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2nd Legco Report to HKSA Council By Eric K.C. Li

I. Highlights

1.The first quarter of 1996 turns out to be very eventful with Legco activities intertwined with Preparatory Committee's (PC) work. In between, I have also fitted in a week-long lobbying trip to London and the European Parliament on the British Nationality Scheme, visa arrangements and residency issues. There were also the important Budget Debate and my first report to Legco as Chairman of the Public Accounts Committee.

2.A more detailed report of my London / European trip will appear in the March/April 1996 issue of the Hong Kong Accountant under the Legco column, an advanced copy is attached as Appendix I. A full copy of my Budget speech will be issued to all members in the name of my Legco office and its translation into English is underway. My speech was very extensively quoted by all forms of the mass media.

II. Committees and Panels

1. Public Accounts Committee (PAC):

I presented my first report as Chairman of PAC to Legco on 7 February 1996 and a supplementary report on 13 March 1996. It was generally regarded as the single most substantial PAC report in the history of Hong Kong which contained at least two highly contentious issues on the Hospital Authority and the UNHCR handling of the Vietnamese boat people. The whole process of public hearing etc. attracted intense media interests but the final report was generally well received as true and fair by the parties concerned.

To complete the exercise, I have sponsored a motion debate at the request of all PAC members on the access of government information by the PAC to be held on 24 April 1996 and also present a major paper on behalf of HK Legco to the Commonwealth Parliamentary Association on 14 May 1996. The second Director of Audit report will be received by me on 24 April 1996 and work will commence straight afterwards.

2. Financial Affairs Panel:

The Panel had held another four meetings (agenda attached as Appendix II) since the last report. The most significant meeting to HKSA was the meeting on 5 February 1996 where HKSA made a strong representation against the proposed legislation on statutory protection for auditors. Lobbying work will continue to stall the proposed legislation until HKSA has time to devise a comprehensive response.

Another initiative is to create a forum for HKSA to present its report on corporate governance. The panel chairman has already met with HKSA informally and indicated support.

3. Administration of Justice and Legal Services Panel:

The proposed reorganisation of the two legal branches : lawyers and barristers, has come to a stand off. The Administration will consider the way forward.

4. Welfare Services Panel:

The panel has studied a report on the comprehensive review of Hong Kong Comprehensive Social Security Assistance (CSSA), the first of its kind in some 20 years since the scheme commenced. I was also Chairman of the Social Welfare Advisory Committee which undertook the review.

5. Finance Committee and House Committee:

No significant event. TD of HKSA being kept informed on progress of all bills on a continuous basis.

III. Bills Committee Joined

1. Prevention of Bribery (Miscellaneous Provisions) (No. 2) Bill 1995:

Since my last report, the Administration and Bills Committee both agreed with me that IRD records need to be better safeguarded. The latest position after much deliberation is that the Administration has agreed with most of my recommendations and to introduce Committee Stage Amendments to specify in law the public interest grounds on which ICAC can seek information from IRD records; the ICAC will issue internal guidelines to ensure that only the Commissioner or Deputy Commissioner can make such a request and that if information is sought from an innocent third party, the Administration will have to notify him and grant him a fair chance to contest the matter in court. The Administration's response is enclosed as Appendix III. The Bill drags on because of other unresolved issues.

2. Sub Committee to study the Leveraged Foreign Exchange Trading (Calls) Rules: completed.

3. Rehabilitation of Offenders (Amendment) Bill 1995: completed.

4. Medical Registration (Amendment) (No. 2) Bill 1995:

The Academy of Medicine and Medical Council still have problems in resolving on a formula to accreditate medical 'experts'.

5. Inland Revenue (Amendment)(No. 3) Bill 1995:

HKSA submission on secrecy of tax information with respect of Double Tax Agreements has very quickly been resolved. The Administration will provide both the Committee Stage Amendments agreed with HKSA and a policy assurance during second reading debate which will be reflected on the record in Hansard. Work completed.

6. Inland Revenue (Amendment) (No. 4) 1995:

The case of tax penalty for traffic control purpose was strongly opposed by HKSA and others. The Committee has held two meetings on 11 April 1996, the HKSA attended the second meeting in which it made a strong representation. I am actively lobbying to have this Bill voted down in its entirety.

7. Evidence (Amendment) Bill 1996

HKSA will make submission. Bill on waiting list.

8.Bankruptcy (Amendment) Bill 1996

HKSA will make submission. Bill on waiting list.

IV. Motion Debates

List attached as Appendix IV. All my speeches will be placed on Internet (http://www.ppn.com.hk/erickcli.html). Main points will be highlighted in my upcoming circulars to members.

V. Questions

Since my last report, I have asked another six written questions on a variety of issues. The subject matters of these questions are attached as Appendix V for reference. More are in the queue.

VI. General Political Background

Since my last report, I was appointed a member of the Preparatory Committee and as expected, the work of the PC has galvanised the attention of the media, senior civil servants, main political parties and politicians alike. I have joined two sub-groups of the PC i.e. economy and provisional legislature. As far as it affects the HKSA, I have been keeping the President, Vice President Tim Lui and our Registrar apprised of the situation on the Selection Committee and generally. The next major topics are likely to be the method of choosing the Chief Executive, Provisional Legco and the civil servants co-operation with the provisional legislature.

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