| I. Highlights
The second quarter of 1999 was packed with political drama. The
numerous reform proposals of the Government were beginning to backfire
because they lack well thought out implementation details.
The controversial manner in which the Government had handled the
Cyperport project (subject of my Legco Column in the June issue
of the Hong Kong Accountant) and the right of abode issue threw
further doubts as to whether or not the Government had taken public
opinions seriously. Although the economy did cease sliding downwards
and business confidence gradually restored as I had predicted in
March, the Treasury is still struggling in trying to redress the
serious fiscal imbalance against the background of strong political
opposition to any new revenue raising measures.
Political commentators sprung into full vigour in the last couple
of weeks busy taking stock on Tung's rule after two full years.
Most concluded that the civil services machinery is now backing
him and that he has a workable majority support in Legco to see
most things through. However, this is still not a free license to
steamroller everything through with little regard to implementation
details and reasoned public opinions. This manner of administration
is especially unwise at a time when the economic mood is so bad
that it must have already bred much political discontent generally.
The long expected revamp of the Executive Council did not happen.
A good chance missed for the Chief Executive to secure vital political
allys with credible opinion leaders and bring him closer to the
political factions of the Legislative Council.
As I have forewarned in my last report, the self regulation regime
of the accountancy profession was under heavy fire from the media
with the Democratic Party and the Stock Exchange lurking behind
the scene. I have tried my best to help the President and the Registrar
to anticipate their every move and to always tread a step ahead
of them in our strategic planning. From the way the Financial Affairs
Panel has turned out yesterday, I think our initial efforts are
paying off. I urge the Council to take further steps to strengthen
our communications with the Democratic Party and the Stock Exchange
in order to remove any remaining misunderstanding.
II. Committees and Panels
| 1. |
Public Accounts Committee (PAC): |
| ¡@ |
On 21 April 1999, the Director of Audit tabled his headline
catching Report No. 32 in the Legislative Council. The Committee,
after holding three days of public hearings to receive evidence
from the Controlling Officers, have been meeting several times
a week in order to finalise our own independent report on time.
I will present yet another very useful and constructive PAC
Report to LegCo tomorrow. |
| 2. |
Financial Affairs Panel: |
| ¡@ |
The Panel held 5 meetings since the last report and the relevant
agenda are attached as Appendix I. A special meeting held on
the 11 June 1999 was devoted to receive a briefing by the Financial
Secretary on the overall economic development of Hong Kong.
I have put forward numerous views on behalf of the accountancy
profession during these meetings on draft Bills and especially
on the Composite Securities and Futures Bill and the Regulatory
mechanisms for auditors. There were good press coverage today.
Minutes will be passed to HKSA as and when they become ready
and extracts will be published on Eric's Bits and Bytes.
A proposed list of future agenda items dated 26 May 1999
is attached as Appendix II for reference. |
| 3. |
Welfare Services Panel: |
| ¡@ |
The Panel held 4 meetings since the last report. The Panel
studied the services for demented elderly, active employment
assistance programme, strengthening of social security field
units and the Special Investigation Team and the creation of
one Chief Clinical Psychologist post in the Social Welfare Department.
It also concentrated on the progress of Year 2000 (Y2K) compliance
exercise in social welfare organisations, the honoraria and
allowances for Guardianship Board members and witnesses, community
rehabilitation network, contracting out the meal service of
Community Care Services, the review of school social work
service, as well as the review of Comprehensive Social Security
Assistance Scheme (CSSA).
A special meeting was held to discuss the annual inflation
adjustment of the standard payment rates under the Comprehensive
Social Security Assistance Allowance Scheme and the Social
Security Allowance Scheme. |
| 4. |
Economic Services Panel: |
| ¡@ |
The Panel held 4 meetings since the last report. It focused
on the China Light and Power Company Limited's revised tariff
structure, the retail prices of major fuels, the Year 2000 compliance
in Government, Government-funded and Government-regulated organizations
under the purview of the Economic Services, the interconnection
between China Light and Power Co. Ltd. And Hong Kong Electric
Co. Ltd. and competition in the electricity supply industry,
the consultancy study on fisheries resources and fishing operations
in Hong Kong, and the terminal handling charges. It also discussed
the airport charges of the Hong Kong International Airport,
the demand side management programme.
A Joint meeting with Home Affairs, Planning, Lands and Works
Panel and Public Service was held to discuss the follow-up
on the recommendations of the three inquiry reports on the
opening of the new airport. |
| 5. |
Information Technology and Broadcasting Panel: |
| ¡@ |
The Panel held 5 meetings since the last report. The Panel
mainly focused on the Secure Central Internet Gateway System,
the opening of the external telecommunications services market,
the implementation of the mobile phone number portability scheme,
the progress of Year 2000 compliance exercise under the purview
of the Information Technology and Broadcasting Bureau, and in
the office of the Ombudsman and Government Records Service Division,
Chief Secretary for Administration's office. It also examined
the public opinion survey on the operation of the Control of
Obscene and Indecent Articles Ordinance as well as the measures
to promote the development of the film industry and to enhance
Hong Kong's position as a film production centre.
There were two special meetings to receive a briefing by
the Administration on the Cyperport project as well as the
1998 Review of Fixed Telecommunications - Moratorium on the
issue of further Local Fixed Telecommunications Network Services
Licences and Licensing of Additional External Facilities-Based
Operators. |
| 6. |
Finance Committee and House Committee: |
| ¡@ |
There were 6 meetings of Finance Committee and 23 meetings
of House Committee (including 10 special meetings from 6 to
19 May 1999 to discuss the issue of the right of abode in the
Hong Kong Special Administrative Region of 1.675 million people
in the Mainland.)
There was also two special House Committee meetings to examine
the problem of Hong Kong residents detained in the Mainland
as well as to receive a briefing by the Administration on
the decision of the Standing Committee of the National People's
Congress in respect of the Chief Executive's request for an
interpretation of Articles 22(4) and 24(2)(3) of the Basic
Law.
TD of HKSA was 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. |
Companies (Amendment) Bill 1999 |
| ¡@ |
The Bills Committee held 3 meetings to discuss the Bill with
the Administration. The object of the Bill is to update and
streamline the operation of the Companies Ordinance (Cap. 32)
("the Ordinance"). The main purposes of the Bill are
to: (a) provides merger relief to companies upon their mergers
and reconstructions; (b) introduces a new procedure for deregistering
solvent, defunct private companies; (c) removes the requirement
to record and report the nationality of directors and secretaries;
and (d) introduces some miscellaneous amendments.
The Hong Kong Society of Accountants (HKSA) was invited to
assist in the deliberation of the Bills Committee at two of
the meetings as it had been heavily involved in formulating
the merger relief provisions in the Bill. As the Council has
suggested, I gave this Bill my strong backing which should
have helped to secure a relatively smooth passage on 23 June
1999.
I have also taken the opportunity to place on record my reservation
with regard to the need to charge for an Inland Revenue tax
clearance certificate. This would help provide a more 'open'
position for HKSA in future reviews. Ironically, this mechanism
of tax certification is now holding back the announcement
of the effective date of the enacted Ordinance. I am now pressing
for the effective date to commence on 1 September this year.
|
| 2. |
Revenue Bill 1999 |
| ¡@ |
The Bills Committee held 7 meetings with the Administration
and received 2,256 submissions. It seeks to amend certain Ordinances
to give effect to the proposals in the Budget introduced by
the Government for the 1999-2000 financial year, and for connected
purposes.
Second Reading debate on the Bill will resume tomorrow and
the Secretary for the Treasury will be meeting me in the morning
to exchange views. Council Member's thoughts welcome. |
| 3. |
Tax Reserve Certificates (Amendment) Bill 1999 |
| ¡@ |
This Bill is to improve the tax reserve certificates (TRCs)
system by: (a) abolishing paper certificates for normal TRCs
and replacing it by scripless TRCs, and (b) paying TRCs interest
at moving rates prescribed for conditional TRCs.
Council will remember that this is a direct response to my
earlier criticisms made in public during the 3 October 1997
Finance Committee. The Bill was passed without controversy
on 2 June 1999. |
| 4. |
Banking (Amendment) Bill 1999 |
| ¡@ |
The objective of this Bill is to amend the Banking ordinance
(Cap. 155) (the Ordinance) so as to: (a) bring Hong Kong's banking
supervision framework in closer conformity with the Core Principle
for Effective Banking Supervision published by the Basle Committee
on Banking Supervision in September 1999 (Core Principle); (b)
revise the provisions governing the publication and submission
of annual audited accounts of authorised institutions (AI);
and (c) improve the operation of the Ordinance in the light
of market developments.
HKSA has given blessing to the Bill which is tabled for enactment
tomorrow. |
| 5. |
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
still stalled after the HKSA made its submission. Further meeting
is expected to be held to continue discussion. |
| 6. |
Subcommittee on Public Revenue Protection (Revenue) Order
1999 |
| ¡@ |
There was only 1 meeting on Public Revenue Protection (Revenue)
Order 1999. This subcommittee studies the Public Revenue Protection
(Revenue) Order that is a temporary measure taken under the
Public Revenue Protection Ordinance (Cap. 120) to give effect
to most of the revenue proposals announced in the Budget Speech
delivered by the Financial Secretary on 3 March 1999 when moving
the Second Reading of the Appropriation Bill 1999. The Protection
Order 1999 was signed by the Chief Executive, after consultation
with the Executive Council, on March 1999 and came into operation
on 1 April 1999.
The Revenue Bill Committee had subsequently taken over the
work of this Subcommittee. |
| 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. This Bill seeks 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). It was passed without
controversy on 26 May 1999 as the First Private Member's Bill
in the history of the HKSAR. |
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 2 (1 written and 1 oral) questions, since
the last report which are attached as Appendix V. The relevant HKSA
Committees may wish to be advised and to consider the replies further.
A worthwhile note is that the Secretary for Manpower and Education
has directly responded to my appeal in the recent Budget Speech
to review their policy on allocating monies from the Language Fund.
I understand that a working group is now set up with a representative
nominated by HKSA.
VII General Political Background
The summer months will be quieter with most senior officials and
politicians away on vacation breaks. However, the preparatory works
for the Chief Executive's Policy Address to be delivered on the
6 October 1999 will be put together in earnest. The Government may
wish to save some ammunition e.g. Disney project, Chinese Medical
Centre, Consolidation of youth services and the Composite Securities
and Futures Bill etc for announcement closer to that date.
The third quarter will give the Administration some breathing space
to sort out the many implementation details necessary to take its
various ambitious reforms forward. The economic performance of this
quarter will be watched closely to see if it is truly a turning
point for a sustained recovery in the last quarter of 1999. This
may set the mood for the Policy Address. |
