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4th Legco Report to HKSA Council By Eric K.C. Li


I. Highlights
since my last Legco Report to you on 14 June 1996, some Bills were satisfactorily concluded in the rush before the end of July break for the summer. The months of August and September would have been uneventful except for the Diaoyu Islands incident.

I accepted an invitation from the British Trade Commission and had made a sponsored trip to England in September. The 4-days trip included visits to the Head Office of the Chartered Institute of Public Finance and Accountancy (CIPHA); ACCA; the Securities Institute; the Leicestershire Chamber of Commerce; Loughborough University and other national youth agencies as an accompanied VIP guest of the Foreign & Commonwealth Office. Naturally I also met some senior officials of their Hong Kong Department and The Rt. Hon. Jeremy Hanley M.P. We exchanged cordial and candid views on how England can maintain long term relationships with Hong Kong's politicians post 1997.

The 1996-97 Legco session started off with a highly politically charged Policy Address by our Governor. My response last Thursday, a summary of which will be published and sent to all members, was relatively restrained with lavished words of encouragement particularly directed at the Civil Service as a whole.

II . Committees and Panels

1. Public Accounts Committee (PAC):

I presented my PAC Report No. 26 in Legco on 10 July 1996 and the Chief Secretary (CS) responded on 9 October 1996. Unlike Report No. 25, this time the exchange was extremely civil with the CS accepting all my recommendations with little reservation.

2. Financial Affairs Panel:

The Panel held 5 meetings (Agenda attached as Appendix I) since the last report. I was again re-elected Deputy Chairman on 2 October 1996.

I wrote an article on the taxation arrangements for using a company to buy or sell properties, which was published by Ming Pao. The Chairman took an interest in the article and tabled it on 29 July 1996. The article, previewed by Mr. Tim Lui (VP) and Ms. Winnie Cheung (TD), powerfully argued against the use of tax legislation to penalize investors' choice to use a company to buy or sell properties. To date, the Inland Revenue Department has not made any move despite press reports about its plan.

I assisted the President again to update Exco on the progress of the proposed legislation on statutory protection of auditors in late August. This item will be discussed under item 3.5 of the Council's Agenda.

3. Administration of Justice and Legal Services Panel:

The Panel held 4 meetings since the last report. No significant business for HKSA.

4. Welfare Services Panel:

The Panel held 4 meetings since the last report with the Comprehensive Social Security Assistance (CSSA) study and the controversial consultancy review of the Social Welfare Subvention System being highlighted.

On the sideline, I have resigned as Chairman of the Social Welfare Advisory Committee in order to take chair of the Hong Kong Council of Social Services, the umbrella professional organisation of Hong Kong's Non-Government organizations, which together provides about three-quarters of all social welfare services in Hong Kong.

5. Matters relating to the Formation of Parliamentary Friendship Groups:

The Group met once since the last report. No significant event.

6. Finance Committee and House Committee:

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

7. Special Transport Panel:

I joined a Special Transport Panel formed to scrutinise the Western Corridor Railway, which had met 10 times. One of my direct questions exposed the fact that numerous consultancy assignments had been awarded without tenders and proper approvals by the KCRC Board of Directors. The Administration is now conducting an in-depth enquiry and will report back to this Panel. In the meantime, the Chairman of KCRC resigned with a press report revealing that I had declined to an offer for the job.

III. Bills Committees Joined

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

The Bill was passed on 10 July 1996 with Committee Stage Amendments (CSA) on tax secrecy endorsed by HKSA.

2. Inland Revenue (Amendment) (N0. 4) Bill 1995:

The Administration has, for the time being, been holding back this Bill to which HKSA had strongly opposed.

3. Evidence (Amendment) Bill 1996:

The Administration had provided CSAs to satisfactorily address HKSA's concerns by excluding revenue legislation from the scope of this Bill. However, there are still other policy issues of fundamental importance on which the Bills Committee will deliberate further before deciding whether or not to support the Bill.

4. Bankruptcy (Amendment) Bill 1996:

The Bills Committee met several times. However, HKSA's Insolvency Practitioners Committee has shifted its position. Nonetheless, I anticipate matters can be satisfactorily resolved to balance the interests of all sides.

5. Inland Revenue (Amendment) (No. 3) Bill 1996:

Since the Bill offered to exempt from profits tax liability in respect of non-residents' investment activities through stock brokers and fund managers in Hong Kong, a HKSA Budget Submission accepted by the Administration, I have lobbied Legco not to delay its passage. HKSA's submission was then dealt with speedily with the Administration's introducing the appropriate CSAs and assurances on future actions. The Bill was passed with HKSA's blessing on 10 July 1996 without a Bills Committee formed.

6. Companies (Amendment) Bill 1996:

The Bills Committee met 4 times taking note of HKSA's representations on 4 September 1996. Deliberations amongst members still continuing.

7. The Orthodox Metropolitanate of Hong Kong and South East Asia Bill:

This Private Member's Bill sponsored by me at the request of the Church was first read on 9 October 1996. The Administration and the House Committee of Legco have both given this Bill their blessings, the Bill should be passed without a hitch on 23 October 1996.

8. Professional Accountants Ordinance:

The Bills Committee on subsidiary legislation has questioned whether or not our rules on Incorporation should be regarded as subsidiary legislation requiring Legco endorsement. The House Committee on 18 October 1996 had agreed to pursue the matter further. The issue, if not properly resolved, can have serious implications for HKSA. I shall continue to brief this Council on further developments.

IV. Motion Debates

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

V. Questions

I have asked 3 written questions (Appendix III) since my last report.

VI . General Political Background

The Preparatory Committee has already laid down all the rules of the Selection Committee, the Chief Executive of the HKSAR and the Provisional Legco. In three months' time, all the post-1997 team would have been chosen and tracks laid for the immediate tasks in their hands. The uncertainty factors of 1997 would have been removed to a large extent and the business sector would know 'who' to deal with and possibly 'how'.

The next few months is likely to be the most critical time for a smooth changeover. Once the team designate is in place, some controversial issues will re-surface, e.g. press freedom, 1997-98 Budget and Mandatory Provident Fund etc.






Appendix III

List of Legco questions asked by Mr. Eric Li:

Date Question Replied by
26.6.96 (Written) Payment of profit to Government by KCRC and expenses on Western Corridor Railway Secretary for Transport
26.6.96 (Written) Monitoring the contents and selling prices of textbooks Secretary for Education and Manpower
3.7.96 (Written) Senior civil servants with "professional accountant" qualification Secretary for Civil Service
3.10.96 (Oral) How appropriate is it for the Governor to stipulate require- ments for the future Chief Executive of the HKSAR Governor

 

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