Legislative Council
LC Paper No. CB(2) 901/98-99
(These minutes have been seen by the Administration)
Ref : CB2/PL/PS
LegCo Panel on Public Service
Minutes of Meeting
held on Monday, 16 November 1998 at 10:45 am
in Conference Room A of the Legislative Council Building
Members present:
Hon TAM Yiu-chung, JP (Chairman)
Hon Mrs Sophie LEUNG LAU Yau-fun, JP (Deputy Chairman)
Hon LEE Cheuk-yan
Hon LEE Kai-ming, JP
Hon CHEUNG Man-kwong
Hon CHAN Wing-chan
Hon Howard YOUNG, JP
Hon Ambrose LAU Hon-chuen, JP
Members absent :
Hon Michael HO Mun-ka
Hon CHAN Kwok-keung
Hon Andrew WONG Wang-fat, JP
Public Officers attending :
- Items III & IV
- Mr Duncan W Pescod
- Deputy Secretary (Civil Service) 2
- Ms Anissa WONG
- Deputy Secretary (Civil Service) 3
- Ms Joyce TAM
- Principal Assistant Secretary (Civil Service) 4
- Item III
- Miss Sandy CHAN
- Principal Assistant Secretary for Housing (2)
- Mr Marco WU
- Deputy Director (Management), Housing Department
- Mrs Winifred CHUNG
- Assistant Director (Administration), Housing Department
- Item IV
- Mr LAU Kwok-choi
- Principal Assistant Secretary for Works (Policy & Development)
- Mr CHAN Pui-wah
- Deputy Director of Water Supplies
Attendance by invitation :
- Representatives from the Alliance of Housing Department
Staff Unions
- Mr LAM Man-cheuk, Convenor
Mr KWAN Chi-fong,Vice Convenor and Principal Spokesman
Mr TONG Wing-on, Vice Convenor
Mr KWAN Man-keung, Secretary
Mr WONG Chi-tao, Member
Mr LO Yuk-lun, Member
Mr YAU Yan-hung, Member
Mr MOK King-po, Member
Mr KWOK Yiu-wa, Member
- Representatives from the Alliance of Staff Union of Water Supplies Department
- Waterworks Inspectors' Association
- Mr POON Chung-hei
Mr MUI Kwok-ying
- Association of Water Meter Reading Staff
- Mr CHAN See-chi
Mr CHEUNG Chi-ming
- Consumers Services Inspectors' Association
- Mr TSANG Ge-ping
Ms WONG Suet-ling
- Government Waterworks Professionals Association
- Mr TAM Wing-tai
Mr LO King-yin
- Hong Kong Water Supplies Department Employee Union
- Mr SUEN Ming-fung
Mr TAM Kwai
Clerk in attendance :
- Mr LAW Wing-lok
- Chief Assistant Secretary (2)5
Staff in attendance :
- Mr Arthur CHEUNG
- Assistant Legal Adviser 5
- Miss Mary SO
- Senior Assistant Secretary (2)8
I. Confirmation of minutes of meeting on 19 October 1998
(LC Paper No. CB(2) 606/98-99 issued under LC Paper No. CB(2) 607/98-99 on 13 November 1998)
1. The minutes of the meeting held on 19 October 1998 were confirmed.
II. Date of next meeting and items for discussion
(LC Paper No. CB(2) 613/98-99(01))
2. Members agreed that the following three items should be discussed at the next meeting to be held on 21 December 1998:
- Briefing by the Efficiency Unit on the implementation of the Enhanced Productivity Programme;
- Measures to achieve cost saving in Government departments and agencies; and
- Policy on the provision of passages and subsistence allowance for overseas duty visits by senior civil servants.
3. Members further agreed to defer the discussion of the following two items to a later date:
- Briefings by the Post Office and the Electrical and Mechanical Services Department on the staff situation in these two departments since their establishment as trading fund departments; and
- Civil servants borrowing money from loan sharks.
III. Privatisation of services provided by the Housing Department - Its impact on staff concerned
(a) Meeting with representatives from the Alliance of Housing Department Staff Unions (The HD Alliance)
(LC Paper No. CB(2) 613/98-99(02))
4. Referring to the paper, the HD Alliance highlighted the reasons for their objection to the corporatisation of the Housing Department (HD) currently being studied by HD. In a move towards corporatisation, HD had grossly exaggerated the effectiveness of the private management agencies (PMAs) in the management of Home Ownership Scheme (HOS) courts and public rental housing (PRH) estates. In order to achieve profit maximisation, PMAs invariably offered lower salaries to their employees who were not of the right calibre and who often could not handle problems of a sudden and complex nature. Moreover, their turnover rate was high, particularly in the middle-management level. According to the HD Alliance, HD staff had to put in a lot of time and efforts in supervising and supporting inexperienced employees of PMAs. However, such time and efforts expended by HD staff were not duly recognised by the management, which was extremely unfair. The HD Alliance also pointed out that many of these PMAs had little or no resources when they took over the management of HOS courts and PRH estates. As HD provided them with office accommodation, furniture and equipment, it was therefore very much the case of HD financing their business operation.
5. The HD Alliance further said that corporatisation was not the only means to achieve higher productivity. In the past few years, HD had undergone a series of management reforms to improve its productivity. HD staff were confident that if HD would further improve its management structure and working procedures, as well as putting more resources in staff training and development, HD could compete with PMAs. The HD Alliance reckoned that some senior HD staff might be pushing for corporatisation of HD for their personal benefits. Some of the senior HD staff might be contemplating to take up senior management positions in PMAs after retirement or establish their business ahead of their retirement with a view to taking up jobs from HD when they retired.
6. The HD Alliance also pointed out that the majority of HD staff wished to remain as civil servants. The existing plan to corporatise HD had undermined the harmonious relationship between the staff and the management. If the corporatisation plan was implemented, it would contravene the pledge laid down in the Basic Law that public servants might all remain in employment and retain their seniority with pay, allowances, benefits and conditions of service no less favourable than before the establishment of the HKSAR. The HD Alliance was also of the view that most HOS/PRH residents would prefer HD to continue to be responsible for the management and maintenance of their courts/estates because of the expertise of HD staff and that there were proper channels for them to lodge their complaints. Moreover, a government department was subject to close monitoring by the central government, the legislature and the district boards. Private companies were, however, not subject to such monitoring.
7. Mr Howard YOUNG asked whether there was any evidence to substantiate the allegation that some of the senior HD staff advocated the corporatisation of HD for their own personal benefits. In response, the HD Alliance said that its members had observed that the senior management of some PMAs were former senior HD staff, although they admitted that some former HD staff in junior positions also joined the PMAs.
8. Mr Howard YOUNG also asked about the extent of backup service provided to employees of PMAs by HD staff, and whether there were any statistics showing HOS/PRH residents' assessment of the standard of housing management and maintenance services provided by HD vis-a-vis that provided by private contractors. In reply, the HD Alliance said that HD staff often had to go beyond their monitoring role to follow up on problematic cases passed on to them by employees of PMAs. The HD Alliance also pointed out that there was no noticeable increase in the number of complaints as a result of the contracting out of the management and maintenance services of some estates. It was therefore difficult to say with certainty that residents found the performance of PMAs unsatisfactory, having regard to the fact that HD staff often provided assistance to PMAs.
9. The Chairman said that in the absence of any statistics on the following up of problematic cases by HD staff, the occurrence of such cases might be regarded as isolated incidents and did not necessarily mean that HD staff had to provide overall backup service. Mr CHEUNG Man-kwong echoed the Chairman's view.
10. Mr CHAN Wing-chan expressed concern about the likely decline of service by PMAs if HD staff no longer provided backup service after the corporatisation of HD.
11. Mr CHEUNG Man-kwong said that it appeared inevitable that the operations of HD would need to be downsized in view of the fact that at least 250,000 flats would be offered for sale to tenants over ten years under the Tenants Purchase Scheme (TPS) and that HD would cease to be responsible for internal maintenance and tenancy control after the tenants became owners of their flats. He further pointed out that having transformed from tenants to owners, they had the complete freedom to choose HD or the PMAs to manage their estates. In response, the HD Alliance reiterated that corporatisation was not the only means to improve productivity. They were of the view that if HD would adopt greater flexibility in its management and maintenance operations, HD staff could deliver more responsive and customer-focused services in competition with PMAs. In their view, if the management and maintenance services of newly-built PRH estates were to be undertaken by HD staff, it would avoid the problem of surplus staff arising from the downsizing of HD's operations as a result of the introduction of the TPS.
12. Mrs Sophie LEUNG and Mr CHEUNG Man-kwong said that in addition to the consultancy study being undertaken, it would be useful to conduct a separate study to compare the cost effectiveness of the management and maintenance operations carried out by HD and PMAs.
(b) Meeting with representatives from the Housing Bureau and Civil Service Bureau
(LC Paper No. CB(2) 613/98-99(03))
13. Principal Assistant Secretary for Housing (2) said that the paper had clearly set out how HD made use of private sector resources in the provision of its services and related new initiatives currently being studied by HD. She stressed that the paramount consideration in any new initiatives was to ensure that public's interests would not be impaired.
14. Mr LEE Kai-ming expressed doubt as to whether the downsizing of HD's housing management and maintenance operations could be achieved through natural wastage. He further enquired about whether HD would consider streamlining its management structure and work procedures such that existing HD staff could be deployed to undertake new activities so as to avoid staff becoming redundant.
15. Deputy Director (Management) assured members that HD would take appropriate measures to address the situation of surplus staff, if any, arising from corporatisation. He further pointed out that corporatisation would not necessarily imply that HD staff would be made redundant. In view of the increasing demand for trained and experienced housing management staff in the community, corporatisation would in fact provide an alternative avenue of career development for HD staff. He stressed that when tenants became owners of their flats, they could choose their own management agency and there was therefore a need for HD to streamline its operations in order to be competitive.
16. Mr CHEUNG Man-kwong said that any proposal to corporatise the management and maintenance operations of HD should not result in the conditions of service of HD staff being affected and should be subject to monitoring by the legislature and the relevant public bodies. He suggested that the consultancy study cover the four options publicly mentioned by the Director of Housing. The four options included selling the management and maintenance operations to the private sector; setting up a subsidiary company under HD; privatisation; and forming a joint venture arrangement with the private sector.
17. In response, Deputy Director (Management) said that the consultancy study would consider various alternatives including the four options referred to by Mr CHEUNG. In drawing up its recommendations, the consultants would take into account the concerns of and possible impact on affected staff. The consultancy report was expected to be completed before the end of this year and would be submitted to the Housing Authority for consideration. He further pointed out that only some of HD's services were being considered for corporatisation and that the affected staff would be given the option to remain in the civil service or to join the new corporation.
18. Mr LEE Cheuk-yan said that he could not see how the conditions of service of HD staff would not be affected if HD wished to compete with private contractors. In response, Deputy Director (Management) said that in the face of changed relationship with our customers, there was a need to enhance our productivity and competitiveness. However, he did not agree that the conditions of service of HD staff would necessarily need to be adjusted downwards in order to compete with private contractors. Principal Assistant Secretary for Housing (2) added that in view of the strong demand for better housing management and maintenance service by the public, it was not necessarily the case that the lowest bid would win the contract.
19. In reply to Mr Howard YOUNG, Deputy Director (Management) said that HD had a comprehensive tendering procedures for selecting private contractors. The tenderers had to meet stringent requirements and that the contract would not necessarily go to the lowest bidder. As HD was tasked to monitor the performance of private contractor, the division of work between HD and the private contract was clearly laid down in the contract. Referring to the views expressed by the HD Alliance that HD staff sometimes had to go beyond their monitoring role to complete the unfinished tasks of private contractors, Deputy Director (Management) said that HD would review the matter with the staff concerned.
IV. Privatisation of services provided by the Water Supplies Department - Its impact on staff concerned
(a) Meeting with representatives from the Alliance of Staff Union of Water Supplies Department (The WSD Alliance)
(LC Paper No. CB(2) 613/98-99(04) and a statement of the Alliance tabled at the meeting)
20. Referring to the statement tabled at the meeting, the WSD Alliance briefly explained the reasons for their objection to the Water Supplies Department (WSD)'s plan to commission a consultancy study to examine the feasibility of private sector participation in the provision of water supply services. As the provision of water supply services by WSD had all along been operating very smoothly and in view of its importance to people's livelihood, they did not see the need for replacing the existing water supply system with a new one where a stable supply of good quality water could not be guaranteed. At present, water charges were subsidised by government rates. It was envisaged that water charges would be greatly increased if the provision of water supply services was to be undertaken by the private sector.
21. The WSD Alliance further said that corporatisation or privatisation would not necessarily bring about increased efficiency and better service. Overseas experience had shown that the quality of service provided by private enterprises might not be better than that provided by the public sector. Unlike the Government, private enterprises were profit-oriented and lacking in public accountability, transparency and social responsibility.
22. The WSD Alliance also pointed out that it was not an appropriate time for WSD to consider private sector participation in the provision of water supply services in this period of economic downturn and high unemployment. They urged the WSD to immediately abort the plan, so as not to adversely affect the morale of WSD staff and bring instability to the community.
(b) Meeting with representatives from the Works Bureau and the Civil Service Bureau
(LC Paper No. CB(2) 613/98-99(05)
23. Principal Assistant Secretary for Works (Policy & Development) (PAS/P&D) briefed members on the salient points of the paper. He pointed out that the Administration did not have any preconceived ideas on what form private sector participation should take in the provision of water supply services. The consultancy study to be commissioned would examine various options for private sector participation, including privatisation, corporatisation and contracting out, etc., taking into account overseas experience. As such, it would be premature to speculate at this stage what effect there might be on staff in WSD. WSD staff were informed in June of the consultancy because of all developments and to consult them early on any proposals which might affect them.
24. Mr CHEUNG Man-kwong said that there was no room for mistakes in the provision of water supply services. WSD should not take the decision to privatise the provision of water supply services lightly and in haste. He further expressed concern as to whether the existing high water quality standard and Government subsidy to keep water charges affordable to the public would be maintained if the private sector was involved in the provision of water supply services. He also raised query as to how a private enterprise not being a part of the Government could negotiate with the Mainland authorities on the water supply from Dongjiang. In response, PAS/P&D reiterated that the Administration would carefully consider the various options, taking into account overseas experience, before recommending the best way forward.
| 25. At the request of the Chairman, PAS/P&D undertook to provide a written reply addressing the concerns set out in the WSD Alliance's statement to the Panel.
| PAS/P&D |
26. In reply to Mr LEE Cheuk-yan's enquiry about the consultancy brief, PAS/P&D said that the scope of the consultancy study was set out in paragraph 3 of the paper. He added that the Administration did not have any preconceived ideas about the outcome of the study. They had, however, in mind what sort of background and experience the consultants should possess. The consultants would be asked to make recommendations having regard to the existing situation and arrangements in Hong Kong.
27. Mr LEE Cheuk-yan expressed concern that water charges would be increased if the private sector was involved in the provision of water supply services. PAS/P&D replied that it was premature to predict at this stage whether water charges would be increased as a result of private sector participation.
28. In reply to the Chairman, PAS/P&D said that the consultancy fee would be met from approved funding resources and there was no need to seek extra funding from the Finance Committee.
29. Mr CHAN Wing-chan said that according to the experience in overseas countries set out in the paper provided by the WSD Alliance, disputes between the consumers and the private enterprises providing water supply often occurred. In reply, PAS/P&D said that the consultant would take into account overseas experience in both the public and the private sectors on the provision of water supply services before making recommendations.
30. In reply to Mr Howard YOUNG, PAS/P&D said that the reason for conducting the consultancy study was not because the Administration was dissatisfied with the existing situation. The consultancy study was part of an on-going exercise to explore ways to enhance the efficiency and quality of services provided by WSD.
31. Mr LEE Cheuk-yan suggested and members agreed that the Civil Service Bureau should be requested to provide information on what other government services were being considered for privatisation, corporatisation and contracting out.
V. Declaration of interests by the civil servants
(LC Paper No. CB(2) 613/98-99(06))
32. As the meeting had overrun and the matter was not of an urgent nature, the Chairman suggested and members agreed to defer the discussion of the item on "declaration of interests by the civil servants" to the next meeting.
33. The meeting ended at 12:49 pm.
Legislative Council Secretariat
17 December 1998
