On behalf of the Public Accounts Committee, I have the honour to table our Report No. 37 today.
The Report corresponds with the Report of the Director of Audit on the Accounts of the Government of the Hong Kong Special Administrative Region for the year ended 31 March 2001 and his Report No. 37 on the results of value for money audits, which were submitted to you on 30 October 2001 and tabled in the Legislative Council on 21 November 2001.
The Public Accounts Committee's Report No. 37 tabled today contains three main parts:
(a) the Committee's assessment of the actions taken by the Administration in response to our recommendations made in the Committee's previous Reports Nos. 34 and 35;
(b) our observations on the Report of the Director of Audit on the Accounts of the Government for the year ended 31 March 2001; and
(c) the conclusions reached by the Committee on the Director of Audit's Report No. 37.
At the time when PAC Report Nos. 35 and 36 were finalised, the Committee's deliberations on the subject "Construction of two bridges" in Report No. 35, and the subjects "Follow-up review on control of utility openings" and "Review of the Hong Kong Sports Development Board" in Report No. 36, were continuing. A full report on these chapters was therefore deferred. The Committee have now concluded our deliberations and have the honour to table the supplemental reports on these three chapters together with our Report No. 37 today.
As in previous years, the Committee have selected for detailed examination only those chapters in the Director of Audit's Report No. 37 which, in our view, referred to more serious irregularities or shortcomings. The Report tabled today covers our deliberations on seven of the eight subjects selected. We have decided to defer a full report on the subject "Mechanised street cleansing services" as we shall hold a second public hearing on 1 March 2002 to examine, among other things, the many tiers of staff in the chain of command in the Food and Environmental Hygiene Department involved in the operation of mechanised street cleansing services, and how they affect the provision of the service. The Committee will endeavour to finalise our report to the Council at the earliest opportunity.
The Committee's Work
The Committee's consideration of the actions taken by the Administration in response to the recommendations made in our previous reports, and our examination of the Director of Audit's Report on the Accounts of the Government are an integral part of our work.
In reviewing the Administration's actions in response to PAC Reports Nos. 34 and 35, the Committee have proactively enquired about the latest position of a number of issues which have been outstanding for quite some time and urged the Administration to expedite action to conclude them without delay. The Committee's concerns and the Administration's response have been documented in our Report.
To quote an example, the Committee has not lost sight of the outstanding issues relating to the subject "Administration of allowances in the civil service". We note that the Civil Service Bureau (CSB) is consulting the staff side regarding the recommendations of the Standing Commission on Civil Service Salaries and Conditions of Service, and the Standing Committee on Disciplined Services Salaries and Conditions of Service, on the job-related allowances provided for civil servants. We have requested the CSB to provide the outcome of the consultation and its decision on the way forward by the end of March 2002. The Committee will then decide on the appropriate way to follow up the matter.
The Committee have made a number of enquires on the Accounts of the Government for the year ended 31 March 2001. In respect of the advances relating to the expenditure on Vietnamese migrants, as the remark that "the full recovery of the amount due is doubtful" has existed for a long time, the Committee have enquired about the prospects of recovering the advanced amount and when the remark can be removed. The Committee are also concerned about the significant variances between the original approved estimates, and the actual revenues and expenditures in respect of some revenue and expenditure heads and have therefore requested the reasons for the variances. For example, regarding the advances for Tsing Ma Control Area, the Committee have requested the Administration to explain the background to the creation of this Advance Account and the reasons for the significant variance between the toll revenue and related receipts collected, and the remuneration of the Tsing Ma Control Area operator.
Supplemental reports on the Director of Audit's Report No. 35 and 36
Construction of two bridges
The Committee's report on "Construction of two bridges" had been deferred due to the Administration's refusal to disclose in public the information provided by the contractors to the Government relating to the bridge contracts concerned.
The Committee are seriously concerned that because of the confidentiality provisions in the General Conditions of Contract for the bridge contracts concerned, the Director of Audit has to exclude from his Report the relevant information, i.e. detailed information relating to the contractors, the dispute resolution processes and the settlement sums, thereby causing unnecessary delay in the Committee's work and reducing the overall usefulness and timeliness of the Director of Audit's Report.
Arising from the issue, the Committee consider that there is a need to amend future General Conditions of Contract for government capital works projects so that the Administration can make the necessary disclosure to the Committee. The Committee have held meetings with the Administration on the wider question of the Committee's access to documents and information in considering the Director of Audit's reports. The Committee consider that, to enable us to fully discharge our duties and report to the Council, we should have free access to all the documents which have been made available to the Director of Audit for examination.
While the Committee appreciate that the Administration is making efforts to improve the flow of information to the Committee, there are nonetheless still areas where a consensus cannot be reached. We are disappointed with the Administration's insistence that it will not disclose the records of meetings of the Executive Council and the Chief Secretary's Committee or its Policy Groups without regard to the subject matter and the issues involved, and that it will not allow the Committee unrestricted access to all government documents in a manner similar to that for the Director of Audit.
The Committee has suggested that, in order for the Administration to discharge its duty to be accountable to the Legislative Council and its committees, and to live up to the spirit of maximum co-operation with the Committee, the Administration should set out the circumstances which would justify a refusal to accede to the Committee's request for provision of certain documents or information. This has not been taken on board, as the Administration maintains that, in processing the Committee's request for documents, it will give consideration to "public interest" in the light of the circumstances surrounding each case. This falls short of our expectation that the Administration should undertake to provide any documents or information being sought unless it is clear that substantial harm to the public interest would be caused by the provision of such documents or information.
The Committee have urged the Chief Secretary for Administration to ensure that the Administration will render full co-operation when considering our future requests for access to documents and information.
Follow-up review on control of utility openings
The Committee's report on "Follow-up review on control of utility openings" is our third report on the subject, after Report No. 17 of January 1992 and Report No. 24 of July 1995. We are gravely dismayed that after three examinations by the PAC, there is still a lack of real progress on the control of utility openings.
The Committee have spared no efforts in following up the issues involved in this subject, including the slow progress of implementing the excavation permit fee and the new penalty system over the past ten years, and the delay in introducing the relevant legislative amendments. We have held three public hearings to take evidence from the witnesses and spent much time ascertaining the relevant facts, examining the evidence obtained, and reaching our conclusions. The Committee would like to assure the Council and members of the public that we will not be satisfied with the mere admission of mistakes or the lip service paid by government officials on making improvements, while business is conducted in the same old fashion. Unless and until the Committee are provided with evidence that concrete measures have been put in place to improve the control of street excavation works, the Committee will not rule out the possibility of revisiting the subject for the fourth or more times.
Review of the Hong Kong Sports Development Board
In examining the subject "Review of the Hong Kong Sports Development Board (SDB)", the Committee are gravely concerned that from the integration of the SDB and the Hong Kong Sports Institute in 1994 up to 1999, the relevant policy branches and/or bureaux which were responsible for the government subvention to the SDB, had neglected to follow the "Guidelines on the Management and Control of Government Subventions" to determine the comparable grades of SDB staff in the civil service, and to ensure that the package of salary and fringe benefits of SDB staff was not superior to that of their comparable grades in the civil service. Moreover, the Home Affairs Bureau's review for ascertaining whether the package of salary and fringe benefits for SDB staff has exceeded that of their comparable grades in the civil service, which started in early 1999, has not yet been completed, causing serious doubts on the effectiveness of the role of the Secretary for Home Affairs and other public officers sitting on the SDB in closely monitoring the terms and conditions of service of SDB staff to ensure compliance with the Government's subvention policy.
This is not the first time the Committee have had cause for concern about the role of the public officers appointed to sit on the Boards of statutory bodies. In our Report No. 33B, we already made the recommendation that the Administration should arrange for one of the public officers appointed to the Vocational Training Council to be responsible for reminding it of the Government's subvention rules. For the SDB, we have made a similar recommendation again. We consider that, in view of the irregularities identified in these organizations and the recent controversy over the roles and responsibilities of the Secretary for the Transport and the Secretary for the Treasury on the Kowloon-Canton Railway Corporation Board, it falls on the Administration to take on board our recommendation rigorously.
Report on the Director of Audit's Report No. 37
Turning to the subjects in the Director of Audit's Report No. 37 covered in our Report, I would like to comment from the following perspectives:
Use of public money
When examining the subject "Construction of government office buildings", the Committee are seriously concerned that due to the change in the allocation of office space of the Cheung Sha Wan Government Offices from the Architectural Services Department to the Rating and Valuation Department (RVD) at short notice, the submissions of the fitting-out plans for the RVD were delayed, resulting in the grant of extension of time to the contractor, and the estimated prolongation cost of $3.27 million.
We are also seriously concerned that the Department of Health's decision of not relocating the Medical Examination Board (MEB) was made after the fitting-out works for the MEB had been completed, resulting in abortive fitting-out works which cost $3.7 million. We consider that much of the abortive works and costs could have been avoided if the government officers had dealt with the situation more prudently and proactively.
This is not an isolated case. In considering the subject "Procurement and management of government supplies", the Committee are seriously concerned that for 79.9% of all common-users items, the target stock turnover rate of five times a year was not achieved in 2000-01, resulting in $35.3 million being tied up in the average stockholding of these items. There are also 568 items, with stockholding totaling $15.2 million as at 31 March 2001, which had a stock turnover rate of lower than 0.5 time a year in 2000-01. Among these 568 items, 194 items with stockholding totalling $ 4.4 million had a stock turnover rate of lower than 0.01 time a year in 2000-01. We are dismayed that the Government Supplies Department has not demonstrated that it had exerted its best efforts to notify the user departments of the anticipated expiry dates of items in stock, and dispose of items which are in excess of users' requirements and will become outdated or pass their expiry dates shortly.
When considering the subject "The administration of sale of land by public auction", the Committee are gravely dismayed that, in the sale of a site in Siu Sai Wan, the Director of Lands, and the chairman and members of the District Lands Conference (DLC) had neither achieved the Government's planning objective of lowering the development density in order to "thin out" the population, nor sought to obtain the maximum revenue at the public auction by upgrading the Siu Sai Wan site to a Class C site, for example, by requiring the provision of an extra street. If the site had been clearly classified as a Class C site for auction, the eventual auctioned price might be higher than the present auctioned price of $11,820 million.
While the Committee do not want to speculate on the motive behind the DLC's decision to delete the clause specifying the maximum residential gross floor area from the Conditions of Sale of the Siu Sai Wan site, we are gravely dismayed that the decision had not fulfilled any land policy, revenue, or planning objectives.
Land, with its limited supply, is one of Hong Kong's most valuable assets and the sale of land represents a significant source of public revenue. At a time when the Hong Kong economy is in the doldrums and when the Government is facing a severe budget deficit, it is incumbent on the Government to optimise the use of land and maximise revenue from land sales. Seen in this light, the Committee consider that the reason for the sale of land by public auction must be to maximise land revenue, after other policy objectives, such as land supply, town planning, environmental and safety concerns, have been clearly stated in the Conditions of Sale and relevant legislation.
Co-ordination of the work of the PAC and other committees of the Council
I take this opportunity to record that there has been close co-ordination between the PAC and the Council's other committees, to ensure that there is no overlap between our work and that our work is complementary to each other.
Following the tabling of our report on the "Administration of the Quality Education Fund" today, this subject will be discussed by the Education Panel. Meanwhile, the Planning, Lands and Works Panel is actively following up the proposed charging and penalty system for street excavation works, which is one of the issues studied in our report on "Follow-up review on control of utility openings". On the Director of Audit's observations on the method of assessing the financial resources of infant legal aid applicants, contained in his Report on the "Provision of legal aid services", we understand that the Working Group on Legislation concerning the Provision of Legal Aid Services, under the Administration of Justice and Legal Services Panel, has taken note of the relevant policy issues and would deal with them in its report to the Panel.
Madam President, as always, the Committee have made our conclusions and recommendations in this Report with the best intentions and with the aim of ensuring value for money in the delivery of public services.
Finally, I wish to register my appreciation of the contributions made by members of the Committee. Our gratitude also goes to the representatives of the Administration and other organisations who have attended before the Committee. Last, but not the least, we are grateful to the Director of Audit and his colleagues, the clerk to the Committee and the other staff of the Legislative Council Secretariat for their unfailing support and hard work which has made it possible for us to make this Report to the Council within the tight timeframe.