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14th Legco Report to HKSA Council By Hon. Eric K.C. Li

I. Highlights

As predicted in my last LegCo Report, the Government was placed under tremendous pressure on numerous difficult issues. Nonetheless, the Chief Executive had come through rather well and recent poll ratings of his Government is back on the rise.

The Budget was well accepted by the populace despite lingering concerns of a possible long term structural fiscal imbalance. The dramatic civil service reform took everyone by surprise and turned old critics into supporters. The reappointment of the Chief Secretary, political reforms; education reforms; financial market reforms; information technology projects; costs control measures over social welfare expenditure and public housing are keeping the media busy. Senior civil servants are beginning to file in a long line to speak on air waves and to the printed media. Instead of reacting to issues, the Government has now taken initiatives to gradually set the society's agenda.

The Government was not spared by unexpected surprises though. It was dealt a number of nasty blows by the Court of Final Appeal's decision on immigrant children from the mainland and the inappropriate remarks made by the Secretary of Justice regarding public interest considerations in the 'Sing Tao' case. The Government's credibility did suffer, but it was a 'down', not an 'out'. With the top team of the Tung's administration moving into place, senior civil servants are finally getting back their acts together.

II. Committees and Panels

1. Public Accounts Committee (PAC):
@ The PAC met a total of 37 times before I tabled the PAC Report No. 30 & 31 at LegCo on 10 February 1999. The Report recommends, amongst other measures, wider disclosure of Government Accounts. It received extensive support and press coverage.

In order to urge the Administration to take note of the Committee's concern and to generate discussion among Members of LegCo on the issued raised, I had moved a motion on "Civil Service's Culture and Efficiency" at the LegCo meeting on 10 March 1999 at the request of members of the PAC.

Preparatory work is already under way for PAC Report No. 32 and I am also considering whether or not to ask the Director of Audit to present a study report on 'Resource Accounting' for the civil service in his Report No. 33.

2. Financial Affairs Panel:
@ The Panel held 4 meetings since the last report and the relevant agenda are attached. A Joint meeting with Planning, Lands and Works Panel was held to discuss the estimates of consultancy fees and financial monitoring of Public Works Projects.

I have assisted HKSA to prepare a written submission regarding the consultation paper on Corporate Rescue and the Protection of Wages on Insolvency Fund (Treatment of Employees on "Provisional Supervision"). It seems that more discussion with the Government is needed before they would take a positive position on the issue.

A proposed list of future agenda items dated 24 February 1999 is attached for reference.

3. Welfare Services Panel:
@ The Panel held 4 meetings since the last report. The Panel studied the Social Networking for the Elderly Project and measures taken under the social networking mechanism during old spells to assist the vulnerable, single elderly, services for demented elderly. It also discussed the funding-problems of welfare agencies faced with the prospect of reduced subsidy from the Community Chest, the implementation of the Enhanced Productivity Programme in the Social Welfare Department and welfare agencies as well as the review of Comprehensive Social Security Assistance Scheme (CSSA).
4. Economic Services Panel:
@ The Panel held 3 meetings since the last report. The Panel studied the promotion of Hong Kong as an International Shipping Centre, the Third Party Insurance for Civil Aircraft, Safety of Gas Water Heaters, Satellite Based CNS/ATM System, review of speed limits for vessels in Hong Kong Water, sustainable development of the pig raising industry as well as the transitional arrangements for the opening of the Sheung Shui Slaughterhouse
5. Information Technology and Broadcasting Panel:
@ The Panel held 3 meetings since the last report. The Panel mainly focused on the Administration's decision on the proposed acquisition of the Internet-related business of Hong Kong Star Internet Limited by Hong Kong Telecom IMS Limited, the common in- terface for the use of Chinese in electronic communication, 1998 Review of Fixed Telecommunications as well as the progress of Year 2000 compliance exercise in Government, Government-funded and Government-regulated organizations.
6. Finance Committee and House Committee:
@ There were 11 meetings of Finance Committee (including 6 special meetings with 17 sessions from 16 to 19 March 1999 to examine the draft Estimates of Expenditure 1999-2000) and 12 meetings of House Committee. (There were two special House Committee meetings to brief LegCo members on the Secretary for Justice's recent trip to Beijing as well as the Judgement of the Court of Final Appeal delivered on 26 February 1999.)

TD of HKSA was kept informed of progress on all bills on a weekly basis. The latest 1998/99 legislative programme dated 5 March 1999 is attached.

III. Bill Committees Joined

1. Evidence (Amendment) Bill 1998:
@ This Bill deals with court procedures in handling hearsay evidence and was pass without controversy on 13 January 1999.
2. 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). It was passed without controversy on 6 January 1999.
3. Business Registration (Amendment) Bill 1998
@ 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. The Bill was pass without controversy on 13 January 1999.
4. Adaptation of Law Bill (No. 10) Bill
@ This controversial Bill which seeks to allow the US Authority to probe into the tax affairs of US taxpayers in Hong Kong is temporarily stalled after the HKSA made its submission. We still have to lobby hard to stop this Bill on its track. Further meeting is expected to be held to continue discussion.
5. Bills Committee on District Councils Bill
@ The Bills seeks to provide for: (a) the declaration of Districts, the establishment of a body known as a District Council (DC) for each District, the composition of membership in a DC, the qualification for membership and disqualification from being a member; and (b) in the case of elected members, the procedure for electing members to DCs.

A total of 13 meetings (equivalent to 17 two-hours sessions) have been held to discuss with the Administration the principles, policy aspects and detailed provisions of the Bills. The Bills Committee has also received 139 written submissions from the public and met 21 deputations which have given representation at a meeting of the Bills Committee. The Bill was finally passed in a stormy marathon session in the morning hours of 11 March 1999.

6. Companies (Amendment) Bill 1999
@ I attended the first meeting of the Bill yesterday (29 March 1999) and strongly pledged my support behind this Bill on merger relief and deregistration of solvent, defunct private companies. My interests might have helped to put other LegCo members at ease and few questions were filed in the first meeting.
7. Alice Ho Miu Ling Nethersole Hospital Incorporation (Amendment) Bill 1999 - A Private Member's Bill:
@ I have been invited to introduce this Private Member's Bill on behalf of the Hospital Board. The object of this Bill is to clarify and further define the power of investment of the corporation established under the Alice Ho Miu Ling Nethersole Hospital Incorporation Ordinance (Cap. 1072).

V. Motion Debate

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

VI. Questions

I have asked another 8 (7 written and 1 oral) questions, since the last report which are attached. The relevant HKSA Committees may wish to be advised and to consider the replies further.

VII General Political Background

The Chief Executive will begin to promote his policies with growing confidence and a more co-operative civil services machinery. The next step to watch shall be the revamp of the Executive Council which may bring him closer to the political factions of the Legislative Council.

Meanwhile, the economy is widely expected to cease sliding downwards and business confidence gradually restored. All eyes will be watching the moves to merge the stock and future exchanges; the Disneyland project and the Cyberport.

Closer to the accountancy profession, a number of newspapers are developing an editorial line to suggest strengthening regulation on auditors of listed companies. The HKSA must quickly rise to the challenge and to deal with this very serious issue rather than leaving the matter to individuals who are handling the public response in an un-coordinated and half-hazard fashion.


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