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I. Highlights

To present orally.

II. Committees and Panels

@ 1. Public Accounts Committee (PAC):

On 25 April 2001, the Director of Audit tabled his Reports No. 36 in the Council. The Committee, after holding public hearings to receive evidence from Controlling Officers, will finalize our own independent report soon. I intend to present the main bilingual PAC Report No. 36 to LegCo on 4 July 2001.

@ 2. Financial Affairs Panel:

The Panel held 4 meetings to date and the relevant agenda are attached as Appendix I.

On 4 June 2001, the Financial Secretary has provided the Panel with a report on Hong Kong's latest economic situation.

The Chief Executive of HKMA also briefed the Panel on HKMA's Annual Report for the year 2000 in a special meeting on 3 May 2001. There was also a special meeting on 19 June 2001 to study the Bank of China (Hong Kong) Limited (Merger) Bill as well as The Bank of East Asia, Limited Bill.

A proposed list of future agenda items is attached as Appendix II for reference.

@ 3. Economic Services Panel:

The Panel held 2 meetings since the last report.

The Panel focused on Hong Kong Post, Subsidiary legislation under the Merchant Shipping (Local Vessels) Ordinance, as well as Retail price of ultra low sulphur diesel and the concession on diesel duty.

It also reviewed Air Navigation (Dangerous Goods) Regulations and Dangerous Goods (Consignment by Air) (Safety) Regulations, civil liability for unsafe products, regulation of deceptive, misleading and unfair practices in consumer transactions.

@ 4. Information Technology and Broadcasting Panel:

The Panel held 3 meetings to date.

The Panel studied issues relating to digital divide in certain sectors of the community such as the disabled, elderly and low-income groups etc. It also discussed the Government's information technology programmes for secondary students in summer, administration of Internet domain names in Hong Kong and proposal to engage consultancy service by the Television and Entertainment Licensing Authority for enforcement of competition provisions in the Broadcasting Ordinance.

There was also a special meeting to discuss 2001 Digital 21 Strategy, E-Government Strategy and Regulation of acquisitions and mergers in the telecommunications market.

@ 5. Education Panel:

The Panel held 2 meetings to date.

The Panel mainly focused on the additional support to schools with a large intake of students of lower academic ability, personnel Information Management System, Post Secondary College (Amendment) Bill as well as the switch to use English as medium of instruction at Secondary Four and above by some Chinese-medium schools.

It also studied the issue of teaching force for basic education, regulation of tutorial schools, Pilot Scheme of the use of information technology in schools and the creation of a Senior Principal Executive Officer Post in Education and Manpower Bureau.

@ 6. Finance Committee and House Committee:

There were 4 meetings of Finance Committee and 9 meetings of House Committee. TD of HKSA were kept informed of progress on all Bills on a weekly basis.

III. Bill Committees Joined

@ 1. Inland Revenue (Amendment) Bill 2000

On 2 March 2001, LegCo Members decided that the slot currently taken up by the Bills Committee should be released to enable another Bills Committee to be formed to scrutinize other bills on the waiting list. The Bills Committee would only be reactivated upon the Administration's request and subject to the availability of a Bills Committee slot at the time.

@ 2. Drug Trafficking and Organized Crimes (Amendment) Bill 2000

There was only 1 meeting held since the last report on the 4 May 2001.

Some Government's Committee Stage Amendments were presented to the Bills Committee in that meeting which the Committee had rejected in principle. We understand that the Administration is now holding further consultation with the affected parties.

@ 3. Bills Committee on Securities and Futures Bill and Banking (Amendment) Bill 2000

There were 16 meetings held to date.

The Committee is now entering clause-by-clause examination of the Securities and Futures Bill and the Banking (Amendment) Bill 2000. We do not expect the passage of the Bill until after September this year at the earliest.

@ 4. Bills Committee on Dutiable Commodities (Amendment) Bill 2001

The Bills Committee held only 1 meeting with the Administration since the last report. The objective of the Bill is to amend the Dutiable Commodities Ordinance (Cap. 109) (the Ordinance) so as to provide a legal basis for the use of a specified electronic service to process applications for dutiable commodities permits.

In this Bill, a new Part IA relating to the use of electronic records and procedures is added. Clause 8 provides for books and documents in non-legible form and clause 12 adds a new section 42A on the proof of contents of electronic record. Other clauses are miscellaneous amendments relating to the use of electronic records generally under the Ordinance.

While acknowledging the Administration's determination to foster market competition for provision of EDI services, I was concerned that since the Government was the major shareholder of Tradelink, and that the Administration intended to retain Tradelink's services after 2003, other potential contenders might be anxious about unfair competition. As such, I asked whether there was any plan to privatize Tradelink to maintain a level playing field in the market. In addition, I also suggested that a detailed plan should be worked out if the Administration were to open up the market for fair competition, and that consideration should be given to releasing information relating to the revenue base. If possible, Tradelink's accounts should be made available to prospective contenders for reference. This would help potential participants estimate their investment returns before considering whether they wished to express interest.

In response to my question, Principal Assistant Secretary / Commerce and Industry Bureau (PAS/CI) indicated that the Government would withdraw gradually from Tradline. Suitable options, such as selling of shares through public offers, were being explored. He also advised that instead of putting in place a licensing system, the Administration intended to enter into a contract of five years with service providers, and renewal / termination of contracts would be subject to service providers' performance.

The expected date for resumption of Second Reading will be on 11 July 2001.

@ 5. Chief Executive Election Bill

There were 15 meetings held since the last report. The Bill will have to be rushed through in July 2001 so as to enable the preparatory works of the Chief Executive Election in the first quarter of 2002.

@ 6. Bills Committee on Copyright (Suspension of Amendment) Bill 2001

The Bills Committee held 5 meetings with the Administration and received a total of 54 submissions. Twenty-one organizations representing the copyright industry, the business sector, the educational sector and other interest groups appeared before the Bills Committee to give their views on the Bill.

The objective of the Bill is to provide for the suspension of the operation of certain amendments to the Copyright Ordinance effected by the Intellectual Property (Miscellaneous Amendments) Ordinance 2000 (64 of 2000).

HKSA had made a submission which is being followed up. HKSA supported the suspension in principle, and considered that a comprehensive review of the relevant legislation should be conducted to explore long term solutions. HKSA also suggested that the implications of the amendments should be examined carefully in view of the extended criminal liability in the Copyright Ordinance, as effected by Intellectual Property (Miscellaneous Amendment) Ordinance 2000.

The Bills Committee welcomes the Administration's decision to include in the Bill an end date to the suspension. This arrangement will provide a clear timeframe for the Administration to conduct public consultation with a view to formulating long-term and acceptable solutions to address the problems relating to the implementation of the Copyright Ordinance.

The Bills Committee also notes that the Administration has responded positively to the suggestion made by the Legal Adviser about the making of transitional provisions in the Bill to cover the enforcement and investigative actions in respect of copyright works which would be affected by the suspension of amendments during the period between 1 April and the enactment of the Bill. In the CSA to clause 2(1) and the new clause 2(2E) of the CSA, it provides that the Bill commences retroactively on 1 April 2001 to ensure that the provisions of the Bill will apply to cases currently under investigation.

The resumption of the Second Reading debated on the Bill will be on 20 June 2001.

@ 7. Subcommittee on draft Telecommunications (Method for Determining Spectrum Utilization Fees) (Third Generation Mobile Services) Regulation and draft Telecommunications (Designation of Frequency Bands Subject to Payment of Spectrum Utilization Fees) Order

There were 5 meetings held since the last report. The purpose of the Subcommittee is to study the regulation and the terms and conditions of auction after the passage of the main enabling Bill - Telecommunication (Amendment) Bill 2001.

In studying the relevant draft regulation and the proposed auction design and process, the Bills Committee on Telecommunications (Amendment) Bill 2001 notes that the identity and number of, and bids made by the bidders during the auction will be kept confidential and the auction will continue beyond that point to where the fourth winner decides to leave. The industry has taken a very strong view against such blind-auction design and the royalty rate to be set at the point at which the fourth last bidder withdraws.

The Subcommittee is seriously concerned about the major issue relating to the proposed 3G-specific subsidiary legislation, i.e. the proposed "4th leaver rule" of the auction to determine the royalty percentage payable by 3G licensees. Among the Subcommittee, meetings considered that the price level should be set at the current bid being offered when the 5th bidder (instead of the 4th bidder as currently proposed) withdrew and that the auction should end upon the withdrawal of the 5th bidder.

In the last meeting held on 18 June 2001, the Government agreed with the Committee's stance and will propose Committee Stage Amendments to resolve the matter.

V. Motion Debate

List attached as Appendix III. In addition, I have written two 'Letters to Hong Kong' on the 'Importation of Schemed Labour' on 25 March 2001 and the 'Housing Policy' on 17 June 2001 for the RTHK which were widely reported. Speeches on my Web Page and highlights will be published in my circulars to members.

VI. Questions

I have asked 7 questions - (questions for daily turnover of stock projected by Government and SFC when preparing budgets, subsidies for disabled athletes, advance polling arrangements for Legislative Council general election, low level of funding approved by innovation and technology fund, support to Hong Kong representatives participating in international cultural and sports activities, sending and receiving short messages among customers of different mobile phone network operators, and petitions presented to court for bankruptcy orders ) since the last report which are attached as Appendix IV. The relevant HKSA Committees may wish to be advised and to consider the replies further.

VII. General Political Background

To present orally.


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