miss LAU considers the basic level of liberty for an open society.

As a matter of fact, what my motion aims to achieve is to make the Government become a bit more open and give civil servants an opportunity to participate in the reform so that the Government will become closer to the public. My purpose is exactly the same as that of "Big Sister Emily". I am at a loss as to why she opposes my motion so strongly.

I hope Members will support my motion. But it does not matter even if they do not support me as they are entitled to stick to their own views. In my opinion, the relation between the Government and civil servants is like a marriage. I believe that before "Big Sister Emily" got married, she and her husband must have held detailed discussions. Only bilateral negotiations could make the marriage possible. Her husband could not have forced "Big Sister Emily" to marry him against her will because such marriage would not bring happiness. If both parties are to divorce in the future, it will result in much harm to the families, especially those with children. I liken the relation between the Government and civil servant to a marriage. Under such circumstances, I hope that "Big Sister Emily" will appreciate civil servants' feelings. What they wish to have is some democratic channels so that they could participate in the process. She should not have moved an amendment to my motion simply because I have used "has to" in it. If I will move an amendment to her motion in the future because she has used other words, that will be meaningless to both sides. Thank you, Madam President.

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

SECRETARY FOR THE CIVIL SERVICE (in Cantonese): Madam President, let me first of all thank all those Members who have offered us their opinions. The debate is indeed a very wonderful one. On the whole, the Civil Service of Hong Kong is a first-rate team noted all over the world for its excellence and integrity. This was the case in the past, and is still the case now. But we must still seek further improvement and progress, so as to make sure that we can continue to live up to the reputation we have earned.

Since the release of the Consultation Document on Civil Service Reform on 8 March 1999, we have received over 600 submissions. While there are different views on how the civil service management system should be changed and how fast changes should be introduced, there is a general consensus on the need for reform. The community expects and requires steps to be taken to modernize the administration of the Civil Service. We will bear this firmly in mind when formulating detailed proposals later on.

We are now living in a world where economic interests are given the greatest importance, and ours is also a society which must respond rapidly to all sorts of challenges. That is why the problems which the Government must handle are getting increasingly complex, and people are having increasingly high demands on the efficiency and effectiveness of government. Therefore, the Government really needs more flexibility, more openness and a Civil Service with a stronger awareness of competition to ensure that our government departments will be able to cope with future changes with flexibility. This is the aim of the civil service reform. This is also the expectation of the community. We have absolutely no hidden motive or agenda.

The Consultation Document on Civil Service Reform covers almost all aspects of civil service management from entry, pay and conditions, performance management, to discipline, training and exit. The Document gives an outline of our thinking in each area. This is a deliberate move on our part, as we feel it is essential that we develop our ideas as openly as possible, taking into account the views of the staff, as well as the community at large before we finalize the details.

Of all the proposals, those relating to entry and exit have attracted the most discussion. There has been a suggestion that the proposal on the wider use of agreement terms for new recruits is divisive and would undermine the stability and integrity of the Civil Service. From experience I do not see that there is much risk of this. The intention behind this proposal is to put in place a mechanism under which new recruits at the early stage of their career are subject to more stringent observation and assessment. Those with proven performance, abilities and potential and selected for appointment to supervisory ranks will be offered permanent terms. Indeed the initial service on agreement terms serves not only as a testing period for us, the employer; it also serves as an observation and adaptation period for the employee to decide whether the Civil Service is suitable as a longer-term career for him or her.

The use of agreement terms is not new. There are at present agreement officers in quite a number of government departments. These agreement officers work amicably alongside their counterparts on permanent and pensionable terms. There is no evidence suggesting that these agreement officers are more vulnerable to corruption than civil servants on pensionable terms. There is no evidence to suggest that the political neutrality of these officers is compromised through the use of agreement terms, or that they are more susceptible to private sector pressure, or that they are any less committed to public service than their pensionable counterparts.

It has been suggested to us that agreement terms should not be applied to certain grades such as the disciplined services or one-rank grades. We do accept that this may not be applicable across the board. Certain grades may require heavier investment on training than others. Certain grades may have no supervisory ranks. We have listened carefully. We will have regard to the needs and circumstances of individual grades and consider what are the best arrangements as we develop our thinking in this area.

I wish to make one thing very clear, in order to address one of the biggest misunderstanding: serving pensionable officers will not be forced to switch to agreement terms. Frankly speaking, the Government does not have any powers to take any unilateral action to alter the employment terms and conditions applicable to serving civil servants. Civil servants of all ranks are protected by Article 100 of the Basic Law and their respective statutory employment terms. In other words, all serving civil servants will continue to serve on pensionable terms, and agreement terms will be applied to new recruits only. Therefore, the transition from the present arrangements to the proposed system of agreement terms will be a long and gradual process. People are indeed over-worried when they say that our proposals are too drastic and hasty.

The problem of one-rank grades mentioned earlier highlights a particular problem with our current system which requires improvement. If there are no vacancies in the higher rank, or worse, if there is no promotion rank in a certain grade at all, then no matter how brilliant and how hard-working an officer is, there is no tangible reward or incentive available to him or her. This is particularly so if the officer is already on the maximum point of the pay scale. The fact is we currently have 55% of all officers in just such a situation. The Consultation Document has suggested two ways to deal with this: providing more avenues for advancement and introducing performance pay.

We believe that a more flexible appointment system should be introduced to ensure that we get the best persons for the job on the one hand, and maximize and fully utilize an officer's ability and capability on the other. Why should an officer's advancement be confined to within his own grade and be constrained by the vacancy situation in the grade? Why should an officer who is fully competent and demonstrates obvious potential be denied promotion simply because of the absence of vacancies in his grade? Why should we be barred from open recruitment when there is no suitable leader within the Government? Bringing in a more competitive culture is not a novel idea. We have tried this out with senior level positions for some time. The posts of Director of General Grades, Head of the Efficiency Unit, and Judiciary Administrator, for example, are now filled by officers who were selected through an open and competitive process. We have attempted, will continue to try, to fill the post of Commissioner for Tourism by such method.

I firmly believe that competition can bring out the best in all of us. A healthy, competitive environment is of value not only to management, but the greater advancement avenues could open more opportunities for officers as well. That said, we are not proposing to do away with the existing promotion system. We do recognize the need for structured career paths for promising officers. What we intend to do is simply to inject a dose of flexibility into the existing compartmentalized system.

Flexibility is also required in our remuneration package. Although the proposal on performance pay has given rise to some controversy, there is still a consensus that the conventional arrangement of a largely automatic incremental jump is outdated and must be revamped. Our community has already accepted the view that appropriate rewards and recognition should be offered to those who work hard and with outstanding performance. Civil servants should be no exception. The debate now is how we can achieve these objectives. I agree that constructing a performance pay model or models that could suit our own circumstances will not be easy. Not easy but we will try. We will carefully analyse the experience in the private sector as well as civil service systems overseas in designing our own models. I wish to reiterate that we will proceed cautiously by implementing trials in selected areas to ensure that the system is workable, practicable, and generally acceptable before we extend it to other areas.

Some people (including several Members) have accused us of focusing on the junior levels while leaving the senior levels untouched. This accusation is simply incorrect. Actually, if we read all the relevant documents carefully, we will see that the interests of all existing civil servants will be protected regardless of their ranks. The proposed measures will apply mainly to new recruits. Since we respect the legitimate rights and interests of existing staff, and since we very much want to maintain the stability of the Civil Service, we have decided to protect the interests of existing staff. Specifically, we have decided to adopt the approach of "no change for serving staff, but new arrangement for new recruits". This means to say that the terms and conditions of all existing staff will remain unchanged regardless of ranks. This is in line with our principle of seeking change amid stability. And, I must say that the targets of reform are not any specific ranks, but rather new recruits in general. When implementing any new measures in the future, we will accord equal treatment to all, regardless of ranks. The proposed measures will apply to new recruits of all grades and ranks. The new proposed entry system, that is, employment on agreement terms, if implemented, will apply to all new recruits from the basic ranks to directorate levels. And, the proposed provident fund scheme will also apply to all new recruits. Actually, some specific proposals, such as management-initiated retirement, are targeted almost exclusively at senior level staff.

Some have also said that we have tried to implement our proposed reforms much too drastically. But let us all be objective. Of all the proposals made in the document, which one has actually been put into practice already? We once announced that we would conduct a more detailed second-stage consultation exercise. So, why should people still say that our pace is too fast? Is such an accusation reasonable at all?

The instances cited by some Members, about stealing a march, are in fact some temporary measures taken under our policy of suspending the employment of permanent civil servants this year, and they have nothing to do with any long-term civil service reforms. We have also received many opinions relating to top civil servants, and many people think that reforms are most urgently required for these civil servants. Such views are perfectly understandable. Top civil servants are often the centre of public attention and concern, and, since their decisions will significantly affect people's livelihood, it is only natural that people should have high expectations about their conduct and integrity. If top civil servants violate any civil service regulations, or if they misbehave in any way, they must, like all other civil servants, face impartial disciplinary actions. Likewise, if they perform poorly, they must accept suitable management arrangements as all other civil servants do. The quality of top civil servants is extremely important to the proper functioning of the Government. We are convinced that if we can implement the proposed reforms, that is, if we can increase the transparency of the staff appraisal system, introduce an appropriate performance-based incentive mechanism, put in place the proposed system of management-initiated retirement and implement a more competitive appointment system for senior ranks, we will be able to ensure the quality of top civil servants and attract the best people, including professionals, to fill the senior posts.

Some people suggest that top civil servants should be employed on agreement terms. As I pointed out a moment ago, because of Article 100 of the Basic Law and the legal protection of the terms of employment enjoyed by existing civil servants, it is impossible for the Government to take any unilateral actions to alter the employment terms of any serving pensionable civil servants, irrespective of their ranks.

As for the question of whether or not principal government officials should be employed on more flexible terms, I would say that this has already gone beyond the scope of civil service reform. It involves changes to our political system. And, no matter how our political system is going to change, I am sure that Hong Kong will still need a strong and efficient Civil Service. Reforms will definitely enhance our ability to manage our Civil Service properly and are thus in line with the overall interests of Hong Kong.

Madam President, our objective of taking forward civil service reforms is to improve the existing system step by step. Through institutional reforms and enhanced training, we hope to improve the work culture of the Civil Service, and, most importantly, to enhance the efficiency, effectiveness and crisis management ability of the Civil Service. But I must stress that without any institutional reforms, it will be impossible for us to change the work culture of the Civil Service. We have no intention at all of starting a revolution of any kind, and I must add that there is actually no need for us to do so, because our Civil Service taken as a whole is still a very good one. We have deliberately adopted a progressive approach to reform the Civil Service, to enable it to face the challenges of the new millennium. Madam President, I support the spirit behind Mr CHAN Kwok-keung's motion. I agree that when introducing any changes, we must try as much as possible to maintain the stability and integrity of the Civil Service. And, we will also continue to do our very best to rally the participation, acceptance and support of our civil servants and to ask them to work with us in taking forward the reforms. But I wish to say that when handling reforms of such a gigantic scale, the Government will inevitably have to consider many different conflicting interests. As the final decision-maker, the SAR Government has to make the most appropriate judgment, taking account of the overall and long-term interests of the Region. As rightly pointed out by Miss CHAN Yuen-han, at the end of the day, we will have to strike a proper balance.

Mr CHEUNG Man-kwong advocates the setting up of an independent review committee to examine the reform proposals. But let me point out that under our existing framework, there are already quite a number of independent committees, including the Public Service Commission, the Standing Commission on Civil Service Salaries and Conditions of Service and the Standing Committee on Disciplined Services Salaries and Conditions of Service. All these committees have been providing independent advice to the Government on civil service matters. This is a long-standing framework, and has been proven by time to be very effective. Members of these committees also include Legislative Council Members, private sector staff and academics. We very much respect the impartial and independent advice of these committees and we will consult them on our specific reform proposals. Therefore, we do not think that there is a need to set up another independent review committee.

Madam President, I fully understand the anxiety of civil servants when faced with the prospects of change. That is why, in this debate, I wish to offer a further assurance to my civil service colleagues and their representatives that we will proceed with extreme caution; we will listen to different views very carefully, set down the proper priorities and implement the proposed reforms under the principle of "no change for serving staff but new arrangements for new recruits". Since the release of the Consultation Document, my staff and I have attended some 100 sessions on the proposed reforms. And, I have personally also attended no fewer than 20 discussions. As far as I can recall, I have never turned down any request from the central consultative council for meetings with me.

When answering questions from the staff side, we will also listen to their views and seek to address their concerns as quickly as possible. We attach very great importance to all these views, and when drawing up the details of the proposed reforms, we will assess and consider very carefully all the views collected during the first stage of consultation. In the coming few months, we will conduct a second-stage consultation exercise on the details of the various proposals. We will also enhance our dialogues with departmental management and staff representatives on this very important matter. Finally, we will also do our very best to work with them, so as to pave the way for the next stage of our reform efforts. Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the amendment moved by Mr CHEUNG Man-kwong to Miss Emily LAU's amendment be approved. Will those in favour please raise their hands?"

(Members raised their hands)

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

(Members raised their hands)

Mr CHAN Wing-chan rose to claim a division.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan has claimed a division. The division bell will right for three minutes.

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

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

Functional Constituencies:

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

Mr Kenneth TING, Mr James TIEN, Dr Raymond HO, Mr LEE Kai-ming, Dr LUI Ming-wah, Mrs Selina CHOW, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr WONG Yung-kan, Mr LAU Wong-fat, Mrs Miriam LAU, Mr Timothy FOK and Dr TANG Siu-tong voted against the amendment.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Mr Andrew WONG, Dr YEUNG Sum, Miss Emily LAU, Mr Andrew CHENG and Mr SZETO Wah voted for the amendment.

Mr LEE Cheuk-yan, Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Chin-shek, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr David CHU, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung, Mr Ambrose LAU and Miss CHOY So-yuk voted against the amendment.

Miss Christine LOH abstained.

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

THE PRESIDENT announced that among the Members returned by functional constituencies, 21 were present, four were in favour of the amendment and 17 against it; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 29 were present, 11 were in favour of the amendment, 16 against it and one 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): I now put the question to you and that is: That the amendment moved by Miss Emily LAU to Mr CHAN Kwok-keung's motion 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 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 Kenneth TING, Mr James TIEN, Mr Michael HO, Dr LUI Ming-wah, Mrs Selina CHOW, Mr CEHUNG Man-kwong, Mr HUI Cheung-ching, Mr Bernard CHAN, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr SIN Chung-kai, Mr LAU Wong-fat, Mrs Miriam LAU, Mr LAW Chi-kwong and Dr TANG Siu-tong voted for the amendment

Dr Raymond HO, Mr LEE Kai-ming, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Mr WONG Yung-kan and Mr Timothy FOK voted against the amendment.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Dr YEUNG Sum, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr David CHU, Prof NG Ching-fai, Mr MA Fung-kwok, Mr Ambrose LAU and Miss CHOY So-yuk voted for the amendment.

Mr LEE Cheuk-yan, Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Andrew WONG, Mr Jasper TSANG, Mr LAU Chin-shek, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung 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, 21 were present, 15 were in favour of the amendment and six against it; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 28 were present, 16 were in favour of the amendment and 11 against it. Since the question was agreed by a majority of each of the two groups of Members present, she therefore declared that the amendment was carried.

PRESIDENT (in Cantonese): Mr CHAN Kwok-keung, you may now reply, and you have five minutes 27 seconds.

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, just now, the Secretary said they would adopt a strategy of securing no change for serving staff but new arrangement for new recruits. But how can we implement this strategy for all the staff of the Housing Department will be scrapped in future? According to the Secretary, some of the current measures taken for staff recruitment are only temporary in nature. If the measures are really temporary, why is it necessary for the Administration to slash 30% of wages? If the Secretary really aims at securing no change for serving staff but new arrangement for new recruits, I hope he can understand the situation of the Housing Department staff. If the measures are temporary in nature, I hope wages will not be slashed for the time being. The Government should wait until there are formal measures before doing what it needs to do.

Another point I want to mention is that if every Members in this Chamber agree with Miss Emily LAU that there is no need to consult civil servants ─ pardon me, I should say no absolute need to consult civil servants instead. I heard Miss Emily LAU say "Are you kidding!" She loves to say "Are you kidding" most (laughter).

In fact, the acceptance of job offers by civil servants is like what we do in a wedding. I remember I swore before the Lord in my wedding that I would not leave my wife, be it in good or bad times. This is my oath. Today, however, all of us have left someone behind. In other words, we do not lend our support any longer; we insist that there must be a revolution. I think this is unacceptable. A person who has a good sense of family responsibility will do what our Honourable President did. Her love towards her child was so great that she was even willing to give her a kidney. Such a sentiment is really hard to come by. It is also hard to find a parent who is willing to do that.

I hope the Secretary can, from now on, cherish our civil servants and bear in mind not to do what some civil servants said, "LAM Woon-kwong, LAM Woon-kwong, substitute all the civil servants in the end". I think I shall stop here. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr CHAN Kwok-keung, as amended by Miss Emily LAU, 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): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Before I declare 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 Michael HO, Dr Raymond HO, Dr LUI Ming-wah, Mrs Selina CHOW, Mr CHEUNG Man-kwong, Mr HUI Cheung-ching, Mr Bernard CHAN, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr SIN Chung-kai, Mr LAU Wong-fat, Mrs Miriam LAU, Mr LAW Chi-kwong and Dr TANG Siu-tong voted for the motion as amended.

Mr LEE Kai-ming, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Mr WONG Yung-kan and Mr Timothy FOK voted against the motion as amended.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Dr YEUNG Sum, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr David CHU, Prof NG Ching-fai, Mr MA Fung-kwok, Mr Ambrose LAU and Miss CHOY So-yuk voted for the motion as amended.

Mr LEE Cheuk-yan, Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Andrew WONG, Mr Jasper TSANG, Mr LAU Chin-shek, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung voted against the motion as amended.

Mr NG Leung-sing abstained.

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

THE PRESIDENT announced that among the Members returned by functional constituencies, 21 were present, 16 were in favour of the motion as amended and five against it; while among the Members returned by geographical constituencies through direct elections and by the Election Committee, 29 were present, 16 were in favour of the motion as amended, 11 against it and one abstained. Since the question was agreed by a majority of each of the two groups of Members present, she therefore declared that the motion as amended was carried.

PRESIDENT (in Cantonese): Second motion: Developing Chinese medicine centre.

DEVELOPING CHINESE MEDICINE CENTRE

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, I move the motion which has been printed on the Agenda.

Madam President, several major property developers in Hong Kong have recently indicated that they are planning to invest in the Chinese medicine manufacturing industry. Some international funds, including venture capital funds, have also revealed that they are actively studying investment opportunities in the development of Chinese medicine. All of a sudden, the concepts of "Chinese Medicine Port" and "Chinese Medicine Village" for the purpose of developing Chinese medicine were advanced and become the talk of the town. Today, a major forum on the "Chinese Medicine Port" concept is held in Hong Kong.

The enthusiasm among the business and non-governmental sectors has provided a rare opportunity to develop Hong Kong into an international centre for Chinese medicine. Unfortunately, as the saying goes: "A patient with an acute illness is handled by a sluggish doctor"; the Government seems to have taken a lethargic attitude. Although the Chief Executive, Mr TUNG Chee-hwa, twice set the goal of developing Hong Kong into an international centre for Chinese medicine in his 1997 and 1998 policy addresses, the saying of "much has been said but little done" can best sum up the Government's failure to formulate a comprehensive and specific policy and timetable for implementation. In comparison with the implementation of initiatives unveiled in the policy address in respect of the development of information technology, innovative technology and tourism, little progress has been made in the development of Chinese medicine. This is really disappointing. It appears that some people still harbour doubts and suspicions about developing an international centre for Chinese medicine. Thus they must enhance their understanding of this issue and take it more seriously.

Madam President, the development of an international centre for Chinese medicine will bring enormous benefits to promoting economic and social development in Hong Kong. In the wake of the Asian financial turmoil, The Hong Kong economy has abruptly entered a period of adjustment, exposing the weaknesses of its economic structure which depended excessively on real estate and financial services in the past. Faced with this reality, we have realized that the development of high technology and high value-added industries is the only way to revitalize our economy. The development of a centre for Chinese medicine fits well with the direction of movement towards developing hi-tech and high value-added products. It can also make full use of the edges in both the Mainland and Hong Kong. Moreover, it is a more environmentaly-friendly industry, as well as a best choice in the adjustment of economic structure and the upgrading of our industries.

According to estimates by industry insiders, the worldwide sales of Chinese herbal medicine products and health foods generated more than US$20 billion last year and the market is rapidly growing at double digits. Hong Kong's export of such products valued at just US$25 million last year, accounting for less than 0.2% of the worldwide market. So it is obvious that there is a huge international market for Chinese medicine and Hong Kong also has huge potential for development in this respect. Therefore, from an economic point of view and for the creation of employment opportunities, we should use the development of Chinese medicine as a new starting point for promoting the economic development in Hong Kong.

The most critical question now is how to seize the opportunity and spare no effort in implementation. The Government can no longer sit and prattle on about general principles. What is required of it is actions rather than words. It should formulate a comprehensive and long-term policy on the development of Chinese medicine and take specific steps to implement and promote the development of a centre for Chinese medicine. The Government should draw up long-term, medium-term and short-term goals and strategies and a timetable for implementation.

Regarding the direction and positioning of an international centre for Chinese medicine, some people favour a centre for the promotion of products while others stress the importance of product manufacturing centre. There are also those who advocate the development into an international centre for treatment with Chinese medicine. While all these ideas merit exploration, I consider that a more realistic option is to position Hong Kong as a centre for the co-ordination, research and development, quality control, information, promotion and trading of Chinese medicine.

In my opinion, the Government should consider the following aspects when formulating the policy:

First, Chinese medicine should be incorporated into Hong Kong's public health care system. Many people elect to use Chinese medicine. It is estimated that 40% of the Hong Kong population regularly take Chinese medicine. But because the Government used to favour Western medicine at the neglect of Chinese medicine in the past, the latter was not given a statutory status and subject to exclusion and discrimination. A prerequisite for developing Hong Kong into an international centre for Chinese medicine is to incorporate Chinese medicine into Hong Kong's public health care system and give it a statutory status, so as to provide another choice in public health care service. The Government should expeditiously establish more Chinese medicine out-patient clinics in public hospitals to serve the public and to provide beds for treatment with Chinese medicine in in-patient departments for those who need it. In addition, the Government should set up a Chinese medicine hospital for the purpose of health care service, clinical tests and practice for medical students. As several universities have begun to offer degree courses in Chinese medicine, there is an urgent need for a Chinese medicine hospital.

Secondly, a scientific research centre for Chinese medicine should be established to formulate a standard for the certification of Chinese medicine which is accepted by overseas examination authorities, so that Chinese medicine can genuinely enter the international market. This is of crucial importance to the development of the Chinese medicine manufacturing industry. The biggest difference between Chinese medicine and Western medicine is that the former mostly uses compound prescriptions in treatment. It is therefore very difficult to certify the efficacy, quality and safety of Chinese medicine composed of different recipes. The difficulties in standardizing Chinese medicine of compound proscriptions are the main reason why no brand of such medicine has been registered by the Food and Drugs Administration in the United States. Proprietary Chinese medicine can only enter the international market as health food instead of medicine with a much lower profit margin.

Although the certification of quality for proprietary Chinese medicine is very important, the protection for the patent of such medicine is indispensable. Nowadays, the most profitable part of Western medicines is not in the manufacturing process but its intellectual property value. Hong Kong should work towards becoming an international centre for the registration of Chinese medicine patents. A comprehensive system for the protection of intellectual property is of crucial importance to attracting investors to participate in the research, creation and invention of Chinese medicine.

Thirdly, infrastructure facilities and support in various areas should be provided for the development of proprietary Chinese medicine, and natural and health products. The Government can offer help in terms of funding (such as the proposed $5 billion Innovation and Technology Fund), technical support and the industrial land policy, in order to facilitate the research and development of Chinese medicine and the commercialization of scientific research results. Hong Kong can make use of its edge in capital, management, information, packaging and marketing. Hong Kong can help to market proprietary Chinese medicine from the Mainland on the international market on the one hand, and develop its own Chinese medicine industry on the other to facilitate the adjustment of its economic structure, to create employment opportunities and to expedite the modernization and internationalization of the Chinese medicine manufacturing industry.

Fourthly, the training of qualified personnel should be enhanced and the Chinese medicine profession should be developed into a discipline of excellence. It was estimated that there were 6 890 Chinese medicine practitioners in Hong Kong as of 1 January 1995, only 2 888 of whom claimed to be graduates of formal courses in Chinese medicine, accounting for just 42% of the total number of Chinese medicine practitioners. Such a proportion was simply too low. Currently, the Baptist University, the Chinese University and the University of Hong Kong offer a total of a few dozen places in their degree courses in Chinese medicine. The number is far too small. Chinese medicine bears the greatest hope for the Chinese people to take the number one spot in the world. Hong Kong must develop Chinese medicine into a discipline of excellence if it is to become an international centre for Chinese medicine. Therefore, the Government should significantly increase the number of places for degree courses in Chinese medicine and offer postgraduate courses in Chinese medicine, so as to train qualified personnel at higher level with master's degree and doctorate qualifications in Chinese medicine.

Finally, I wish to stress that Hong Kong must strengthen co-operation with the Mainland in its bid to become an international centre for Chinese medicine. In view of the abundant supply of qualified personnel, achievements in scientific research, products and raw material on the Mainland, the Government should relax the immigration restrictions on such personnel by allowing experts, professors and qualified personnel in scientific research on Chinese medicine to come to Hong Kong to take up teaching posts, or to be engaged in scientific research and product development. Qualified personnel is the most important resources. Before it can train a large number of highly qualified personnel in Chinese medicine, Hong Kong should make full use of such personnel from around the world.

The Government should also study the feasibility of a Chinese medicine port.

It is imperative that the Government must consult the Chinese medicine sector and the community as a whole to draw on collective wisdom before formulating a comprehensive policy on the development of Chinese medicine.

Madam President, we must seize this opportunity which may not come again. The business sector is closely watching the extent to which the Government will be involved in the development of a centre for Chinese medicine, in order to formulate its own business plans and strategies. Whether Chinese medicine can transform from "an ugly duckling" into "a white swan" will depend on the determination and commitment of the Government.

Several colleagues from the Democratic Alliance for the Betterment of Hong Kong and the Hong Kong Federation of Trade Unions will speak on various specific policy areas concerning the development of a centre for Chinese medicine later on. I also hope that more colleagues will speak on this subject and support my motion. Let us join together in urging the Government to expedite the development of Hong Kong into an international centre for Chinese medicine.

I so submit. Thank you, Madam President.

Mr YEUNG Yiu-chung moved the following motion:

"That this Council urges the Government to expeditiously formulate a comprehensive and long-term policy on the development of Chinese medicine, so as to facilitate the development of Hong Kong into an international centre for Chinese medicine; the policy should include:

(a) incorporating Chinese medicine into Hong Kong's public health care system;

(b) developing Hong Kong into a centre for the co-ordination, research and development, quality control, information and promotion of Chinese medicine; and

(c) developing Hong Kong into a centre for promoting high value-added proprietary Chinese medicine, as well as natural and health products."

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

MRS SELINA CHOW (in Cantonese): Madam President, it is undeniable that Hong Kong is at the crossroads in the development of Chinese medicine. Ever since the Working Party on Chinese Medicine was set up under the then Health and Welfare Branch back in 1989, developments in the following 10 years (that is, the establishment of the Professional Consultative Committee on Chinese Medicine and the Preparatory Committee on Chinese Medicine in 1990 and 1995 respectively) have borne fruit. The fact that this Council is examining the Chinese Medicine Bill has reflected the fruit of such a long process of study, discussion and consultation. Madam President, of course, today's debate should not pre-empt the resumption of the Second Reading debate of this Bill, but in view of the far-reaching implications of this subject for the medical science and the economy in Hong Kong, today's debate is significant and should be useful to the Government in formulating policies in this area.

Chinese medicine has all along occupied an important position among Chinese communities around the world. Today, its acceptance is no longer confined to traditional users. Many Western countries are actively adopting Chinese medicine as supplements or even substitutes for Western medicine as a result of enhanced awareness of environmental protection worldwide, which has made natural and health foods and medicines more popular. Chinese medicine has, as a matter of course, also become increasingly popular.

The total sales of herbal medicines worldwide amounted to US$16.5 billion in 1997 with an annual growth of as much as 10%. It is no wonder many sectors are eyeing such a lucrative market with huge potential for growth. Such a huge market will naturally attract the attention of certain sectors. While the pharmaceutical industry will be energetically engaged in research on new products naturally, it is the support and promotion by investors and the Government that counts most importantly.

In addition, the continued emigration of Chinese people to other parts of the world over the past several decades has also enabled Chinese medicine to take root in those places outside China. Therefore, the Liberal Party unreservedly supports the overall direction of the development strategies of Chinese medicine outlined by the Chief Executive in his last two policy addresses. We share the Government's view and confidence that Hong Kong shall gradually develop into an international centre for Chinese medicine and hit success in the production, trading, research and information of Chinese medicine as well as in the training of qualified personnel in Chinese medicine. Our confidence is based on Hong Kong's strategic location and its political and economic advantages brought about by the implementation of the "one country, two systems" concept. As part of China, we can benefit from our motherland's long-standing expertise and experience on Chinese medicine as well as the abundant supply of raw material, which will put us in a more advantageous position than other places. Meanwhile, as a manufactory and export centre, Hong Kong has established a recognized status in quality control. We have a sound legal framework and adopt internationally recognized rules governing commercial contracts with our trading partners. We also have a legal system that is conducive to doing business and a clean Government which boost the confidence of overseas investors. Moreover, both Chinese and English are official languages in Hong Kong, which, together with our quality services in packaging, design, information, trade and transport, will also facilitate the rapid development of the Chinese medicine industry.

Having said that, the development of Chinese medicine in Hong Kong is still at an initial stage where the relevant legislation has yet to be put in place. Even if it is enacted, its implementation will take time. The research on new products requires time and investment. Although the Government has provided funds to universities and will continue to do so in the future, the development and investment in this field require more than public money. It is thus more important for the Government to take up the role of a matchmaker by pulling together scientific researchers and investors to promote the commercialization of the entire Chinese medicine industry.

Madam President, many retailers and manufacturers of Chinese medicine have expressed anxieties to me recently. They are worried because they will be subject to regulation after the enactment of the relevant legislation. I do not intend to go into the specific details of the Bill. They do worry about the effects on them of government policy in the future. Most of them come from families which have been in the business for several generations. Many of their operations fall in the category of small and medium enterprises. The Government should offer help to these experienced operators in order to make use of their many years of marketing experience and to help them survive in the new environment in terms of facilities, regulation, information and the protection of intellectual property and so on.

Finally, I call on the Government to liberate itself from the restrictions inherent in its own structure and not to neglect the inter-departmental co-operation that is essential to the implementation of policies on Chinese medicine. As the Health and Welfare Bureau, the Trade and Industry Bureau, the Agriculture and Fisheries Department, the Intellectual Property Department and the Information Technology and Broadcasting Bureau are involved to various degrees, the Government must establish horizontal co-operation in order to truly embody a positive role that the Government should play.

Madam President, I support the motion on behalf of the Liberal Party.

DR LEONG CHE-HUNG (in Cantonese): Madam President, wherever there is a Chinese community, Chinese medicine will be used extensively in that part of the world. Hong Kong is no exception. Yet regrettably, despite the fact that it is just next to the place of origin of Chinese medicine, due to some historical reasons, Hong Kong has for more than 100 years been regarding the long-standing use of Chinese medicine as a part of the Chinese culture instead of seeing it as a kind of medical science, not to say making any effort to contribute to its development.

As a matter of fact, the medical sector has since more than a dozen years ago been advocating for the establishment of a mechanism to govern the development of Chinese medicine, as a means to safeguard public health and to develop the traditional medical science of our country. However, it was not until the incorrect use of Chinese medicine had cost a precious life that the Government agreed to address the situation squarely and look into issue in a proactive manner. In this connection, a bill on the control of Chinese medicine has been submitted to this Council for scrutiny.

Since the Chief Executive put forward in his policy address a proposal to develop Hong Kong into an international centre for Chinese medicine, with a view to giving the economy of Hong Kong a boost, not only has there been a sudden upsurge of interest in Chinese medicine among our community, appeals for the development of a "Chinese Medicine Port" have also been heard from time to time; besides, certain organizations have also advocated the establishment of a Chinese medicine research co-ordination centre at the border between Shenzhen and Hong Kong. What is more, even the prices of those so-called "concept stocks" having the slightest connection with Chinese medicine have been rising tremendously. All these have served to reflect the enormous potentials of development of Chinese medicine. However, at this stage when such necessary basics as a regulatory system for Chinese medicine, accreditablion of qualifications and manpower training have yet to be established in Hong Kong, the strong advocation espoused by the Government, the businessmen and even the public on Chinese medicine has to a certain extent reflected the fact that a great many people of Hong Kong are seeing Chinese medicine as a money-spinner. Chinese medicine is indeed an art of medical treatment that the Chinese people have developed over the past few thousand years. For this reason, any development in Chinese medicine should be aimed at perfecting the efficacy of its treatment to the benefit of patients. Any economic interests derived from this should be regarded as a by-product. Should such by-product be made the aim of development, it would only cause the development of Chinese medicine to deviate from its right course, thereby hindering the progress of certain processes which are fundamental and essential but cannot yield economic benefits in the short run.

I think there are four factors conducive to Hong Kong's development into an international centre for Chinese medicine.

First, we must have in place beforehand a mechanism to regulate Chinese medicine practitioners, Chinese herbal medicines and proprietary Chinese medicines. I hope that the relevant bill can be passed by this Council as soon as possible.

Second, the development of any profession cannot afford to overlook the importance of manpower training. In recent years, the various universities in Hong Kong have started offering courses in Chinese medicine one after another. However, while such enthusiasm is recommendable, will the lack of overall co-ordination give rise to duplication of courses and hence a waste of public resources? Moreover, will the absence of an overall assessment of the demand for practitioners in Chinese medicine and Western medicine give rise to any excess in manpower supply? Hence, the Government should take the responsibility for co-ordinating and planning efforts in this connection promptly.

Third, regardless of whether it is the proposal for a "Chinese Medicine Port" or the proposal to establish a Chinese medicine research co-ordination centre at the border between Shenzhen and Hong Kong, the aim should be to centralize the research in, as well as manufacturing and quality control of Chinese medicine, with a view to providing the industry with tailor-made infracture facilities. This will certainly be helpful to the upgrading of product quality, promotion of technical exchange and enhancing appeal to investors.

Nevertheless, I hope that in providing the large scale infrastructure, the Government will not forget to offer assistance in the forms of loans or scientific research grants to the existing Chinese medicine manufacturers to help them comply with the prospective requirements of the law. Many of these manufacturers are long-standing small and medium enterprises handed down from their ancestors, letting them to close down will undoubtedly cause the buried treasure of Chinese medicine to disappear forever.

Fourth, if products of Chinese medicine are to break into the international market, they must comply with the international requirements in terms of quality, safety and efficacy certification, as well as disclosure of ingredients. While Chinese medicine has a few thousand years of history in practical application, and its effectiveness and value have long been proven, many aspects of its practice have yet to comply with the modern scientific requirements if viewed from the academic research perspective of the Western world. For this reason, it is very important to invest resources in scientific research and clinical experiments that are in line with international standards. Besides, "peculiar prescriptions handed down from ancestors" should never be used as an excuse for not disclosing the formulas of any medicines. In this connection, the Government should of course formulate and implement a stringent intellectual property protection regime to safeguard the interests of all parties concerned.

Madam President, the Chinese Medicine Bill is expected to be passed very soon, but so far the Government has not yet clearly outlined the future role of Chinese medicine in Hong Kong's public health care system as a whole. One cannot but suspect the Government of trying to shirk its responsibility.

While some have suggested defining Chinese medicine as a kind of primary health care services, others have considered Chinese medicine should play a unique supplementary role to make up for the inadequacy of Western medicine. Personally, I think we can consider treating Chinese medicine as one of the specialties of medical science as a whole; that way, Chinese medicine can effect mutual referrals much in the same way like other specialties of Western medicine, with a view to supplementing each other. The Government should actively enter into discussion with the public as well as the various professions concerned, so as to determine a position for Chinese medicine as soon as possible.

With these remarks, Madam President, I support the motion.

MR KENNETH TING (in Cantonese): Madam President, I speak in support of Mr YEUNG Yiu-chung's motion on behalf of the Federation of Hong Kong Industries.

First, I would like to give two examples to illustrate the actual effectiveness of Chinese medicine. I believe Honourable colleagues must have heard the first example. It is the success made by local doctors in using arsenic to trent leukaemia patients. This pioneering move of local doctors proves the practical efficacy of traditional Chinese medical treatment. Another example is the successful use of Chinese medicine to cure a diabetes patient in serious conditions. Starting from last year, the Prince of Wales Hospital in Sha Tin has made arrangements for dozens of diabetics pending limb amputation to switch to supplementary treatment with Chinese medicine. At last, gratifying results were achieved and the festering wounds of most patients successfully cicatrized, obviating the need for amputation.

Madam President, the two examples above illustrate that Chinese medicine used properly can achieve unprecedented medical effects. I believe these are just two of the many successful cases. With sufficient resources and the co-operation of local and mainland medical specialists, the development of Chinese medicine in application and Chinese medical treatment in Hong Kong will surely be advanced to the benefit of both patients and the economy of Hong Kong.

According to the statistics of in 1997, the global sales volume of herbal medicine including Chinese medicine reached US$16.5 billion. As Mr YEUNG has said, the sales in 1998 exceeded US$20 billion, and the annual growth rate was over 10%. However, the Chinese medical product market is almost monopolized by Japan and South Korea, while proprietary Chinese medicine made in China only takes up 10% of the market sales. Ironically, most raw materials for the production of Chinese medicine in Japan and Korea are imported from China.

Madam President, I am convinced that so long as we can co-ordinate the achievements of research in Chinese medicine made in the Mainland and Hong Kong, matching them with the quality control experience, advanced information and creative packaging of Hong Kong as well as the methods for the scientific verification of the efficacy and safety of Chinese medicine, the Chinese medicine produced in Hong Kong will have a share of the world market and even become the leader of the world Chinese medicine market. Therefore, I support the motion on developing a Chinese medicine centre.

I so submit. Thank you, Madam President.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, the establishment of the Government of the Special Administrative Region (SAR) has marked a turning point in the development of Chinese medicine. Article 138 of the Basic Law has set out clearly that the Government "shall, on its own, formulate policies to develop Western and traditional Chinese medicine and to improve medical and health services", thereby putting the professional status of Chinese medicine on a par with that of Western medicine on the one hand, and ensuring the development opportunities of the Chinese medicine practice on the other. While the registration arrangement proposed by the Government can serve to establish the professional status of Chinese medicine practitioners, it is obvious that the effort made by the Government so far is still insufficient to develop Hong Kong into a centre of Chinese medicine in a comprehensive manner.

The three targets proposed in the motion today are undoubtedly the essentials for Hong Kong to develop into a Chinese medicine centre; however, it is regrettable that the motion has not laid emphasis on the importance of manpower training. The talents required by the Chinese medicine industry include not only Chinese medicine practitioners but also professionals in such fields as research and manufacturing of Chinese medicine, management, sales and so on. Although Hong Kong has more than 5 000 Chinese medicine practitioners, systematic training has yet to be provided for other professionals of the Chinese medicine industry. Let me take the dispensers working in retail shops of Chinese medicine as an example. At present, dispensers of Chinese medicine are largely the owners of or employees working in the retail shops of Chinese medicine concerned, they may not necessarily be professionals in Chinese medicine themselves. What is more, the law of Hong Kong so far has not required shops selling Chinese medicine to have Chinese medicine practitioners stationed in the shops; under such circumstances, the protection for the users of Chinese medicine is indeed far from adequate.

The Hong Kong Progressive Alliance (HKPA) holds that the Government should further encourage the local universities to offer professional training courses in Chinese medicine. In this connection, the Hong Kong Baptist University has already started a full-time degree course in Chinese medicine, thereby making the first successful strides in the development of full-time degree courses in Chinese medicine. The HKPA suggests the Government should allocate additional resources to bring in and draw on the training and research experience of both the Mainland and other countries in Chinese medicine to assist the local tertiary institutions to offer relevant training programmes, including the setting up of clinical teaching centres, provision of master's degree and doctor's degree courses and so on, with a view to training up more professionals in Chinese medicine.

In addition to human resources, the co-ordination effected by relevant legislation is also very important. At present, the import, export, sale, and purchase of Chinese medicine and proprietary Chinese medicine are governed and regulated separately under a number of ordinances, such as the Pharmacy and Poisons Ordinance (Cap. 138), the Import and Export Ordinance (Cap. 60), the Public Health and Municipal Services Ordinance (CAP. 132), the Undesirable Medical Advertisements Ordinance and so on. Due to the lack of cohesion, the implementation of the relevant provisions will inevitably be rather confusing at times. On the contrary, the Central Government have all along subject Chinese medicine to a set of very specific and stringent laws. For instance, the Central Government has formulated since as early as 1988 the Methods of Managing Poisonous Medical Drugs to govern the use of poisonous Chinese medicine. The HKPA is of the view that in formulating laws in the light of the practical situation in Hong Kong, the SAR Government should also refer to the regulatory system in force in the Mainland; besides, it should particularly collaborate with the Chinese medicine industry in investigating the ways to step up the control over the use of poisonous Chinese medicine.

To successfully enable the Chinese medicine industry and the practitioners of Chinese medicine to become a part of the medical system recognized by the people of Hong Kong at large and the international community, a stringent regulatory system must be set up expeditiously; besides, a strngent code of practice must also be formulated for and observed by the industry. As regards the control on medicine and manpower training, it is better to err on the side of proceeding gradually in an over-prudent manner than taking things too leniently. In this connection, exaggerated claims on the efficacy of the medicine or practice of stressing quantity to the neglect of quality should never be allowed. That way, given time, the confidence of the public and the international community in both the Chinese medicine manufactured and certified in Hong Kong and the local professionals in Chinese medicine will be bolstered. By then, the Chinese medicine industry could genuinely take off in Hong Kong.

Madam President, the question of how Chinese medicine can cope with the medical reforms to be introduced in Hong Kong will definitely have an important impact on the long-term development of the Chinese medicine industry in Hong Kong. Earlier on, the Consultancy Report on Hong Kong's Health Care Financing and Delivery System prepared by the Harvard consultancy team was published, but it has failed to investigate into the issue in the light of the enormous public demand for Chinese medicine-related services. The HKPA hereby urges the Government to expeditiously incorporate Chinese medicine into Hong Kong's public health care system and set up public hospitals of Chinese medicine to provide treatment for both out-patients and in-patients. Moreover, Chinese medicine practitioners should be empowered to issue medical certificate for purposes of sick leave recommendation and patient referral. In addition, if the Health Security Plan recommended in the Harvard Consultancy Report should be implemented, the Government must also investigate how the insurance policy could be extended to cover services provided by Chinese medicine practitioners. While Chinese medicine is available at comparatively lower costs, they are visibly effective in terms of daily health protection and disease prevention; as such, if the use of Chinese medicine should be comprehensively incorporated into the public health care system, not only would the expenditure on public health care be reduced, the pressure on public funds earmarked for medical expenses could also be alleviated as well.

With these remarks, Madam President, I support the motion.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, in the aftermath of the devastating financial turmoil that began more than a year ago, a great many problems with Hong Kong have become clearly visible; in particular, our economic structure's undue reliance on the financial, real estate and service sectors has served to gradually weaken the diversifying economy that Hong Kong used to have. In the wake of this financial turmoil, the majority of the people of Hong Kong have drawn lessons from the bitter experience and considered that we should adjust the economic structure by giving our industries a new boost.

For this reason, Madam President, the past year has seen many people seeking to ascertain the diversity of the economy of Hong Kong in the coming century. As for these days, some studies conducted in the West have suggested that two major high value-added industries would be developing in the next century, and one of these should be proprietary Chinese medicine.

The people of Hong Kong are no strangers to proprietary Chinese medicine. We all know that it has a long history in this city, only that the former Government has never given it any legal recognition. But this unreasonable situation will be changed very soon, for Chinese medicine will be given professional recognition upon the passage of the relevant bill in this Council. Nevertheless, bearing in mind that it is a general practice of the Chinese medicine practitioners in Hong Kong to rely on traditional Chinese medicines or the so-called "peculiar prescriptions handed down from arrestors", if the development of our Chinese medicine industry is to compete competitively with that of other countries in the coming century, new impetus from the Government will be indispensable.

Without a doubt, Hong Kong is lagging behind the Mainland and Taiwan in its development of Chinese medicine-related technologies. According to the Report of the Preparatory Committee on Chinese Medicine, of the some 2 000 types of Chinese herbal medicine used in Hong Kong, 80% to 90% are imported from the Mainland; as regards proprietary Chinese medicine, of the 3 300 types available in Hong Kong, about 85% are imported from the Mainland, only some 500 types are manufactured locally. This situation is attributable to the fact that there are not many Chinese herbal medicine processing workshops or proprietary Chinese medicine manufacturers operating in Hong Kong; moreover, the imported proprietary Chinese medicines are mainly manufactured for export sales.

For quite some time in the past I have visited the proprietary Chinese medicine manufacturers in Shenzhen and Zhuhai. The pharmaceutical factories there are very large in scale, some of them even have assets of as much as $15 billion; besides, they have also successfully modernized a number of Chinese medicines and made them into capsule form proprietary Chinese medicines. Proprietary Chinese medicines as such are easy to take and inexpensive, they should be able to prove their competitiveness on the market. However, the proprietary Chinese medicine exports of the Mainland as a whole represent only a very small portion of the world market, compared to the larger market shares enjoyed by the proprietary Chinese medicines exported from Japan and Korea. One major reason why the proprietary Chinese medicines manufactured in China are not as competitive as their overseas counterparts is that the Mainland has failed to master the international market trend. Moreover, since there have been some past cases in which the proprietary Chinese medicines manufactured in China were found to have contained problematic ingredients such as heavy metal, consumers will naturally be wary of them. All these are attributable to the fact that a complete set of monitoring standards and regulatory system have yet to be developed in the Mainland. Indeed the marketing and standard testing are fields in which the people of Hong Kong should excel.

According to local statistics, in 1988, the majority of Hong Kong's top 10 imported Chinese herbal medicines were from the Mainland and represented a total value of $1.6 billion, with more than $880 million being generated from local sales. Then, in 1993, as shown in statistics prepared by the mainland customs authorities, the re-export trade of Chinese herbal medicines and proprietary Chinese medicines via Hong Kong made a 28.7% contribution to the total value of pharmaceutical products manufactured in the Mainland. On the other hand, while industry participants have estimated the total value of Chinese herbal medicine products and health foods sold worldwide at more than US$20 billion a year, the total exports of Hong Kong in this connection amounted to only some US$25 million last year, representing a less than 0.2% share of the world market. Since Hong Kong has all along been mainland China's major re-export centre for its proprietary Chinese medicines, does it follow that Hong Kong could not do any better or play a better role?

Chinese medicine products manufactured in the Mainland would still have difficulty entering the world market for the meantime, and the issue mentioned by me just now is only one of the major reasons. If we look further into the situation, we can see that the research practice in the Mainland are not up to the internationally recognized standards. In this connection, although the various professional aspects of the Chinese medicine trade, such as GLP, GCP, GMP, GSP and so on, are subject to stringent laws and regulations in the Mainland, the enforcement of such laws is way below international standards. The fact that production plants vary dramatically in quality is indeed an obstacle to winning the confidence of the international community. Actually, the development of Chinese medicine research in the Mainland has already reached a rather mature stage, but since the efforts made so far are all towards the local market, they cannot fit successfully into the existing international practices, not to say introducing our precious national treasure — Chinese medicine — to overseas markets. Given the inadequacies of the Mainland in this respect, there should be plenty of development opportunities for Hong Kong to explore. One possible direction is to make traditional Chinese medicine products into specific pharmaceutical products, standardizing and mordenizing them, and thereby bring them in line with international requirements.

However, one point I should like to stress is that Hong Kong would still need to invest a lot more resources into the development of our own Chinese medicine trade. In this connection, the Chinese University of Hong Kong has started its researches into Chinese medicines in as early as the '70s and established its Chinese Medicine Research Centre in 1979 to conduct tests and studies on a variety of Chinese medicines. In recent years, the University has even attained considerable achievement in the field of Chinese medicines authentication. Although the progress made in this area could not generate any immediate economic benefits, it has in fact laid the foundation on which the quality authentication of Chinese medicine products develops. Nevertheless, the perseverance of the academia alone is not enough to bring about success; hence, the Government must give impetus and support to the development of the trade in an active manner.

Madam President, Hong Kong is well-located at the meeting point of the East and the West. Hence, we could conveniently draw on the quintessence of traditional Chinese medicine on the one hand, and understand perfectly well the drugs control requirements and standards in force in the West on the other. Those are our strengths. If Hong Kong should develop proprietary Chinese medicines that could meet the Western drugs control requirements, given our advanced information networks and excellent marketing talents, proprietary Chinese medicines would be able to enter the world market more easily. Indeed, we should make the most of our advantageous position to give renewed impetus to our economic development in the next century, as well as to create more employment opportunities.

With these remarks, Madam President, I support the motion.

DR TANG SIU-TONG (in Cantonese): Madam President, in his second policy address, Chief Executive TUNG Chee-Hwa stated very clearly that Hong Kong did have all the conditions to become an international centre for Chinese medicine. As a matter of fact, Article 138 of the Basic Law has already laid down the foundation on which Hong Kong's Chinese medicine trade could develop. If the Government could formulate long-term strategies for the development of Chinese medicine, including enacting laws to give professional recognition to the trade, formulating policies for training and bringing in overseas personnel, safeguarding the intellectual property rights of Chinese medicine products, as well as devoting resources to the research and authentication of Chinese medicines, I am sure Hong Kong would be able to develop into an international centre for Chinese medicine.

Hong Kong has indeed lagged far behind Europe, the United States and Japan in its development of Chinese medicine, in particular the development of Chinese medicine products. However, given that Hong Kong is well-located at the meeting point of the Chinese and Western cultures, and that it has, in addition to its good network of international trade partners and management talents, the powerful resources support from the Mainland, if we should make an effort to catch up with others, Hong Kong would definitely have a better edge than the rest of the world to play the role of an international centre for Chinese medicine. On the other hand, if we should be complacent with our present situation, I am afraid we would not have even the chance to take part in the future international competition in Chinese medicine development; we would just be "disqualified"!

If Hong Kong is to develop its Chinese medicine trade, it is imperative that the Government should put in place complete and comprehensive strategic plans. In this connection, the first and foremost step is to establish the trade's professional status. Hence, apart from finalizing the Chinese medicine Bill as soon as possible, implementing the Chinese medicine practitioner registration system, giving professional recognition to Chinese medicine practitioners and putting into force a monitoring system, the Government should also actively discuss with other professional bodies in the medical and health sector as well as other relevant organizations, with a view to finding out the way to further upgrade the status of registered Chinese medicine practitioners by legislative means. Besides, the Government should also formulate plans and devise a timetable for incorporating Chinese medicine into Hong Kong's public health care system, thereby implementing a policy that attaches importance to both Chinese and Western medicines. Yet such a policy is certainly not the same as combining the application of Chinese medicines with Western medical treatment, for we still need to conduct more in-depth investigations and studies in regard to a combined medical system as such. It is only when the professional status of Chinese medicine practitioners is recognized and Chinese medicine widely accepted and applied in Hong Kong that manpower and financial resources would be attracted to our Chinese medicine industry.

Secondly, in regard to manpower training, as a means to train up talents and to support the development of Chinese medicine, three of our local universities have been offering diploma and degree courses on Chinese medicine since 1998. Nevertheless, taking into account of the number of places of all those degree courses, in 10 years the universities concerned could only train up for Hong Kong 270 degree-holding Chinese medicine professionals. That figure is equal to only 4% of the existing number of Chinese medicine practitioners in the territory, and it is definitely insufficient to cater for the needs of our Chinese medicine development. For this reason, I hold that the Government should adopt a two-pronged approach. On the one hand, it should allocate additional resources to local tertiary institutions in order to enable them to take in more students and to encourage them to provide Chinese medicine graduates with further study opportunities by setting up Chinese medicine graduate schools. On the other hand, it should set out clearly the academic requirements for qualifying as registered Chinese medicine practitioners, so as to enable the relevant non-government institutions to reorganize their existing training courses, with a view to accelerating the speed of quality manpower training. Moreover, the Government should also expeditiously draw up an acceptable and efficient "bring in non-local talents" policy to actively attract quality Chinese medicine professionals from both the Mainland and other countries to come to Hong Kong for development, as well as invite renowned Chinese medicine practitioners from the Mainland to conduct clinical training and research in Hong Kong to help facilitate the exchange of talents and knowledge, thereby ensuring that Hong Kong could have sufficient manpower to cater for the future development needs.

Thirdly, on Chinese medicine products. While Chinese medicine products are used extensively by the people of Hong Kong, they could only enter Western markets as health products or beautification products, none of them could enter those markets as medical or pharmaceutical products. This situation is attributable to the fact that Chinese medicine products are not subject to any internationally accepted quality control standards. As a sresult, even though the products concerned may be renowned for their efficacy and the prescriptions concerned have been clinically tested for several hundred years, they are still unable to comply with the Western drugs control requirements, not to say gaining a distinguished status in the international medical sector. This is indeed the major obstacle that hinders Chinese medicine from entering the international market. To overcome this obstacle, the Government needs to play the role as a monitor and implement the Chinese medicine practitioner registration system on the one hand, provide assistance and encouragement to enable Chinese medicine to attain international recognition on the other. In this connection, the Government should take the following measures in the short run: first, provide small and medium scale Chinese medicine manufacturers with assistance during the transitional period and help them comply with the requirements set out under the Chinese Medicine Bill; second, enhance Hong Kong's research strength by injecting more resources into the existing research fund for Chinese medicine development and actively helping the various research institutes to secure more financial support; third, encourage and facilitate the co-operation between local research institutes, the Chinese medicine trade and the Mainland, with a view to improving the quality of Chinese medicine products and developing new medicines; and fourth, collaborate with the trade to establish a drugs quality control system compatible to that of other countries, thereby paving the way for the registration of new Chinese medicine products and for Chinese medicine products as a whole to enter the world market. In pursuing such goals, the Government must take special care to safeguard the intellectual property rights of the persons and institutions responsible for the development of the Chinese medicine products.

In addition to giving enormous publicity to the efficacy of Chinese medicines, developing Hong Kong into an international centre for Chinese medicine will certainly give an active and significant boost to the revival of the local economy. As such, I hope that the Government could make the most of this rare opportunity and bring about a turning point for the economy.

As regards the question of whether Chinese medicine can take the place of Western medical science, I consider this still too early a stage. As a matter of fact, the two streams of medicine do have their own respective strengths , patients should be allowed a free choice.

I so submit, Madam President.

MR CHAN WING-CHAN (in Cantonese): Madam President, as the former Government only recognized and endeavoured to promote Western medicine and its development, traditional Chinese medicine has not been given any assistance and support at all. As a result, Chinese medicine is not given the same status as Western medicine. In the past, it was difficult to convince hospitals to adopt Chinese medicine. Some people even mistook Chinese medicine for medicine used by itinerant Chinese herbalists and cast doubt on its credibility. This explains why only Western medical practitioners can issue sick leave certificates; Chinese medical practitioners do not have the power to do so. I hope the Government can alter the current situation expeditiously.

Although the former Government treated Chinese medicine as worthless and failed to take it seriously, people of the Chinese community have, fortunately, not abandoned the tradition of Chinese medicine. Over the past few decades, surveys conducted by some institutions have constantly shown that quite a number of the people in Hong Kong received traditional Chinese medicine treatments. In a recent oral question in Council, I also pointed out that nearly 400 000 people had received Chinese medicine treatment in eight workers' clinics under the Hong Kong Federation of Trade Unions last year. This shows that Chinese medicine is well received by the public.

After the reunification, the Chief Executive, Mr TUNG Chee-hwa, has for the second year in a row mentioned his plan of developing Hong Kong into an international centre for Chinese medicine amd medical practitioners. It was only until then that the community started to embark on a vigorous campaign to explore Chinese medicine. Since then, Chinese medicine, which has been ignored for a long time, became a focus of concern and people began to take it seriously. Moreover, it is believed that Chinese medicine can provide one of the avenues for solving our current economic problems.

Both Japan and Korea have achieved some success in actively studying the comprehensive theory of traditional Chinese medicine and its unique medical effectiveness. Even the "Han prescription" was originated from the tradition of Chinese medicine. With the tendency that the global market for natural medical products are expanding rapidly, and added to the fact that traditional Chinese medicine has a deep-rooted history and cultural foundation, a large number of technological and research findings are now awaiting to be dug out and put into practical use. Moreover, Hong Kong will be able to play an important role of leading the Chinese medicine industry to a higher level of development, and gradually alter its role from an entrepot for Chinese medicine into an international centre for Chinese medicine and medical practitioners. In fact, Hong Kong is better qualified to develop the Chinese medicine industry than any regions in other parts of the world.

It will be very convenient for Hong Kong to export and import raw materials of Chinese medicine because of its proximity to the Mainland. As a result, Hong Kong will be provided with a great diversity of Chinese herbal medicine materials. This will subsequently give us a competitive edge with respect to the export of local Chinese medicine products and make it easier for us to achieve the goal of "developing into a centre for the co-ordination, quality control and promotion of Chinese medicine" as proposed in the motion.

In view of the huge potentials of natural and health food as well as the Chinese medicine market, Hong Kong will also be faced with numerous challenges and opportunities. With the further opening up of the mainland market to the outside world and the gradual lowering of tariffs, foreign products will find it easier to enter the China market. This explains why, in recent years, we can find Chinese medicine produced in foreign countries penetrating into the mainland market rapidly. Since the registration of imported medicine took effect in the Mainland in 1989, a dozen countries and a few scores of natural medicine have registered in the Mainland. Traditional medicine produced by European and American countries, Japan, Korea and so on has poured into the market in China. Through processing low-priced imported raw materials from China, quite a large quantity of proprietary Chinese medicine is now sold back to the mainland market at a higher price. This is something that warrants Hong Kong's attention. And for these reasons, there is an urgency for Hong Kong to develop itself into a centre for Chinese medicine.

Furthermore, it is imperative for us to train Chinese medicine personnel in order to develop Hong Kong into an international centre for Chinese medicine and medical practitioners. Comparatively speaking, Chinese medicine personnel available in Hong Kong at the moment is far from adequate. It is therefore necessary for us to catch up with others. Recognizing the importance of Chinese medicine, the Government has now embarked on a programme to train Chinese medicine personnel. We welcome the Government's measures in this are. We also hope that, with more vigour and far-sightedness, the Government can support the development of the Chinese medicine industry.

With these remarks, Madam President, I support the motion.

MR WONG YUNG-KAN (in Cantonese): Madam President, during the past 100 plus years when Hong Kong was ruled by a colonial government, Western medicine has been stressed to the neglect of Chinese medicine since after the Second World War. Over the past years, Western medical science has established a complete system which covers such aspects as manpower training, ethics supervision, professional recognition, as well as quality control of drugs. Thus enabling Western medical science to earn its place in the hearts of the people of Hong Kong. On the contrary, the development of Chinese medicine could be described as "a struggled survival". While Chinese medicine practitioners are not given any professional recognition in Hong Kong, they also vary dramatically in quality. Naturally, it would be very difficult for them to establish their due status.

If Hong Kong is to develop into a Chinese medicine centre, it is imperative that the status of Chinese medicine be established in both Hong Kong and the international community. The Chinese Medicine Bill currently under examination by this Council will provide for a regulatory system for Hong Kong's Chinese medicine trade, thereby paving the way for Chinese medicine practitioners to be given professional recognition. However, a regulatory system alone is too small an effort; if we are to prepare for the long-term development of the trade, manpower training would indeed be indispensable.

Owing to the fact that Hong Kong did not attach any importance to Chinese medicine in the past, there was no systematic training for Chinese medicine practitioners. As a matter of fact, some of the Chinese medicine practitioners practising in Hong Kong were trained up through apprenticeship, some learned from the knowledge handed from ancestors, while others were academically trained. On the other hand, the development of Chinese medicine in both the Mainland and Taiwan have already reached the stage at which the training responsibilities are shouldered principally by tertiary institutions. What is more, the Central Government has also set up specialized departments to take charge of the training of Chinese medicine professionals, research and exchange in knowledge and technology with other countries. In this connection, while Chinese medicine practitioners will be categorized into different levels according to their academic qualification and experience, a professional qualification of "senior practitioners of Chinese and Western medicines" has also be established as a means to encourage the exchange of knowledge between Chinese medicine and Western medical science. All these have served to not only enable the number and quality of Chinese medicine practitioners to rise sharply, but also enhance the professional status of Chinese medicine. The Democratic Alliance for the Betterment of Hong Kong (DAB) considers there is a need for the Government to follow the example of the Central Government's manpower training system and develop tertiary education in Chinese medicine as the major form of training in this respect. In other words, the Government should provide the various tertiary institutions with more resources for training up Chinese medicine practitioners, as well as provide more training hospitals for Chinese medicine schools, with a view to enhancing the professional standards of local Chinese medicine practitioners.

Apart from Chinese medicine practitioners, the role play by dispensers of Chinese medicine is also very important. However, while the professional status of the dispensers will not be given any recognition by the Chinese Medicine Bill, there will not be sufficient training provided for them either. Eventually, they may become a major obstacle to the development of Hong Kong's Chinese medicine trade. As such, the DAB believes there is a need for dispensers of Chinese medicine to be included in the scope of professional quality control. Besides, systematic training should also be provided for these dispensers to help them develop towards professionalism.

Madam President, the DAB holds that the Government must set a clear direction for the development of Chinese medical science before we can make its development meaningful. Given our well-trained personnel in Western medical science and considerable experience in the application of Chinese medicine, Hong Kong should be at a more advantageous position than the Mainland in developing the collaboration of Chinese medicine with Western medical science. For this reason, the DAB believes that we should make the most of this opportunity to formulate appropriate systems and policies to help develop Hong Kong into a centre for collaboration of Chinese and Western medicines. In regard to the current arrangement of confining Chinese medicine services to out-patient treatment, for instance, there is indeed a need for the Government to incorporate Chinese medicine services into the public health care system, with a view to enabling Chinese medicine practitioners and Western medical practitioners to exchange their knowledge and experience within the public health system on the one hand, and offering more choices to the public on the other.

Madam President, now I should like to turn to the development of Chinese medicine. To begin with, we should identify a clear direction of development. With our close proximity to the Mainland, we should be able to play an important role in the re-export trade of Chinese herbal medicines. However, the DAB is afraid that concentrating our development solely on the re-export trade of Chinese herbal medicines may not be the best option for Hong Kong. On the one hand, re-export trade of raw materials is not a high value-added activity; on the other hand, following mainland China's adoption of an open door policy, and in particular at this juncture when China's accession to the World Trade Organization has reached a critical point, the import and export trade between China and the rest of the world will undoubtedly become more and more open, and Hong Kong may soon find itself losing its edge as an entreport. Therefore, the DAB believes that the future Chinese medicine trade of Hong Kong should develop mainly in the direction of producing high value-added proprietary Chinese medicines for export.

For this reason, Hong Kong must develop a set of internationally accepted standards of product inspection and clinical testing. However, without the participation of the Government, the private drug manufacturers and research institutes alone would not be able to set up such a set a standards. In this connection, the Government should play an important role in such aspects as financial support, assistance in conducting research, fostering future connections with the international community and so on. Moreover, the Government can also implement measures such as low-interest loans, credit guarantee and so on to help drug manufacturers to improve the environment and conditions of their production plants, thereby enabling them to meet the internationally accepted standards. It is the DAB's belief that if the Government should provide the kinds of assistance mentional above, it would certainly be of great help to Hong Kong in its effort to establish a good reputation in the international proprietary Chinese medicines markets.

As regards the research and development of new products, the DAB is of the view that the local manufacturers need not make hasty moves to develop new proprietary Chinese medicines or new prescriptions. Despite their long history and clinically proven efficacy, many prescriptions are still unable to be sold as internationally accepted medical products due to the lack of scientific data support. In this circumstances, the Government should help the research institutes concerned to conduct scientific research into the various Chinese herbal medicines and ancient prescriptions by granting them the necessary funds.

Thank you, Madam President.

PROF NG CHING-FAI (in Cantonese): Madam President, the need for the economy of Hong Kong to develop towards diversification has become a consensus of our community since after the financial turmoil. In addition, the question of whether Hong Kong should develop into a Chinese medicine centre and introduce Chinese medicine to the world market as a commodity has also become a subject of concern to a great many people. Hence, the motion moved by the Honourable YEUNG Yiu-chung this evening is indeed a timely one.

Madam President, the Chief Executive mentioned in his policy address that Hong Kong would be developed into a Chinese medicine centre. As regards the specific objective of such a development, this is exactly the thrust of this debate this evening.

In my opinion, Hong Kong should aim at becoming an international centre for the comprehensive development of Chinese medicine which is well-supported by excellent research and development personnel. This is basically in line with the second objective proposed in Mr YEUNG's motion. An international centre as such should of course set eye on introducing Chinese medicine into the international market and compete with its international counterparts.

Why should the development of Chinese medicine be of a comprehensive nature? While bringing Chinese medicine into the world market should be but a part of our overall goal, the purpose of manufacturing and selling pharmaceutical products is to help people cure their diseases and enhance their health. For this reason, we must develop the Chinese medicine practice at the same time, with a view to providing the people of Hong Kong and even the rest of the world with treatments in Chinese medicine of even higher standards.

At present, there are some people who consider the development of Chinese medicine as simply the manufacturing and packaging of Chinese pharmaceutical products. I am afraid such kind of view is rather incomplete. As a matter of fact, over the past few years, the experiences of the Mainland and elsewhere have shown us that if researches into "pharmaceutical products" should be conducted separately without the support of theories of Chinese medicine, significant results could hardly be attained. Japan is a typical example in this respect, for the Japanese are interested in only the Chinese medicines but not the practice. Although Japan is now enjoying a greater share of the world herbal medicine market than that of mainland China (this is mainly attributable to their good quality control efforts), to me, the edge that Japan is now enjoying is but a temporary one. If we should be able to upgrade our quality inspection and control standards scientifically and systematically enough, we would be able to rise above this disadvantaged position. However, if we are to gain a fundamental edge in this respect, it is necessary for us to combine the research and development of Chinese medicine practice with that of Chinese medicines. That way, we would be able to enhance the efficacy of existing medicines on the one hand, and continuously develop new medicines and new ways of treatment on the other.

In addition, regardless of whether our objective is to develop a well-organized and high value-added medicine manufacturing industry or to raise the standard of Chinese medicine practice, Hong Kong will still need to have a hospital of Chinese medicine. We could hardly imagine a city which claims itself as an international centre for Chinese medicine would have not even one decent hospital of Chinese medicine. Without a hospital of Chinese medicine, no clinical research could be conducted, how then could we introduce existing and newly developed medicines into the world market? Without a hospital of Chinese medicine, where could practical training be conducted? Should that be the case, our endeavour to train up a new generation of quality Chinese medicine practitioners would only get half the result with twice the efforts. If Hong Kong is to develop into an international centre for Chinese medicine, a continuous supply of new talents from our universities would indeed be indispensable. I certainly understand that Chinese medicine must be incorporated into Hong Kong's public health care system if we are to have a hospital of Chinese medicine. For this reason, I suggest including the incorporation of Chinese medicine into our public health care system as an item on the agenda of the imminent health care system review. Besides, I also my hope that the work in this respect could be implemented in an orderly, well-planned and yet expeditious manner. Actually, I still have one more secret wish, for I sincerely hope that the final year Chinese medicine students of our local universities do not need to go elsewhere for practical training but do it at Hong Kong's hospital of Chinese medicine instead.

Madam President, to realize the concept of developing a Chinese medicine centre, there is still much work for the Government to do. To begin with, it should identify an objective for the endeavour and determine the course of development whereby the objective could be attained. The relevant objective and course of development should be clear, practicable, acceptable to all, and chosen after taking into full consideration the various aspects discussed just now. Besides, the Government must also consider supplementing our edge with the strengths of the Mainland and vice versa, with a view to yielding two-fold results with half the effort.

In regard to those local enterprises which have recently shown an interest in the research and manufacturing of Chinese medicines, the Government should give them due encouragement. However, when it comes to large scale projects like the development of a Chinese medicine port, I hope that in dealing with any of such proposals the Government can give very careful thoughts to the matter and apply the four basic consultation steps of Chinese medicine: to look (at the contents), to listen (to views and representations), to ask (questions about the proposals) and to probe (into the details). What is more, the Government should only approve of those proposals which are absolutely healthy and in line with the mutual interests of both the investors and the public .

Finally, I should like to take this opportunity and remind everyone of us have that however promising the prospect of Chinese medicine markets worldwide will be, we should never enter the trade of Chinese medicine to "make quick money". On the contrary, we should treat the development of Chinese medicine as a long-term investment item capable of yielding returns in the long run. This is by no means a kind of difficulty-free investment, but is certainly a sustainable one.

With these remarks, Madam President, I support the motion.

MR MA FUNG-KWOK (in Cantonese): Madam President, I support Mr YEUNG Yiu-chung's motion in urging the Government to expeditiously fulfil the commitment put forward in the policy address of developing Hong Kong into an international centre for Chinese medicine and medical practitioners. In fact, the development of Chinese medicine in Hong Kong will, in economic terms, facilitate the adjustment of our economic structure, set the development of the local Chinese medicine trade and industry in motion, open new sources of economic growth, as well as creating more job opportunities. Insofar as the welfare and livelihood of the people are concerned, the development of Chinese medicine will give the public more medical options and health protection. Apart from these, the development of Chinese medicine in Hong Kong has a significant meaning in terms of culture, a point which merits Members' in-depth discussion.

Why should we explore its cultural significance? To start with, Chinese medicine is our traditional culture. From information contained in ancient books regarding FU Xi's learning of nine types of needling and SHEN Nong's studying of a hundred herbs, we can see that the application of acupuncture and medicine could trace back to several thousand years ago. There was even record of prescriptions relating to internal medicine, surgery, paediatrics, the department of eye, ear, nose and throat as well as epidemiology in inscriptions on bones or tortoise shells of the Shang Dynasty 3 000 years ago. After 3 000 years of succession and development, there emerged such classic literature as Yellow Emperor's Internal Classic, Treatise on Febrile Diseases, The Essence of "the synopsis of the Golden Chamber", The Essential Prescriptions Worth a Thousand Gold and Compendium of Materia Medica, as well as many medical experts like ZHANG Zhongjing and HUA Tuo. Moreover, there were different schools of thought which had their unique points of view. Examples are the cold and cool medical school, the purgationist school, the school of invigorating spleen and the school of nourishing yin. Just like a treasure box, Chinese medicine is a rich cultural heritage for the Chinese race. The people of Hong Kong should take part in sorting out, studying, enriching and upgrading Chinese medicine to help it radiate in the medical field on a global scale. This will benefit all the people in the world. In the past, I had great admiration for Japan for it had taken Chinese medicine seriously and yielded excellent results in developing Chinese medicine. I deeply feel it is necessary for Hong Kong to develop our national medicine.

Madam President, we used to say Hong Kong is a place where Eastern and Western cultures meet as well as an international metropolis of cultural diversity. Except for the medicine industry, Hong Kong's Western medicine and medical practitioners can be said to have reached a sophisticated stage. Being part of the medical system of the West, Western medicine is totally different from Chinese medicine in terms of their theory. The Chinese medicine system is very complete. As a theoretical basis, yin yang and five elements, the viscera-state doctrine, and the making diagnosis and giving of treatment are all unique. It will be extremely challenging for Hong Kong to develop Chinese medicine and strive to become a centre for Chinese medicine. A very specific question we will have to face is how we shall proceed to integrate Chinese and Western culture. Are we moving towards the road of integrating Chinese and Western medicine by allowing or even encouraging a doctor to prescribe both Chinese and Western medicines, or asking Chinese and Western medical practitioners to practise on their own even though they are "sharing a meal at the same table"? Or shall we go to the extreme of not only disallowing Chinese and Western medicine from integrating, but also coming into frequent clashes for the purpose of distinguishing which is more advanced and which is backward?

Such being the case, in formulating policies, we must consider the following points. First, we must consider how to promote co-operation between Chinese and Western medicine to facilitate the integration of Chinese and Western cultures for the purpose of creating a Chinese medical science which is both traditional and modernized. Second, we must conduct an in-depth investigation and study on mainland experiences of integrating Chinese and Western medicine and to include in the plan the establishment of a large scale Chinese medicine hospital as well as putting the plan into implementation expeditiously. Prof NG Ching-fai has made such a call just now, and I greatly support his views. We should at least establish a Chinese medicine hospital as an infrastructural facility if Hong Kong is to become a centre for Chinese medicine. I note that, before the proposal of the Chinese medicine hospital, some people from the medical sector remarked that there was no need to do so. This was based on the argument that "integration of Chinese and Western medicine is the same as developing Western medicine at the expense of Chinese medicine and a Chinese medicine hospital will definitely combine Chinese and Western medicine. Therefore, building a Chinese medicine hospital is the same as building a Western medicine hospital which 'passes off fish-eyes as pearls'". As a result, they thought the proposal was redundant. This a view illustrates the fact that we must explore the relationship between Chinese and Western medicine on a theoretical basis and in a more in-depth manner. But no matter what people say, we definitely need a Chinese medicine hospital. This is because, like Western medicine, Chinese medicine needs to accumulate clinical experiences, apart from having a set of treatment methods. Moreover, for certain patients, it might be a good idea for applying both Chinese and Western medicine to cure their diseases.

With these remarks, I support the motion. Thank you.

MR MICHAEL HO (in Cantonese): Madam President, the Democratic Party supports this motion. This is an appropriate time for us to discuss how we can help Hong Kong become an international centre for Chinese medicine.

The scrutiny of the Chinese Medicine Bill is in full swing. Madam President, I will wait until the Second Reading debate to discuss the contents of the Bill. After the passage of the Chinese Medicine Bill, Chinese medicine practitioners in Hong Kong will be able to register very soon and after their registration, the Chinese medicine system will become more systematic. With such a system, Chinese medicine practitioners, Chinese medicine and proprietary Chinese medicine in Hong Kong will become more systematic and their development will be expedited.

The universities in Hong Kong have started to offer Chinese medicine practitioners training courses and the first batch of practitioners trained up in Hong Kong will graduate soon and they will join other Chinese medicine practitioners in Hong Kong. The universities in Hong Kong have engaged in Chinese medicine researches for years and we are maturing in this respect. I earnestly hope that the researches of universities and the orthodox training they provided will expedite the development of Chinese medicine in Hong Kong. I also hope that the Government, the Trade and Industry Bureau and the Health and Welfare Bureau will step up co-operation and assist in the development of the Chinese medicine industry in Hong Kong.

Madam President, we have been discussing the regulation of Chinese medicine for a long time and I hope that the Government will put it into practice soon. We all know that there are many famous proprietary Chinese medicine and some Hong Kong people even became rich by selling prepared Chinese medicine years ago. If we want to promote proprietary Chinese medicine all over the world, scientific research is an indispensable step. With government support, I hope that small and medium medicine dealers in Hong Kong will enhance their scientific research efforts and promote proprietary Chinese medicine all over the world. I also hope that the research in this regard will be paced up with the investment of Chinese medicine dealers and the closer co-operation between Chinese medicine dealers and universities so that Chinese medicine production will be improved and Hong Kong will become an international centre for Chinese medicine.

I so submit.

MR AMBROSE LAU (in Cantonese): Madam President, in both of his two policy addresses Chief Executive TUNG Chee-hwa mentioned that Hong Kong did have all those conditions for developing gradually into an international centre for Chinese medicine. I consider this an insightful policy objective capable of contributing towards the enhancement of Hong Kong's competitiveness. If implemented successfully, this policy objective should be of significant meaning to the various industries of Hong Kong in their development towards diversification and high added value.

Madam President, the Hong Kong Progressive Alliance (HKPA) has all along been keeping a close eye on the development of the Chinese medicine trade. Drawing on our long-term experience in consulting members of the trade and other sectors, the HKPA holds that if Hong Kong is to be developed into an international centre for Chinese medicine, care must be taken to watch out for certain situations and adopt a number of measures which I am going to elaborate on now.

First, the Government should learn fully from the wisdom of the saying "a waterfront pavilion gets the moonlight first". In other words, the Government should make the most of Hong Kong's edge of being backed up by the origin of Chinese medicine, the Mainland, and couple that with our other strengths like an advanced international information network and marketing skills to make a quick move to occupy the most strategic position of an international centre for Chinese medicine. Since the Government has put forward such a policy objective, it should take follow-up actions expeditiously and formulate feasible measures as soon as possible.

Second, as a first and foremost measure, a Chinese medicine base should be established in Hong Kong promptly. While the Government has invested resources in the infrastructural aspect and research of Chinese medicine over the past few years, the Chinese medicine research laboratory opened earlier on and the research centre for Chinese medicine which is now at its inception stage are just too inexperienced to achieve anything significant. The pharmaceutical firms in the United States could overtake them at any time. As such, there is indeed a need for Hong Kong to set up within two to three years' time a well-structured Chinese medicine base capable of integrating research institutions with pharmaceutical firms. Recently, quite a number of real estate developers have indicated interest in the development of a "Chinese Medicine Port", which in the opinion of the HKPA, should be one viable concept of the Chinese medicine base. In this connection, the Government should select the right companies from the private sector to have a share in the investment and operation of the project; besides, care must taken to enhance the transparency of the project as far as practicable.

Third, however one calls it, the "Chinese Medicine Port" or the Chinese medicine base should be staffed by not only research and development personnel but also renowned Chinese medicine practitioners responsible for providing health enhancement and medical treatment services. Given that a great many renowned Chinese medicine practitioners are here, patients all over the world may consider coming to Hong Kong for treatment. Besides, the provision of high standard medical treatment and health services could also contribute to Hong Kong's development into a Chinese medicine centre. For this reason, the Government should amend the relevant provisions under the Immigration Ordinance. Under the existing provisions, Chinese medicine practitioners from outside Hong Kong are not permitted to provide medical treatment in the territory, as a result, the renowned Chinese medicine practitioners from the Mainland could only visit and offer clinical diagnosis services in Hong Kong for research and teaching purposes. In view of the circumstances, the Government should amend the relevant provisions of the Immigration Ordinance on the one hand, and formulate stringent application requirements and procedures to enable the best Chinese medicine talents in the Mainland to settle in Hong Kong.

Fourth, on opening up international markets for Hong Kong's Chinese medicine trade. The major obstacle in this connection is the fact that the Western drug testing standards are based upon the rules of the Western medical science. In this connection, while the active ingredients of Western medicines could be identified by means of laboratory techniques, the complicated ingredients of Chinese medicines could hardly be tested in a similar manner. In spite of that, the Government should still strive to strengthen the modern laboratory research into the pharmaceutics of Chinese medicine on the one hand, and introduce to the world the unique testing standards of Chinese medicines on the other, with a view to expeditiously enabling Hong Kong's Chinese medicine trade to develop towards modernization, internationalization, standardization, industrialization and commercialization while safeguarding the uniqueness of the pharmaceutics of Chinese medicine. That way, we should be able to open up markets on a global scale gradually.

Fifth, this is the most important point. If Hong Kong is to develop into an international centre for Chinese medicine, we must make the most of mainland China's fundamental resources in developing Chinese medicine, the scientific research results, as well as their professionals. In this connection, the Government should foster close relations with the mainland medical and health care authorities, relevant institutions, as well as the medical schools in the Mainland, with a view to transforming the resources, achievements and human resources into an edge for Hong Kong.

Madam President, the proposal to develop Hong Kong into a Chinese medicine centre put forward by Chief Executive TUNG Chee-hwa has served to offer the Chinese medicine trade a precious chance of investment. While the international interest in Chinese medicine products has kept on growing in recent years, the average age of the world population in general has also been rising, naturally the demand for health foods and products will be on the increase. In this connection, the effectiveness of Chinese medicine products in prolonging one's life, nurturing health and improving stamina has been to date irreplaceable by Western medical products. According to the figures released by the United States Medical Association in its news bulletin, the proportion of American consumers using herbal medicines like Chinese herbal medicine had rose from the original 30% to more than 40% towards the end of last year; as a result, even foreign businessmen have started looking actively into the development of Chinese medicine products. With our close proximity to the origin of Chinese medicine, Hong Kong is blessed with the most advantageous conditions to become an international centre for Chinese medicine. If we could sense the urgency of the matter and generate impetus from our feel of adversity, we should be able to make our endeavour a success.

The HKPA hopes that the Government can take the five points into careful consideration and adopt them. Madam President, I so submit.

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, Hong Kong has failed to sustain its development of local industries during the past decade or so when it went through a period of economic transformation. As a result, our trades and industries were all subject to great challenges when Hong Kong was struck by the financial turmoil. It is indeed imperative for Hong Kong to revive the local industries once again. According to information available up to end-March 1997, there were 1 270 retailers engaging in Chinese medicine in Hong Kong, and the total number of employees in the industry is approximately 4 680.

If Hong Kong can develop its status as a centre for Chinese medicine, we will be able to accommodate a number of local employees, including hi-tech personnel, mid-level technology staff and related non-skilled employees. In particular, the uniqueness of Chinese medicine will serve as one of the elements for reinforcing our tourism industry, in addition to reinforcing our export trade. For instance, in the past, we often heard that many visitors from Taiwan purchase a kind of medicine package called "Zhongjiang soup" in a large quantity when they visited Hong Kong. But over the past few years, the fever seemed to have waned slowly. This might have something to do with the development of the Chinese medicine industry in Taiwan.

While gradually perfecting our legislation on Chinese medicine, Hong Kong can also set up an international treatment and service centre for Chinese medicine by using Hong Kong as a base and inviting medical practitioners of national grade to come to Hong Kong to provide members of the public and patients from all over the world with quality Chinese medical treatment and health services. This will make Hong Kong into a medical and health centre where Chinese medical talents of national grade gather together on the one hand and promote the development of Chinese medicine trade, medical services, tourism, the retailing industry and so on in Hong Kong on the other.

Although the development of a centre for Chinese medicine is meant to be a newly-developed industry for Hong Kong, it is imperative that the Government must consider how to keep these industries (particularly the production lines) in Hong Kong in order to enhance the job opportunities for local workers. The Government should not indulge in empty talk in the policy address only. It should, instead, draw up a timetable or it might risk losing a golden opportunity.

Should the development of the centre for Chinese medicine be managed by a trade department or a health department? I think the former is more appropriate. Although a health department can monitor medicine in accordance with the standards already laid down, it can also take up the task relating to the licensing and registration of Chinese medicine practitioners, in addition to control. The Trade and Industry Bureau can, on the other hand, co-ordinate the development of a "Chinese Medicine Port".

As for site selection, my attitude is particularly open. This is because the whole process, from scientific research to actual production, will be conducted in an environmentally-friendly manner for the Chinese medicine industry is pollution-free. But when we look back at the "Cyberport" programme, the Government has chosen to acquire land through reclamation. I think this is not the best option. As a matter of fact, Hong Kong has many options for developing Chinese medicine. While some interested parties have suggested that we should continue with the project of developing land in the vicinity of Tseung Kwan O on a trail basis; some opined that, in order to tie in with the research on Chinese medicine and the development of resources in the Mainland, we should choose a site which is close to the Mainland, for instance, by developing land near the Hong Kong-Shenzhen border in the New Territories.

The notion of developing a centre for Chinese medicine is undoubtedly an industry which necessitates the integration of hi-tech research. The greatest advantage is that, apart from having market potentials for yielding economic benefits, it is a non-polluting industry and will not produce any impact on our ecological environment. Therefore, I think it is only a side-issue as to where we should carry out this development project, as long as the Government makes its best effort to avoid acquiring land through reclamation. For instance, the unique geographical position of the 1 sq mile "river-bend" area at the Hong Kong-Shenzhen border has made it a special region inside the two special zones. There is also a vast piece of land nearby that is available for development. I believe we can, through integrating talented people and experiences of the Mainland, break a fresh path for the development of Chinese medicine in Hong Kong.

Madam President, Hong Kong must drum up its vitability in order to revive and develop the local industries. Just like what it did in order to put the "Cyberport" project into implementation, the Government has, ignoring opposition raised by 10 major property developers, displayed an attitude of "choosing what is good and holding fast to it". I hope the Government can display the same degree of courage and perseverance in its consideration of developing a "Chinese Medicine Port" and related environmental protection industries, and seriously create a good employment environment for the general workforce.

Madam President, I so submit.

MR NG LEUNG-SING (in Cantonese): Madam President, it is imperative for Hong Kong to make its best efforts to revive its various trades and industries in the wake of a major economic readjustment. The proposal of studying the feasibility of developing Hong Kong into a Chinese medicine centre is indeed a far-sighted and viable development strategy for promoting Hong Kong's economic restructuring. It is very meaningful indeed for this Council to conduct constructive discussions on specific problems encountered in implementing this development strategy of public concern.

In order to promote Hong Kong to develop in the direction of a Chinese medicine centre, Chinese medicine practitioners and Chinese medicine are obviously like two tracks running in a parallel direction and both are indispensable. Upgrade in Chinese medicine theories and practice will provide greater support to the production and marketing of Chinese medicine. In return, effective and general application of Chinese medicine will provide best demonstration for Chinese medicine theories. The priority problem Hong Kong needs to address now is to normalize and standardize activities relating to the application of Chinese medicine. I believe the passage of the Chinese Medicine Bill will produce a positive impact in this respect and alter the current situation for the industry has so far been subject to no professional regulation and is allowed to do anything it likes. This will give the parallel tracks for developing Chinese medicine practice and Chinese medicine a better direction and a firmer basis.

On the other hand, if we look at the issue from the economic angle, giving priority to promoting the research, manufacture and sales of Chinese medicine in Hong Kong will produce better market effectiveness and help promote the economy, compared to the Chinese medicine practice.

According to an unofficial survey, the global sales of herbal medicine products has reached US$16 billion at the moment. This is indeed a huge market. Surprisingly, the biggest share of the market is now taken up by Japan and South Korea. Comparatively speaking, China is only an exporter of raw material. It has lagged far behind Japan and Korea in competing in international markets, particularly the European and American markets, with respect to the production of proprietary Chinese medicine, as well as natural and health products.

As an important bridge for building China's external trade relations, Hong Kong still enjoys a unique dominant position in developing into a centre for the manufacture and sales of proprietary Chinese medicine, as well as natural and health products. On the one hand, the Mainland can supply Hong Kong with raw material for producing Chinese herbal medicine and, on the other, support Hong Kong with its Chinese medicine theories and experiences, as well as professionals in this field. It is easier for Hong Kong, compared to other countries and regions, to benefit from the achievements made by the Mainland in technological research. On the other hand, in understanding messages delivered by the international market and mastering sales techniques, Hong Kong enterprises are no worse than Japan and Korea for they have got used to exploring overseas markets as their focus of work. What we should do is to regulate the production of proprietary Chinese medicine produced locally through the Government to ensure that the drugs are in line with the quality and standard required of international proprietary drugs. Moreover, we should pay close attention to the scientific requirements of the medical sectors in European and American countries with respect to herbal medicine products and, upon completion of researches on local market trends, explore how Chinese and Western medicine can integrate in Hong Kong on a long-term basis. We should also attach importance to the nurture of talents. What is more, I hope Hong Kong can allow the Chinese medicine industry and its functions to develop smoothly to the benefit of public health and enhancement of our economic growth.

With these remarks, Madam President, I support the motion.

MISS CHOY SO-YUK (in Cantonese): Madam President, we, Hong Kong people, will usually seek treatment from Western medical practitioners when we fall ill. But I believe Members in this Chamber must have sought treatment from a Chinese medicine practitioner or take Chinese medicine, like most members of the public do. As a medical science of traditional China, Chinese medicine has a hundred years of clinical experience. Its effect is especially prominent in protecting our health, preventing diseases and treating chronic illnesses, particularly in protecting our health. Madam President, I have taken traditional tonic prescribed by Chinese medicine practitioners for a long time. Perhaps this is one of the reasons why I am so healthy today and even doctors express amazement at me.

In recent years, instant tea for treating influenza, instant canned herbal tea, Chinese medicine pills, as well as lozenges and natural food containing Chinese medicine have all become very popular. This illustrates, on the one hand, the popularity of Chinese medicine with the people of Hong Kong and, on the other, Hong Kong's potentials of developing into a centre for Chinese medicine and Chinese medicine practice.

In my opinion, the Government must first of all pay attention to the structural and functional aspects of management bodies for Chinese medicine for the purpose of fully developing the Chinese medicine industry. Even if the Government is willing to allocate land for developing a Chinese medicine centre, it will probably get half the results with double the effort. In fact, the development of Chinese medicine involves a number of government departments: while it falls into the brief of the Industry Department to promote the development of the Chinese medicine industry, expanding education on Chinese medicine and formulating standards for examining proprietary Chinese medicine fall to the University Grants Committee and the Department of Health respectively. If we are to set up a Chinese medicine department in public-run hospitals in future, the Hospital Authority will then need to take up the responsibility. We can well say that there are divided policies from various sources. Sometimes, it is hard to avoid the phenomenon of having different departments acting on their own or even coming into conflicts. More importantly, in addition to government departments, proposals made by people from the Chinese medicine field, academic circles, the manufacturing sector, as well as the public in general will all play a very important role in developing Chinese medicine in a comprehensive manner. The Government must consider setting up an inter-departmental ad hoc body to take charge of co-ordinating the operation of various sectors and segments for the purpose of developing Hong Kong into an international centre for Chinese medicine and Chinese medicine practice.

There are some areas in the Chinese medicine management framework in the Mainland that are worthwhile for the SAR to borrow. At present, the framework for managing Chinese medicine and medical practitioners in the Mainland are mainly responsible by three organs under a sophisticated system. The State Administration of Chinese Traditional Medicine acts as an administrative organ for managing the national Chinese medicine industry, responsible mainly for such areas as rules and laws pertaining to Chinese medicine, technological research and education on Chinese medicine, management of Chinese medicine health care and health protection. The State Bureau of Pharmaceutical Supervision and Management is responsible for managing both Chinese and Western medicine, including research, protection, circulation and application of medicine. Finally, the State Administration of Import and Export Commodities Inspection and Quarantine is responsible for quarantine inspection relating to immigration, as well as inspection of commercial goods and so on. At the moment, the Health and Welfare Bureau is not an administrative organ for dealing with Chinese medicine exclusively. Moreover, the Industry Department has limited powers. Therefore, a dedicated department, which runs like the State Administration of Chinese Traditional Medicine, will play a very important role in developing the Chinese medicine industry in Hong Kong. I hope the Government can give serious consideration to it.

Apart from setting up a framework for managing Chinese medicine, intellectual property protection pertaining to technological research products of Chinese medicine is another area that warrants our concern. In recent years, the piracy problem has made a great noise in Hong Kong. A variety of goods, ranging from movies, records, computer software, to even clothes, handbags and watches, have become the target of piracy activities. While the piracy problem has become increasingly rampant, intellectual property rights are not taken seriously. In addition, Chinese medicine is a comparatively new topic. We can therefore easily find loopholes in the existing legislation. This makes us worry that future achievements of research in Chinese medicine will also become a target of piracy activities one day.

Madam President, in order to safeguard intellectual property rights for Chinese medicine, the Government should, on the one hand, take further steps to strengthen its combat against piracy activities as a preventive measure and, on the other, perfect the existing legislation expeditiously in order to plug the loopholes. At the same time, the Government should co-operate with the Chinese medicine sector and academic field with a view to building up a sophisticated and large scale computer database for Chinese medicine for the sake of safeguarding property intellectual rights for Chinese medicine. Apart from being loaded with basic knowledge on Chinese medicine, methods of application, effectiveness and side effects of Chinese medicine, the database should also incorporate chemical analysis and research findings which are in line with internationally accepted standards. The fact that most books and literature on Chinese medicine are compiled in Chinese only has made it difficult to promote Chinese medicine in the international community. Therefore, it is necessary for the Government and the academic circles to recruit specialized people to undertake translation work. I believe a perfect electronic database on Chinese medicine will not only safeguard the intellectual property rights for Chinese medicine products, but also help develop research in Chinese medicine.

Madam President, we learned from the financial turmoil that although the financial and service industries play an important role in Hong Kong, it is also a matter of urgency for us to find a new economic impetus for Hong Kong. The Chinese medicine industry is precisely an important, new economic impetus that we need. I hope the Government can seek views and invite suggestions, as well as adopting an all-embracing attitude by fully considering the views expressed by this Council today and providing Hong Kong with a new economic locomotive in the form of a Chinese medicine centre.

With these remarks, Madam President, I support the motion.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I wish to thank Mr YEUNG Yiu-chung for moving this motion today, and I also wish to thank several other Members for their valuable suggestions on how we should develop Hong Kong into a centre of Chinese medicine. I wish to take this opportunity to speak on the various policy issues relating to the development of Chinese medicine.

As Members may still recall, and as mentioned by several Members, the Chinese Medicine Bill was put before this Council in February this year. This Bill proposes the setting up of a self-regulatory mechanism for the Chinese medicine trade. Specifically, it proposes the establishment of a statutory Chinese Medicine Council which is to be vested with the responsibilities of implementing various Chinese medicine regulatory measures, including the registration of Chinese medicine practitioners, the licensing of Chinese medicine traders and manufacturers and the registration of proprietary Chinese medicine. The Bill aims to put in place a sound regulatory framework for Chinese medicine, so as to ensure the professional standards of Chinese medicine, and to regulate the use, manufacturing and sales of Chinese medicine products for the protection of public health.

The Bill is now being examined by the relevant Bills Committee. I very much hope that it can be passed in the Legislative Council before it rises in July this year. Once the Bill is passed, we will promptly set up the regulatory bodies required and draw up all necessary subsidiary legislation. I hope that we can start to implement the various measures relating to the regulation and registration of Chinese medicine practitioners and Chinese medicines early next year. The establishment of the regulatory system will provide a sound basis on which Hong Kong can continue its long-term development of Chinese medicine and open up overseas markets.

In respect of Chinese medicine services, the Chinese Medicine Bills seeks to accord a statutory professional status to Chinese medicine practitioners by providing for a fair licensing examination, a registration system and a disciplinary mechanism. This will ensure that Chinese medicine services can meet the standards required, and will also assist in attracting talented young men to join the profession. In 1998, the Baptist University of Hong Kong started to offer a full-time first degree programme in Chinese medicine, and the University of Hong Kong will start to run a similar programme later this year. All these degree programmes will be very useful to upgrading the overall professional standards of Chinese medicine practitioners.

Although the Chinese Medicine Bill requires that all Chinese medicine practitioners must be duly examined and registered before they can practise in Hong Kong, it also seeks to facilitate the import of Chinese medicine professionals from outside Hong Kong by providing for a "limited registration" system, under which Chinese medicine professionals can be allowed to come to Hong Kong to perform predominantly clinical teaching or research in Chinese medicine. This arrangement will enable local Chinese medicine practitioners and their counterparts outside Hong Kong to engage in co-operation and share their experience. That way, it is hoped that our professional standards can be raised.

I am sure that with professional registration, university training, continuing education and academic exchanges, our standards of Chinese medicine will certainly keep on rising, thus turning Hong Kong into a centre of Chinese medicine training, research and information flow.

In respect of the regulation of Chinese medicine, our primary concern is the protection of public health. And, for the purpose of regulation, the Chinese Medicine Bill recommends a licensing system for Chinese herbal medicine traders and manufacturers and a registration system for proprietary Chinese medicines. Traders engaging in the selling and buying of Chinese herbal medicines and manufacturers of Chinese herbal medicines shall be required to apply for licences from the Chinese Medicine Council and they have to comply with a number of licensing conditions which cover the facilities and hygiene in storehouses, shop premises and manufacturing plants. There are also other licensing conditions on package, label, storage and sale. For proprietary Chinese medicines, whether they are locally manufactured or imported from outside Hong Kong, they must meet the required standards in terms of safety, quality and efficacy before they can be registered with the Chinese Medicine Council and allowed to be sold in Hong Kong.

The Department of Health will assist the Chinese Medicine Council in implementing all these regulatory measures, and as stipulated in the Chinese Medicine Bill, the Director of Health shall be the Chariman of the Chinese Medicines Committee under the Chinese Medicine Council. The Government Chemist will also provide the required laboratory services to the Council. A regulatory system based on international standards which can command the recognition and trust of the people of Hong Kong will not only help upgrade the overall technical levels and quality of our Chinese medicine trade, but will also help develope Hong Kong into a Chinese medicine centre in the world.

As rightly pointed out by some Members, the Chinese medicine manufacturers in Hong Kong now are of a relatively small scale, and for this reason, it is feared that they cannot possibly meet the international standards required within a short period of time. We understand this only too well. That is why the Chinese Medicine Bill already contains a set of flexible transitional arrangements to enable existing Chinese medicine traders and manufacturers to continue their business in the meantime. I hope that they can in time catch up with international standards in their operations and manufacturing processes.

Since health foods are subject to less stringent requirements all over the world, most Chinese medicine products manufactured by Hong Kong are now sold as health foods in the world market. If the Chinese medicine trade wants to sell its Chinese medicine products as drugs in the world market, it must comply with the requirements of many stringent tests. The Foods and Drugs Control Agency of the United States, for example, will approve the use of a drug only when its effectiveness is backed up by adequate theoretical support and proven by stringent animal and clinical tests. The Chinese medicine trade will have to double its effort before it can attain such levels.

In the future, the Department of Health will continue to work closely with the World Health Organization and other overseas drugs control agencies, so as to assist local Chinese medicine manufacturers in keeping abreast of the latest Chinese medicine development in the rest of the world and their relevant regulatory requirements. Such information will assist Hong Kong in opening up its Chinese medicine market in the whole world.

Madam President, the motion today also proposes to incorporate Chinese medicine into the public health care system of Hong Kong. As we all know, there is now in Hong Kong a public health care system based on Western medicine, and this system is providing high quality health care services to people at low prices. This public health care system is operating satisfactorily and is well-received by the community.

And, we must also note that since the Chinese Medicine Bill is still being scrutinized by the Legislative Council, we will still have to wait for quite some time before we can establish a regulatory framework for Chinese medicine. For this reason, we should not at this stage make any hasty decision on whether or how we should incorporate Chinese medicine into our public health care system. We should wait until a statutory regulatory framework for Chinese medicine is finalized before we consider and follow up the matter further.

Moreover, as Members are also aware, we are right now conducting a comprehensive review on our health care system, and this review covers questions such as how best we should utilize our limited resources and allocate them to our public health care services. We maintain that before the completion of this review, and before there are any final conclusions, we should not consider an immediate incorporation of Chinese medicine in our public health care system.

Over the years, our discussions on the incorporation or otherwise of Chinese medicine in our public health care system have been marked by the advocacy that we should combine Western medicine and Chinese medicine, so as to enable our patients to benefit from the best of these two types of medicine.

As far as I understand it, Westen medicine and Chinese medicine have actually developed from two entirely different theories. And, we still need to conduct further research to ascertain whether a patient can receive treatment from both Western medical practitioners and Chinese medicine practitioners all at the same time, or whether he can take Western medicines and Chinese medicines as a combined course of treatment. Besides, Western medicine and Chinese medicine are actually at two different stages of development in Hong Kong. In Hong Kong, we already have years of experience in training and regulating Western medical practitioners and conducting Western medical research. But in all these respects, Chinese medicine is still at the inception stage. As a result, we do not think that this is the right time for us to consider or implement any combined application of Western and Chinese medical theories. If we really do so, Chinese medicine will only be absorbed as a part of the Western medical care system, because its development is not as advanced as Western medicine. That way, it will be impossible for Chinese medicine and Western medicine to complement each other.

Madam President, our primary task now should be to set up a satisfactory regulatory framework for Chinese medicine, so as to provide it with a solid foundation for future development. I hope that the Legislative Council can pass the Chinese Medicine Bill before its summer recess, so that we can start the work required as soon as possible.

Thank you, Madam President.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I am very grateful to Mr YEUNG Yiu-chung for moving this motion today, and to all those Members who have put forward many valuable suggestions on how best to develop Hong Kong into a centre of Chinese medicine. The Secretary for Health and Welfare has already spoken in response to the proposal of incorporating Chinese medicine in the public health care system of Hong Kong. In the time which follows, I will speak on two more aspects of the work undertaken by the Government to assist the Chinese medicine profession, namely, research and development as well as marketing strategies and measures.

Over the years, the Chinese medicine trade has relied heavily on "peculiar prescriptions handed down from ancestors". But if the trade is to catch up with the quality control standards in modern-day society, and if it is to develop any new products at all, the impetus from research and development will indeed be absolutely indispensable. In this connection, the Government has already put in place quite a number of different support measures.

First, there is the Industrial Support Fund operated by the Industry Department. This Fund has been providing various kinds of support to Hong Kong industries, including the technical development of the Chinese medicine trade. Since 1994, the Fund has financed 18 Chinese medicine-related projects, involving a total cost of $860 million. The projects receiving financial assistance from the Fund cover a variety of areas, including quality control, information and promotion and the development of manufacturing technologies. Besides, proprietary Chinese medicines, natural foods and health foods are also covered. In brief, all these projects actually cover both the provision of infrastructure facilities and specific research topics. These projects are usually undertaken by universities and research institutes (such as the Hong Kong Bio-technology Institute). These institutions have accumulated an immense pool of research results and technologies over the years, and their experience will definitely play a very positive role in upgrading the manufacturing standards and product quality of the Chinese medicine trade.

Quite a number of Members have mentioned the point that some small and medium Chinese medicine manufacturers are facing many difficulties in upgrading their product quality and production processes to meet the requirements of the world market and future regulatory measures. In fact, this is also a great concern of the Government. In this connection, let me perhaps point out that one of the projects which I mentioned a moment ago aims precisely to tackle this problem; it aims to assist small and medium Chinese medicine manufacturers in attaining GMP standards. And, recently, with the assistance of this project, one Chinese medicine manufacturer has managed to receive formal recognition from Australia. In the future, this manufacturer will be able to export its Chinese medicine products to Australia.

Another point I wish to make is that many of our existing industrial infrastructure facilities and support institutions, such as industrial estates and the Hong Kong Bio-technology Institute, can all provide the facilities and services required by the Chinese medicine trade. And, I am sure that the Science Park now being planned and the Innovation and Technology Fund will certainly be able to provide even more assistance in the technological research relating to the Chinese medicine trade.

In order to further strengthen our scientific and technological base and to facilitate the commercialization of Chinese medicine products, the Chief Executive said in his policy address last year that a feasibility study would be conducted on the establishment of an Institute for Chinese Medicine. We hope that in the near future, we can lay down a tentative outline for the scale, modus operandi and objectives of the Institute. But since this subject involves the very long-term development of Chinese medicine, we will need to conduct detailed studies, and we will certainly consider the suggestions of Members very seriously. One point I must stress here is that when the case for establishing an Institute for Chinese Medicine is studied within the Government, all relevant Policy Bureaux, such as the Trade and Industry Bureau and the Health and Welfare Bureau, and all relevant departments, will participate in the process. We also wish to consult the entire community widely on this issue.

Apart from the series of support measures mentioned just now, manpower is also a crucial factor determining the future development of Chinese medicine. Since last year, several local universities have started to offer degree courses on Chinese medicine. And, the Employees' Retraining Board will shortly offer training courses for Chinese medicine dispensers. We will closely monitor these degree programmes and retraining courses to see if they can meet market demands. We are also examining some new measures which can facilitate the import of mainland technological talents to Hong Kong. These measures will certainly make it easier to attract the Chinese medicine talents required by the local Chinese medicine trade and related research projects.

In order to speed up the development of Chinese medicine in Hong Kong, we will of course have to make the best use of our proximity to the Mainland. As a matter of fact, of the 18 projects financed by the Industrial Support Fund which I mentioned earlier on, 13 are connected with the co-operation between the research institutes of Hong Kong and their mainland counterparts. Later on, I will talk about the marketing measures of the Trade Development Council (TDC). If we look at these measures, we will see that many of them are aimed specifically at fostering technical and business exchanges between Hong Kong and the Mainland. The Government will continue to make positive efforts to foster our co-operation with the Mainland in the development of Chinese medicine, so as to strike up a complementary relationship.

Scientific and technological research in Chinese medicine will most definitely provide Hong Kong with a sound base as it seeks to increase its market competitiveness. But we must also note that drugs are subject to very tight regulation in the world market, and for this reason, a lot of money and time will have to be spent on research and studies relating to drug safety and efficacy. So, I think it will still take quite some time before locally manufactured Chinese medicine products can attain internationally recognized standards.

Since the local Chinese medicine trade cannot possibly be expected to develop along the lines of the Western pharmaceutical industry overnight, we believe that in the short run, if we want to have a share in the world market, we will have to rely on health products with Chinese medicine ingredients; the market potentials of these products seem to be greater, because they take less time for development and are subject to less stringent regulation. In the medium- and long-run, we should aim at upgrading our Chinese medicine trade to internationally recognized standards; we should aim to develop quality products, so as to increase the value and profits of Chinese medicine products in the world market.

In the meantime, we should seek to intensify our measures of opening up new markets for our Chinese medicine products. In this connection, the TDC has already classified the promotion of Chinese medicine products as an item with export potentials. The TDC has thus organized many promotion activities, including sponsorship for local universities to hold seminars on marketing strategies, talks on overseas markets delivered by experts, fact-finding missions organized in conjunction with the Chinese medicine trade, trade negotiations, and participation in overseas exhibitions.

Madam President, it is the aim of the Government to create a good business environment for the Chinese medicine trade under the free market principle, so as to assist its development and turn Hong Kong into a centre of Chinese medicine. Members' remarks have convinced us that their objectives are basically the same as those of the Government. We believe that a Chinese medicine industry capable of conducting research and manufacturing quality products will do a great deal in widening the base of our economy, thus creating more job opportunities.

I must of course add that the Government cannot possibly be expected to replace private enterprises in the development of Chinese medicine. The input of private enterprises is the most crucial factor deciding whether or not our efforts to develop Chinese medicine will be successful. We notice that more and more investors have shown their interest in developing Chinese medicine in Hong Kong. We are greatly encouraged by this. We welcome all local and overseas investors to take part in the development of this industry. We also hope that with the co-operation of the Government, universities, research institutes and the trade and many others, we can bring a boom to our Chinese medicine development.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung, you may now reply. You have four minutes 33 seconds.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, first of all, I am very grateful to 15 Members who have spoken in support of my motion. I would also like to thank the two Secretaries for giving very positive responses. This motion moved by me today can be said to be extremely mild. There was no heated debate but still we have gathered many valuable opinions. This is also in line with the treatment effect produced by Chinese medicine: mild in nature but has a reinforcing and rejuvenating effect.

Madam President, I think Members in this Chamber should have tried "24-ingredient herbal tea" before and known that it tastes bitter but can produce a marvellous effect for it is able to clear heat and remove toxic elements. Today, a number of Members have jointly prescribed a dose of herbal tea and I have summed it up by calling it "12-ingredient herbal tea": First, to incorporate Chinese medicine into our medical system; second, to strengthen training of Chinese medicine personnel; third, to attract specialized people from overseas countries to come to Hong Kong to give full play to their potentials; fourth, to set up a technological fund for Chinese medicine for the purpose of developing related products; fifth, to take full advantage of the dominant position enjoyed by the Mainland and borrow its experiences; sixth, Chinese medicine and medical practitioners should complement one another instead of running in two separate directions; seventh, to take into account the significance of Chinese and Western cultural exchanges in developing Chinese medicine; eighth, to set up a Chinese medicine institute expeditiously for the training purpose and providing the public with a wide range of medical options; ninth, to set up an inter-departmental working group to help develop Hong Kong into an international centre for Chinese medicine and medical practitioners; tenth, to protect intellectual property rights; eleventh, to build up a mammoth computer database; and twelfth, to provide government funding to support the Chinese medicine industry.

I hope the Government can actively study these 12 ingredients and get the "12-ingredient herbal tea" brewed so as to enable Hong Kong to develop into an international centre for Chinese medicine and medical practitioners expeditiously. Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr YEUNG Yiu-chung 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 the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections and by the Election Committee, who are present. I declare the motion passed.

NEXT MEETING

PRESIDENT (in Cantonese) : I now adjourn the Council until 2.30 pm on Wednesday, 16 June 1999.

Adjourned accordingly at a quarter past Ten o'clock.

Annex I

WRITTEN ANSWER

Written answer by the Secretary Justice to Mr YEUNG Yiu-chung's supplementary question to Question 4

With data supplied by the Law Society, the requested information is now provided as follows:

Size in terms of number of practising solicitors (both full-time and part-time)	Number of firms
1-4	328
5-9	171
10-19	67
20 or more	30
Total	596

Annexes II and III

WRITTEN ANSWERS

Written answer by the Secretary for Justice to Mrs Selina CHOW and Miss Margaret NG's supplementary questions to Question 4

The required information is now provided as follows:

Number of practising senior counsel	53
Number of practising senior counsel who had responded to the survey conducted by the Bar Association	44
Number of practising junior counsel	650
Total number of practising barristers	703

Annex IV

WRITTEN ANSWER

Translation of written answer by the Secretary for Trade and Industry to Mr LAU Kong-wah's supplementary question to Question 5

During the period between the full operation of the Prevention of Copyright Piracy Ordinance on 29 August 1998 and 15 June 1999, Customs and Excise officers have discovered in total six cases in which manufacturers' codes have not been marked on the optical discs in accordance with the standards. As such cases only constitute minor offences, the relevant licensees will be prosecuted summarily.

Furthermore, since the operation of the Ordinance, the Customs and Excise Department has smashed eight underground workshops which manufacture optical discs without a licence. As a result, 12 production lines have been involved and 20 persons arrested. Apart from prosecuting those involved under the Copyright Ordinance, the Department will also bring an extra charge of producing optical discs without a licence against the underground workshops in accordance with the Prevention of Copyright Piracy Ordinance.

1 Section 3 of the PIO sets out that any person who, by fraudulent or reckless misrepresentation, induces another person: (a) to enter into or offer to enter into any agreement (i) for or with a view to acquiring, disposing of, subscribing for or underwriting securities; or (ii) the purpose or effect, or pretended purpose or effect, of which is to secure to any of the parties to the agreement a profit from the yield of securities or property other than securities or (b) to take part in or offer to take part in any investment arrangements in respect of property other than securities, shall be guilty of an offence.