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7th Legco Report to HKSA Council By Eric K.C. Li

I. Highlights

Three months ago, in my 6th LegCo Report, I predicted that the Chief Executive would have to balance his powers with the Preparatory Committee and the Provisional Legislature. He has so far won hands down on both counts. The Preparatory Committee has completed its tasks on hand and is now awaiting disbandment. The Provisional Legislature on the other hand, enjoys a close, team-like, working relationship with the Chief Executive's office.

The Preparatory Committee decided on 23 May 1997 that all 21 original functional constituencies should be retained in their 1991 form. This implies that the Accountancy Functional Constituency will be left intact.

LegCo has had to work at a frenzied pace, barely coping with the complicated Bills thrown at it by the Administration in the eleventh hour of its existence. In the last few weeks, even taking time out for lunch has become a rare luxury.

Work at the Provisional LegCo has also been accelerating with meetings in Shenzhen beig held every weekend. Important Bills have been passed with great speed while the public still left puzzled in their blazing trail.

On a personal note, I have accepted appointment as a member of the Deposit Taking Companies Advisory Committee.

II. Committees and Panels

1. Public Accounts Committee (PAC):
@ The PAC met a total of 12 times before I tabled the PAC Report No. 28 in LegCo, on 11 June 1997. This Report was finished in a record time of just two months.
2. Financial Affairs Panel:
@ The Panel held 5 meetings (Agenda attached as Appendix I) since the last Report. The most controversial subject for HKSA had to be the "Review of the Hong Kong Companies Ordinance" held on 2 June 1997. During the meeting, I strongly urged LegCo members to take note that quotes from individual accountants in the Consultant Report had been misleading and that the Accountancy profession actually held serious reservations about the Report's recommendation to set up an independent accounting standard-setting Board and about the proposed abolition of statutory audits.
3. Administration of Justice and Legal Services Panel:
@ The Panel held 4 meetings since the last report: no significant item relevant to HKSA concerns.
4. Welfare Services Panel:
@ The Panel held 4 meetings since the last report. No significant item relevant to HKSA concerns.
5. Special Transport Panel (Western Corridor Railway task force):
@ The Panel held 2 meetings since the last report. No significant item relevant to HKSA concerns.
6. Finance Committee and House Committee:
@ TD of HKSA kept informed, on a weekly basis, of progress and priority on all bills. There were 7 meetings of Finance Committee and 11 meetings of House Committee.
@ On 30 May 1997, I successfully urged the House not to form a Bills Committee to study the Securities and Futures Commission (Amendment) (No. 3) Bill 1996.
@ On 6 June 1997, I expressed HKSA's position of no objection to the introduction of the five resolutions under sections 113, 114 and 36 of the Bankruptcy Ordinance (Cap. 6). However, the House still decided to block it because of the complexity of the Bill and the tight time schedule given to LegCo. (Extract of the minutes attached as Appendix II)

III. Bills Committee Joined

1. Independent Police Complaints Council Bill (IPCC):
@ This Bills Committee met 7 times and a compromise is struck with the Administration on the gradual reform of the IPCC Council.
2. Securities and Futures Commission (Amendment) (No. 3) Bill 1996:
@ As mentioned under the Report on House Committee, this Bill had died a natural death. Efforts will continue to persuade the Administration not to re-gazette this Bill after 1 July 1997.
3. Child Care Centres (Amendment) Bill 1996:
@ This Committee met once more and the Bill was passed without controversy.
4. Medical Registration (Transitional Provisions) Bill 1997:
@ This Bills Committee met once more and the Bill was passed with overwhelming support despite the medical profession's opposition.
5. Mutual Legal Assistance in Criminal Matters Bill:
@ This is an enabling Bill aimed at providing a legal framework for comprehensive mutual legal assistance with other countries. The Bill also facilitates the signing of more detailed treaties which are subjected to positive approval of LegCo.
@ The Bill, which now supersedes the withdrawn Evidence (Amendment) Bill 1996, introduces the provisions for the exchange of tax information; it also surfaced later that the United Kingdom had already entered into treaties with Australia and the USA permitting their authorities to collect evidence and conduct investigation on taxation matters here through Hong Kong Courts.
@ After my strong protest and intense lobbying, the Administration has now introduced extensive amendments to the Bill, providing professional privileges to accountants as auditors and tax representatives on a prescribed class of working papers. The Secrecy provision, Section 4 of the Inland Revenue Ordinance, is also preserved. HKSA has indicated its acceptance of this compromise solution arrived at under immense political and time pressure.
6. Smoking (Public Health) (Amendment) Bill 97
@ I attended as former Vice-Chairman of the Council on Smoking and Health and Honorary Advisor to numerous health and sports organisations.
@ After many meetings of representations and protracted negotiations, the Administration's moderate anti-smoking Bill emerged as a mainstream Bill with the different positions taken by Legislators on the issue of sponsorship still needing to be resolved by vote.
7. Justice of the Peace Bill:
@ The Bill seeks to give the appointment of JPs a statutory basis which will last beyond 1997. With the entire LegCo support, I have successfully persuaded the Administration to retain the JPs power to administer oaths and declarations.
8. Sailors Home and Missions to Seamen Incorporation (Transfer of Undertaking) Bill:
@ I was invited by this charitable body to move this Private Member Bill affecting its restructuring. The Bill was withdrawn however, at the request of the Executive Committee of the Mission, due to unexpected opposition from the Seamen's Unions.
9. Legal Services Legislation (Miscellaneous Amendments) Bill 1996
@ In my report to Council on 14 June 1996, I sought Council's understanding and asked for a more flexible stance on the issue of abolition of solicitors' scale fees.
@ The vote on this Bill is about to take place. Further discussions with the President as well as immediate past President have convinced me that, in the long term, it is in the overall interest of the profession to stand with the lawyers on this issue.
@ I plan to state our reservations in principle to scale fees; I will then oppose the Bill on grounds of undue haste and because of the likely devastating effects it would have on the legal profession if proper transitional arrangements are not made. Council's endorsement please.

IV. Motion Debates

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

V. Questions

I have asked 13 written questions (Appendix IV) since my last report. The relevant HKSA Committees may wish to be advised and to consider the replies further.

VI. Provisional Legislature (PL)

The PL has shifted to high gear meeting every weekend in Shenzhen. I have joined two Bills Committees to study the Right of Abode issue and matters relating to reunification. To date, HKSA has not made any representation to PL.

I have devoted much energy organising the new "Breakfast Independents Group" (BIG) which now consists of twelve PL members. Other former "BIG" legislators will join this group after handover.

VII. General Political Background

Hong Kong will soon be propelled into the international limelight by the biggest ever media turnout. Judging from past performances of the foreign press, reports on Hong Kong's handover are likely to be a mixture of facts, fiction, cynicism and wild guess.

Towards the end of the year, real communications work may need to be done to repair some misconceptions about the HKSAR Government and about the political stability of the HKSAR. I have written an article titled "Open their eyes to the Hong Kong legend" for the upcoming issue of the Hong Kong Accountants. In this article, I appeal to fellow accountants to speak out for Hong Kong in this crucial moment.

The euphoria of celebration activities and optimism about Hong Kong's future economic prospects could well be followed by a huge "hangover". The "feel good" factor and momentary frenzy may last a while but real issues such as housing, illegal immigrants and social welfare will soon put the ability of the new HKSAR Government to serious test. I believe that the people of Hong Kong must seek unity and work hard together to prove that Hong Kong is capable of maintaining self administration and high autonomy.

There are also clear signs that Sino-British tensions will diminish upon the departure of the British Administration from Hong Kong and that the restoration of normal trade relationship will again be placed high on the two countries' agenda.



Date Question Replied by
27.3.97 * Stormwater Drainage Secretary for Planning, Environment and Lands
27.3.97 * Overseas Public Relations Secretary for Home Affairs
3.4.97 * Electoral Services Secretary for Constitutional Affairs
3.4.97 * (same) (same)
4.4.97 * Commercial Relations Secretary for Trade & Industry
4.4.97 * Overseas Government Offices (same)
4.4.97 * (same) (same)
4.4.97 * (same) (same)
9.4.97 Arrangement for Stamp Sales Secretary for Economic Services
16.4.97 Record of Revenue from Land Sales Secretary for the Treasury
30.4.97 Interception of Child Illegal Secretary for Security Immigrants
30.4.97 Implementation of Mother Tongue Teaching Secretary for Education and Manpower
7.5.97 Safety of Marine Traffic Secretary for Economic Services

* Questions relating to "Examination of draft estimates of expenditure 1997-98"


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