A number of events dominated the political arena in the last two months: Director of Audit's Report exposing the slack management and wasted productivity in outdoor staff of the Civil Service; the delicate position of the Exchange Fund Investment Limited (EFIL) in making corporate decisions and most recently the highly emotive Comprehensive Social Security Assistance Scheme (CSSA) Review. All these issues landed me in the centre of public debate.

I am quite on top of the Director of Audit's Report as the Chairman of Public Accounts Committee and due process will follow quietly with practical results assured. On the contrary, I was placed on a high profile as a director of EFIL and it had not been easy to balance the need to be transparent as a public servant on the one hand and the need to be discreet as an investment adviser on the other. As far as the emotive CSSA review is concerned, I have kept a slight distance as Chairman of the Hong Kong Council of Social Service (HKCSS). However, I have urged the social welfare community to deal with the matter as rationally as possible and HKCSS will only submit a formal position paper at the end of the six weeks' consultation process. At that time, the rage of welfare recipients and frontline social workers might have slightly subsided.

II. Committees and Panels

1. Public Accounts Committee (PAC):

On 18 November 1998, the Director of Audit tabled his headline catching Reports No. 30 and 31 in the Council. These two Reports came to 25 chapters, and over 2,000 pages. The Committee, after holding 4 days of public hearings to receive evidence from Controlling Officers, will meet several times a week throughout the holiday season, in the hope of finalizing our own independent report on time. I intend to present the bilingual PAC Report to LegCo on 10 February 1999.

2. Financial Affairs Panel:

The Panel held 5 meetings since the last report and the relevant agenda are attached as Appendix I. Two special meetings were devoted to discuss the "Mechanisms for defending the Linked Exchange Rate System". Market practitioners and academics, such as Mr. John Greenwood (advocator for linked exchange rate) and Professor Merton Miller (1990 Nobel Laureate Economist), were invited to give views on how to defend the linked exchange rate system.

3. Welfare Services Panel:

The Panel held 2 meetings since the last report. The Panel studied services for young people, social welfare services development fund, the Integrated Neighbourhood Projects (INP) services as well as the review of Comprehensive Social Security Assistance Scheme (CSSA).

4. Economic Services Panel:

The Panel held 4 meetings since the last report. The Panel studied China Light and Power Company Limited's electricity tariff, development and competitiveness of the Hong Kong container ports, retail prices of major fuels as well as the phase two development of the Cheung Sha Wan Wholesale Food Market Complex and the relocation of the fruit market in Yau Ma Tei to the Complex.

5. Information Technology and Broadcasting Panel:

The Panel held 4 meetings since the last report. The Panel mainly focused on the 1998 Review of Fixed Telecommunications and 1998 Review of Television Policy and electronic service delivery. A special meeting was held to discuss policy on safeguarding fair competition in the Internet services market.

6. Finance Committee and House Committee:

There were 4 meetings of Finance Committee and 7 meetings of House Committee. TD of HKSA kept informed of progress on all bills on a weekly basis. I have maintained a constant dialogue with both the Financial Services Bureau and the HKSA always in anticipation of potential problems.

III. Bill Committees Joined

1. Evidence (Amendment) Bill 1998:

There was only 1 meeting on the Evidence (Amendment) Bill 1998 since the last report. The Bill deals with court procedures in handling hearsay evidence.

2. Securities (Insider Dealing) (Amendment) Bill 1998

There was only 1 meeting on the Securities (Insider Dealing) (Amendment) Bill 1998. This Bill seeks to amend the definition of "judge" in section 2(1) of the Securities (Insider Dealing) Ordinance (Cap. 395) (SIDO) to include a deputy of the Court of First Instance in the definition (Clause 2).

3. Business Registration (Amendment) Bill 1998

The Committee met twice since the last report. The objective of this Bill is to amend the Business Registration Ordinance (Cap. 310) to: (a) introduce changes to the business registration system ; and (b) streamline the operation of the system.

4. Subcommittee on Professional Accountants (Amendment) Bylaw 1998

There was only 1 meeting on Professional Accountants (Amendment) Bylaw 1998. This Bylaw is initiated by the Hong Kong Society of Accountants ("HKSA") under section 8 of the Professional Accountants Ordinance (Cap. 50) with the approval of the Chief Executive in Council.

The purpose of the amendment is to raise the minimum pre-entry education requisite for registration 'Advanced' Level to accountancy degree level with effect from 1 January 1999 and to prescribe new requirements for students who wish to enrol in the HKSA's new examinations.

Members of LegCo were originally concerned with our transitional arrangements and I lead a delegation consisting of the Registrar, Education Director, a leading academic, representatives from HKAAT and the union of Accounting personnel to present our case. The Amendment Bylaw is now passed on 16 December 1998 with the subcommittee's full support.

5. Adaptation of Law Bill (No. 10) Bill

This Bill will give legal effect to an agreement between the USA and the HKSAR on Mutual Legal Assistance on criminal matters. However, the Bill seeks to allow the US Authority to probe into the tax affairs of US taxpayers in Hong Kong. Furthermore, it proposes to remove the hard earned professional privilege provisions that HKSA had won on the enabling Mutual Legal Assistance Ordinance. I have promptly alerted the HKSA and a submission has now been made. We may have to lobby hard to stop this Bill on its track.

IV Deposit Taking Companies Advisory Committee (DTCAC)

I learnt from the DTCAC meeting on 16 December 1998 that the Hong Kong Monetary Authority is considering a unified approach in the making of bad debt provisions with regard to the closure of GITIC and its Hong Kong subsidiaries. The Deputy Chief Executive agreed, after my prompting, that they would first consult HKSA before releasing any public statement on the issue.

V. Motion Debate

List attached as Appendix IV. Speeches on my Web Page and highlights will be published in my circulars to members.

|VI. Questions

I have asked another 6 written questions, since the last report which are attached as Appendix V.

VII General Political Background

The Chief Executive will still be under pressure with the problems of rising unemployment and a deteriorating economy. The Government will be further plagued by difficult issues such as the Amendment Bills for electoral arrangements for the District Board elections in 1999 and LegCo election in 2000; the CSSA review and a deficit Budget which is almost impossible to please.

The Civil Service will be under close scrutiny too with time running out on the Chief Secretary's retirement date and a decision must be made. The new spin-doctor role of the CE will also attract some interests. The scene will be widened further in the latter part of the 1^st quarter of 1999 when I present my PAC Report to be followed by a Motion Debate on Civil Service culture and productivity which is supported by the cross-party PAC Committee. The next salary review will eventually put the morale and loyalty of the Civil Service under the ultimate test.

Closer to home, numerous financial bills and consultation documents with wide ranging policy implications on the Companies Ordinance, Banking and Insurance, Security and Future Commission etc. is likely to keep me and HKSA Committees very busy. It seems that after saying Merry Christmas and Happy New Year to you all, we can all brace ourselves for some real hard work in the coming few months!