|To present orally.
|II. Committees and Panels
||Public Accounts Committee (PAC):
On 21 November 2001, the Director of Audit tabled
another of his headline catching Report No. 37 in the Legislative
Council. The Report No. 37 contains 10 chapters including the management
of medical equipment, the administration of sale of land by public
In response to the fierce public criticisms caused by the PAC
Report No. 37, the Chief Executive (CE) promised a vigorous crackdown
on slack management and irresponsible officials. He said that the
Government would not tolerate slack staff, would not tolerate wastefulness
in the public coffers as well as would not tolerate unreasonably
slack management. The Chief Executive also stated that he would
take action pending the final conclusions and recommendations of
the Public Accounts Committee.
The Committee already held 9 public hearings to receive evidence
from Controlling Officers. It will meet several times a week throughout
the holiday season, in order to finalise our own independent report
on or before 6 February 2002.
||Financial Affairs Panel:
The Panel held 7 meetings (including two special
meetings to consider the item on "Reviving the economy"
and the consultation document "A Broader-based Tax System for
Hong Kong?"; to receive a briefing on the Summary Results of
the 2001 Population Census; a joint meeting with Panel on Administration
of Justice and Legal Services and Security to discuss Anti-
terrorism legislation and related issues as well as an informal
meeting to receive a briefing on the draft research report on Protection
for Banking Consumers in the United Kingdom and the United States
of America: Fees and Charges) to date and the relevant agenda are
attached as Appendix I.
On 3 December 2001, the Financial Secretary (FS) has provided the
Panel with a report on Hong Kong's latest economic situation. He
claimed that the public should interpret "going north"
as a positive rather than a negative message: "one should not
interpret it as saying that Hong Kong has no opportunities and we
have to flee." The financial chief also said the financial
deficit for this year would be very large, urging the public not
to be too pessimistic.
A proposed list of future agenda items is attached as Appendix
II for reference.
||Economic Services Panel:
The Panel held 3 meeting since the last report.
The Panel focused on the Hong Kong International Airport Master
Plan 2020, the extension in the scope of activities of the Airport
Authority, the Port Development Strategy Review.
It also studied the Port Development for Hong Kong, logistics
Hong Kong including the related staffing proposals in Economic Services
Bureau as well as the Competition Policy Advisory Group Report 2000-2001.
||Information Technology and Broadcasting Panel:
The Panel held 3 meetings to date and also visited
the Cyberport site on 5 December 2001.
The Panel studied the implementation of the full liberalisation
of the local fixed telecommunications network services market from
1 January 2003, Capital Works Reserve Fund Head 710 Block Vote for
Computerisation in 2002-03, the reduction of fees under the Film
It also discussed the institutional arrangements for implementation
of the Digital 21 Strategy and E-government initiatives, the provision
of intelligent networks for buildings, as well as the progress of
interconnection issues (including the provision of fixed telecommunications
network services at public housing estates in new towns.
The Panel held 3 meetings to date.
The Panel mainly focused on the early retirement scheme put forward
by the Hong Kong Institute of Education (HKIEd). It also received
a briefing by the Secretary for Education and Manpower on the Chief
Executive's Policy Address 2001, discussed the enhancement of Capacity
Enhancement Grant for secondary schools, the improvements of student
financial assistance schemes as well as the strengthening of the
support for the education reform.
||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.
The hefty 2001/2002 legislative programme dated 5 November is attached
as Appendix III. The Chief Secretary had indicated that he would
lessen LegCo's workload by introducing less Bills.
|III. Bill Committees Joined
||Inland Revenue (Amendment) Bill 2000
||The Bills Committee is now waiting to recommence on
the Administration's request and subject to the availability of a
Bills Committee slot at the time.
||Drug Trafficking and Organized Crimes (Amendment)
||The Government is considering reactivating this Bill
as part of the United Nation's anti-terrorism efforts.
||Bills Committee on Securities and Futures Bill and
Banking (Amendment) Bill 2000
There were 18 meetings held to date.
The Committee is now entering the last phase of resolving LegCo's
differences. Apparently, a record number of Amendments will be introduced
affecting some two-thirds of all the clauses of the original Bill.
|| Banking (Amendment) Bill 2001
There was 4 meeting held since the last report.
The objective of the Bill is to improve the operation of the Banking
Ordinance (Cap. 155) (BO) by providing for: -
(a) the control over Authorized Institutions' places of business;
(b) the regulation of Internet advertisements for deposits;
(c) the maintenance by Authorized Institutions (AIs) of adequate
systems of control to ensure the fitness and properness of their
(d) the establishment of local representative office by non-deposit-taking
(e) the rationalization of the availability of the general defence
under section 126 of BO;
(f) the notification by Monetary Authority (MA) of his decision
on an application to use the name "bank" and the appeal
from MA's decision to the Chief Executive in Council;
(g) the requirement that the relevant shares of a controller,
to whom MA has served a notice of objection, shall be transferred
to a nominee of MA; and
(h) the enactment of a redrafted section 71 of BO relating to
the approval of chief executives and directors by MA.
The Administration has given notice to resume the Second Reading
debate on the Bill at the LegCo on 19 December 2001.
||Mandatory Provident Fund Schemes (Amendment) Bill
There was 3 meetings held since the last report.
The Bill seeks to:
(a) to introduce a number of technical amendments to the Mandatory
Provident Fund Schemes Ordinance (Cap. 485) to better protect the
interests of members of mandatory provident fund (MPF) schemes and
enhance the effective operation of the MPF System; and
(b) to confer on the Mandatory Provident Fund Schemes Authority
(MPFA) certain functions and powers to facilitate its regulation
of MPF schemes.
The Bill also proposes consequential and other technical amendments
to the Mandatory Provident Fund Schemes (General) Regulation (Cap.
485 sub. leg.). These technical amendments include those relating
to strengthening the mechanism of charging contribution surcharge
when employers fail to pay contributions and providing flexibility
to employers in making contributions in respect of casual employees.
||Companies (Corporate Rescue) Bill
The Bills Committee has held 4 meetings. It seeks
to give effect to most of the recommendations contained in the Report
on Corporate Rescue and Insolvent Trading issued by the Law Reform
Commission (LRC) of Hong Kong.
The Bill proposes to inaugurate the new regime of provisional
supervision and voluntary arrangements. The central idea is to stay
all proceedings (with some specified exceptions) against at insolvent
company so as to enable an independent professional appointed as
a provisional supervisor to prepare a proposal which could salvage
the company or part of its undertaking, or achieve the more advantageous
realization of its assets or satisfaction of its debts and liabilities.
The period of stay ("moratorium") would initially be 30
days which could be extended by the court up to six months upon
application by the provisional supervisor.
Complementary to the new regime of moratorium is the introduction
of the concept of "insolvent trade" (Clause 8 of Schedule
8). When a company is unable to pay its debts when they become due
and the directors or manager of that company knowing that the company
cannot avoid insolvency continue to incur debts, each of them could,
upon the application of the liquidator in the subsequent liquidation
of the company, be declared by the court to be liable for insolvent
trading, and be ordered to pay such compensation to the company
as the court may think proper in all the circumstances of the case.
The Administration believes that this provision could encourage
directors and senior management of a corporation to act on insolvency
earlier rather than later.
HKSA made 2 written submissions to the Bill. In principle, HKSA
supports the introduction of legislation to provide a framework
for a corporate rescue procedure, it was believed that legislation
of this nature is important for the business and investment environment
in Hong Kong. HKSA, however, expresses concern about a number of
provisions of the Bill, in particular those relating to payment
of employees entitlements, personal liabilities of the provisional
supervisor, secured creditors, separate ordinance and insolvent
trading. Detailed comments on the Companies (Corporate Rescue) Bill
is attached as Appendix IV.
||Bills Committee on Inland Revenue (Amendment) Bill
The Bills Committee has held 2 meetings with the
Administration. The objective of the Bill is to amend the Inland
Revenue Ordinance (Cap. 112) ("Ordinance") to increase
the maximum amount of home loan interest deduction for the years
of assessment 2001/02 and 2002/03 and to provide for transitional
The Bill gives legal effect to the proposal in paragraph 104 of
the Policy Address of the Chief Executive by: (a) increasing the
maximum amount of home loan interest deduction from $100,000 to
$150,000 for the years of assessment 2001/02 and 2002/03; and (b)
making transitional provisions to enable a person liable to pay
provisional salaries tax in relation to the year of assessment 2001/02
to apply to have the payment of the whole or part of such tax held
over until he is required to pay salaries tax for that year of assessment.
Members note that over 110 000 taxpayers who are paying or will
be paying an amount of home loan interest in excess of the current
tax-deduction ceiling for home loan interest will benefit from the
new ceiling of $150,000. The maximum tax saving for a taxpayer will
be $8,500 per year, or $17,000 for two years. Upon the implementation
of this concession proposal, the Government's revenue from salaries
tax will decrease by $1 billion.
During discussion, Hon CHAN Yuen-han has asked the Administration
to explain the rationale for limiting the proposed enhanced ceiling
for home loan interest deduction to two years of assessment and
to consider extending the proposed enhanced ceiling to beyond 2002-03.
Hon Albert HO has also indicated that he will consider moving a
Committee Stage amendment (CSA) to clause 3 of the Bill to increase
the maximum amount of home loan interest deduction from $150,000
to $180,000 for the years of assessment 2001-02 and 2002-03, but
ended in failure.
The Administration, however, considers that both proposals have
charging effect as defined in Rule 57(6) of the Rules of Procedure
of the Legislative Council since, if implemented, each proposal
would result in a reduction of revenue from a lawfully established
source at a future date.
The Bill was finally passed on 21 November 2001.
||Bills Committee on Kowloon-Canton Railway Corporation
The Bills Committee has held 4 meetings. The Bill
is to amend the Kowloon-Canton Railway Corporation Ordinance (Cap.
372) to create the office of Chief Executive Officer of the Kowloon-Canton
Railway Corporation ("KCRC")
The Bills Committee notes that in order to preserve the efficiency
of the present operation and to maintain the stability of the Corporation,
the existing Chairman-cum-Chief Executive has been invited to serve
as the new CEO for another two years, subject to the passage of
the Bill by the LegCo. The proposed arrangement is also accepted
by the KCRC Board. Some members maintain the view that the proposed
arrangement is undesirable as it will preempt the Chairman's power
to determine the appointment of the CEO, and in turn, affect his
power and working relationship with the CEO.
During the scrutiny of the Bill, the Bills Committee has identified
a number of issues worth further pursuing outside the context of
the Bill. These include:
(a) the factors taken into consideration in determining the remuneration
and fringe benefits for senior management of statutory bodies;
(b) the effectiveness of appointing policy secretaries to the
managing boards of statutory bodies to play a monitoring role;
(c) whether statutory bodies should be put under the scrutiny
of the Director of Audit; and
(d) the feasibility of setting up a professional team to oversee
Government equity on various statutory bodies.
The Administration has given notice to resume the Second Reading
debate on the Bill at the LegCo on 19 December 2001.
||Subcommittee on Solicitors (Professional Indemnity)
(Amendment) Rules 2001
The Subcommittee has held 3 meetings with representatives
of the Law Society of Hong Kong and the Hong Kong Solicitors Indemnity
Fund Limited (HKSIF), the Administration as well as representatives
from a few law firms.
The objective of the Rules is to increase the contributions to
the Solicitors Indemnity Fund with effect from 1 October 2001. The
level of increase for the 2001 contribution is about 130%.
Some members of the Subcommittee point out that many small solicitors
firms operating with marginal profits may be forced out of business
because of the increase in contributions which they cannot afford
to pay. The Subcommittee has also requested the Law Society to conduct
an independent review of the existing Scheme to address the various
issues raised by its members. It has also suggested that the Law
Society should consult its members on the recommendation of the
review to decide on the way forward and make a progress report to
LegCo by a certain date.
After discussion, the Law Society has suggested that it will give
an undertaking which would have the same effect as the proposal
being considered by the Subcommittee. The Subcommittee has considered
the undertaking, in the form of a draft letter from the president
of the Law Society to the Chairman of the Subcommittee. In the draft
letter, the Law Society assures Members that once the parameters
and likely cost out expeditiously an independent review and will
inform LegCo of the progress of the review on or before 30 September
2003. Any recommended arrangements will have to be acceptable to
members of the Law Society, approved by the Chief Justice and transformed
into amendments to the statutory rules to be approved by LegCo before
the expiration of the five-year contracts at the end of September
As the Law Society has undertaken to make a report to LegCo on
the progress of the review on or before 30 September 2003, the Subcommittee
recommends that the matter should be referred to the Panel on Administration
of Justice and Legal Services for follow-up. Upon receipt of the
report from the Law Society, the Panel shall report to the House
Committee which will then decide whether the report should be referred
to a Panel or a subcommittee for further action.
Finally, the Subcommittee recommends that the Chairman should
address the Council on the Amendment Rules at the meeting on 31
||Subcommittee on Occupational Safety and Health (Display
Screen Equipment) Regulation - (Member attend)
The Subcommittee had held 11 meetings and had
discussed in detail the provisions of the Occupational Safety and
Health (Display Screen Equipment) Regulation and the draft Health
The Regulation seeks to protect the occupational safety and health
of employees who normally use display screen equipment (DSE) as
a significant part of their work. The Administration proposes that
non-compliance by a responsible person and an employer with the
various requirements is made offences of strict liability punishable
with a fine at level 5, i.e. $50,000, and non-compliance by a DSE
user with any system of work or any practice provided for his safety
and health is subject to a fine at level 3, i.e. $10,000.
I had strong reservations about introducing the Regulation at
the present moment in view of its wide scope and the heavy penalty
for non-compliance. I was concerned about the cost implications
for the small and medium enterprises to carry out improvement measures
to comply with the various requirements stipulated in the Regulation.
I also expressed doubts as to whether the small and medium enterprises
were aware of the provisions of the Regulation, including the offences
of strict liability.
|V. Motion Debate
attached as Appendix V. In addition, I have written a 'Letters to
Hong Kong' on the 'Affordable Railroads and Highways' on 8 December
2001 for the RTHK. Speeches on my Web Page and highlights will be
published in my circulars to members.
I have asked
only 1 question - (sending and receiving Short Messages Services
(SMS) among customers of different mobile phone network operators)
since the last report which are attached as Appendix VI. The relevant
HKSA Committees may wish to be advised and to consider the replies
|VII. General Political Background
To present orally.