OFFICIAL RECORD OF PROCEEDINGS Wednesday, 23 ...

LEGISLATIVE COUNCIL ― 23 November 2016

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OFFICIAL RECORD OF PROCEEDINGS

Wednesday, 23 November 2016

The Council met at Eleven o'clock

MEMBERS PRESENT: THE PRESIDENT THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P. THE HONOURABLE JAMES TO KUN-SUN THE HONOURABLE LEUNG YIU-CHUNG THE HONOURABLE ABRAHAM SHEK LAI-HIM, G.B.S., J.P. THE HONOURABLE TOMMY CHEUNG YU-YAN, G.B.S., J.P. PROF THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P. THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P. THE HONOURABLE WONG TING-KWONG, S.B.S., J.P. THE HONOURABLE STARRY LEE WAI-KING, S.B.S., J.P. THE HONOURABLE CHAN HAK-KAN, B.B.S., J.P. THE HONOURABLE CHAN KIN-POR, B.B.S., J.P. DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, S.B.S., J.P. THE HONOURABLE WONG KWOK-KIN, S.B.S., J.P. THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P.

LEGISLATIVE COUNCIL ― 23 November 2016 1016

THE HONOURABLE PAUL TSE WAI-CHUN, J.P. THE HONOURABLE LEUNG KWOK-HUNG# THE HONOURABLE CLAUDIA MO THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P. THE HONOURABLE STEVEN HO CHUN-YIN, B.B.S. THE HONOURABLE FRANKIE YICK CHI-MING, J.P. THE HONOURABLE WU CHI-WAI, M.H. THE HONOURABLE YIU SI-WING, B.B.S. THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P. THE HONOURABLE CHARLES PETER MOK, J.P. THE HONOURABLE CHAN CHI-CHUEN THE HONOURABLE CHAN HAN-PAN, J.P. THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P. THE HONOURABLE KENNETH LEUNG THE HONOURABLE ALICE MAK MEI-KUEN, B.B.S., J.P. DR THE HONOURABLE KWOK KA-KI THE HONOURABLE KWOK WAI-KEUNG THE HONOURABLE DENNIS KWOK WING-HANG # According to the Judgment of the Court of First Instance of the High Court on 14 July

2017, LEUNG Kwok-hung, Nathan LAW Kwun-chung, YIU Chung-yim and LAU Siu-lai have been disqualified from assuming the office of a member of the Legislative Council, and have vacated the same since 12 October 2016, and are not entitled to act as a member of the Legislative Council.


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THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, S.B.S., J.P. DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG DR THE HONOURABLE HELENA WONG PIK-WAN THE HONOURABLE IP KIN-YUEN DR THE HONOURABLE ELIZABETH QUAT, J.P. THE HONOURABLE MARTIN LIAO CHEUNG-KONG, S.B.S., J.P. THE HONOURABLE POON SIU-PING, B.B.S., M.H. DR THE HONOURABLE CHIANG LAI-WAN, J.P. IR DR THE HONOURABLE LO WAI-KWOK, S.B.S., M.H., J.P. THE HONOURABLE CHUNG KWOK-PAN THE HONOURABLE ALVIN YEUNG THE HONOURABLE ANDREW WAN SIU-KIN THE HONOURABLE CHU HOI-DICK THE HONOURABLE JIMMY NG WING-KA, J.P. DR THE HONOURABLE JUNIUS HO KWAN-YIU, J.P. THE HONOURABLE HO KAI-MING THE HONOURABLE LAM CHEUK-TING THE HONOURABLE HOLDEN CHOW HO-DING THE HONOURABLE SHIU KA-FAI THE HONOURABLE SHIU KA-CHUN


THE HONOURABLE WILSON OR CHONG-SHING, M.H. THE HONOURABLE YUNG HOI-YAN DR THE HONOURABLE PIERRE CHAN THE HONOURABLE CHAN CHUN-YING THE HONOURABLE TANYA CHAN THE HONOURABLE HUI CHI-FUNG THE HONOURABLE LUK CHUNG-HUNG THE HONOURABLE LAU KWOK-FAN, M.H. THE HONOURABLE KENNETH LAU IP-KEUNG, M.H., J.P. DR THE HONOURABLE CHENG CHUNG-TAI THE HONOURABLE KWONG CHUN-YU THE HONOURABLE JEREMY TAM MAN-HO DR THE HONOURABLE YIU CHUNG-YIM# DR THE HONOURABLE LAU SIU-LAI# MEMBERS ABSENT: THE HONOURABLE CHEUNG KWOK-KWAN, J.P. THE HONOURABLE NATHAN LAW KWUN-CHUNG# # According to the Judgment of the Court of First Instance of the High Court on 14 July

2017, LEUNG Kwok-hung, Nathan LAW Kwun-chung, YIU Chung-yim and LAU Siu-lai have been disqualified from assuming the office of a member of the Legislative Council, and have vacated the same since 12 October 2016, and are not entitled to act as a member of the Legislative Council.


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PUBLIC OFFICERS ATTENDING: THE HONOURABLE MRS CARRIE LAM CHENG YUET-NGOR, G.B.M., G.B.S., J.P. THE CHIEF SECRETARY FOR ADMINISTRATION PROF THE HONOURABLE ANTHONY CHEUNG BING-LEUNG, G.B.S., J.P. SECRETARY FOR TRANSPORT AND HOUSING THE HONOURABLE MATTHEW CHEUNG KIN-CHUNG, G.B.S., J.P. SECRETARY FOR LABOUR AND WELFARE DR THE HONOURABLE KO WING-MAN, B.B.S., J.P. SECRETARY FOR FOOD AND HEALTH MR JAMES HENRY LAU JR., J.P. UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY CLERKS IN ATTENDANCE: MR KENNETH CHEN WEI-ON, S.B.S., SECRETARY GENERAL MISS ODELIA LEUNG HING-YEE, DEPUTY SECRETARY GENERAL MS DORA WAI, ASSISTANT SECRETARY GENERAL MR MATTHEW LOO, ASSISTANT SECRETARY GENERAL


PRESENTATION OF PETITION PRESIDENT (in Cantonese): Presentation of petition. In accordance with Rule 20 of the Rules of Procedure, Mr LAM Cheuk-ting will present a petition co-signed by him and Mr Dennis KWOK to this Council. MR LAM CHEUK-TING (in Cantonese): President, the sudden cessation of the acting appointment of Ms Rebecca LI as Head of Operations by Independent Commission Against Corruption ("ICAC") Commissioner Simon PEH in July 2016 triggered an unprecedented personnel upheaval in ICAC. Despite Ms Rebecca LI's brilliant performance in the past, Simon PEH alleged after ceasing her acting arrangement that her work performance was below par. Subsequently, a number of high-ranking officers in ICAC resigned one after another, including Mr Dale KO, Principal investigator of the Operations Department, and Ms Melissa TANG, Chief Forensic Accountant. Moreover, the annual dinner scheduled to be held in July was cancelled due to boycott by a large number of ICAC officers. Obviously, staff inside ICAC and members of the public find the account of the incident by Simon PEH unacceptable. Since the serious blow dealt by the personnel reshuffle of ICAC to its credibility involves significant public interest, we implore Members to support the setting up of a select committee under the Legislative Council to inquire into matters related to the personnel reshuffle within ICAC arising from Simon PEH ceasing the acting appointment of Ms Rebecca LI as Head of Operations, including the process of and reason(s) for such cessation and whether or not misconduct, abuse of power and even unlawful acts by any persons or organizations are involved. (See Annex I for the content of the petition) (Mr Dennis KWOK rose in his place immediately)


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MR DENNIS KWOK (in Cantonese): President, in accordance with Rule 20(6) of the Rules of Procedure, I request that the petition be referred to a select committee. PRESIDENT (in Cantonese): I now call upon Members who support this request to rise in their places. (Members supporting the request rose) PRESIDENT (in Cantonese): Will Members please remain standing to allow the Clerk to do a headcount. (After doing the headcount, the Clerk indicated to the President that the record had been completed) PRESIDENT (in Cantonese): Members will please now be seated. Members who support this request are Mr KWONG Chun-yu, Mr James TO, Mr HUI Chi-fung, Dr YIU Chung-yim, Mr SHIU Ka-chun, Mr LEUNG Yiu-chung, Mr LAM Cheuk-ting, Mr Andrew WAN, Dr Helena WONG, Mr IP Kin-yuen, Prof Joseph LEE, Mr WU Chi-wai, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr Dennis KWOK, Dr KWOK Ka-ki, Ms Claudia MO, Ms Tanya CHAN, Mr Alvin YEUNG, Dr CHENG Chung-tai, Dr Fernando CHEUNG, Dr LAU Siu-lai, Mr LEUNG Kwok-hung and Mr CHAN Chi-chuen. Do I miss any name of those Members who just stood up? (No Member made any indication) PRESIDENT (in Cantonese): If not, we have a total of 24 Members supporting this request. In accordance with Rule 20(6) of the Rules of Procedure, the petition is referred to a select committee.


TABLING OF PAPERS The following papers were laid on the table under Rule 21(2) of the Rules of Procedure: Subsidiary Legislation/Instrument L.N. No.

Legislation Publication Ordinance (Commencement) Notice 2016 ........................................................................

170/2016

Other Papers

No. 25 ― Secretary for Home Affairs Incorporated Financial statements for the year ended 31 March 2016

No. 26 ― Sir Edward Youde Memorial Fund

Report of the Board of Trustees for the Period 1 April 2015 to 31 March 2016

No. 27 ― Report of the Director of Audit

on the Accounts of the Government of the Hong Kong Special Administrative Region for the year ended 31 March 2016

No. 28 ― Report No. 67 of the Director of Audit

on the results of value for money audits - October 2016 No. 29 ― Accounts of the Government of the Hong Kong Special

Administrative Region for the year ended 31 March 2016 Report No. 4/16-17 of the House Committee on Consideration of Subsidiary Legislation and Other Instruments


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ORAL ANSWERS TO QUESTIONS PRESIDENT (in Cantonese): Questions. First question. Reform of the Medical Council of Hong Kong 1. MS ALICE MAK (in Cantonese): The functions of the Medical Council of Hong Kong ("MCHK") include instituting, in accordance with the established mechanism, disciplinary proceedings in respect of complaints received against registered medical practitioners. However, quite a number of members of the public have pointed out that the efficiency of MCHK in handling complaints has all along been a subject of criticism over the years, and some members of the public even perceive that "doctors harbour each other" in the handling of complaints by MCHK. Given that the voice calling for a reform of MCHK has become increasingly louder in society, the Government introduced the Medical Registration (Amendment) Bill 2016 into this Council in March this year. The Bill has aroused widespread controversies and lapsed upon the expiry of the previous term of Legislative Council ("LegCo") in July this year. Some members of the public are worried that reform of MCHK has been put off indefinitely. In this connection, will the Government inform this Council if it knows:

(1) the number of new complaints received by MCHK, and the accumulated number of complaints the processing of which was not yet completed by MCHK, in each of the past five years;

(2) the number of complaints the processing of which was completed by

the Preliminary Investigation Committee under MCHK (with a breakdown according to whether such cases were accepted or not), and the number of cases for which MCHK conducted disciplinary inquiries, in each of the past five years; and

(3) the main causes for MCHK being criticized for being inefficient in

handling complaints, and whether such causes include the shortage of manpower and other resources faced by the MCHK Secretariat, or the unsatisfactory work efficiency of individual committees under MCHK; the current work plan of the authorities for reforming


MCHK; whether the authorities will introduce the relevant bill into LegCo as soon as possible; if they will, of the details and timetable; if not, the reasons for that?

SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, my reply to the three parts of the question raised by Ms Alice MAK is as follows:

(1) In 2011 to 2015, the Medical Council of Hong Kong ("MCHK") received 461, 480, 452, 624 and 493 complaint cases respectively. Currently, there is a backlog of about 960 cases, of which about 600 cases are at the pre-preliminary investigation stage, 260 at the Preliminary Investigation Committee ("PIC") stage and 95 at the inquiry stage.

(2) In 2011 to 2015, the number of complaint cases handled by PIC and

the number of inquiries conducted by MCHK in each of the past five years are detailed at Annex. As for 2015, 149 cases were dismissed after the pre-preliminary investigation stage as they were considered frivolous or groundless. A total of 129 cases were handled at PIC meetings in 2015, of which 57 cases were referred to MCHK for inquiry, 35 considered minor offences with no need for inquiry, one referred to the Health Committee for hearing and 36 cases dismissed.

(3) The Government has great concern over the operation of MCHK,

especially the backlog of cases and the prolonged time required for handling complaints. The number of backlog cases has reached 960. Due to the backlog of cases, the time required for scheduling an inquiry has further aggravated, having increased from 28 months to about 36 months. Besides, the mode of operation of PIC has been changed in response to a court judgment, resulting in yet longer time for the PIC stage. According to the latest estimate by the MCHK Secretariat, it will take an average of 72 months to handle a case starting from receipt of a complaint to the conduct of disciplinary inquiry unless legislative amendment to improve the operation of MCHK is introduced as soon as possible.

The Government has provided an additional funding of $6.2 million to strengthen the manpower support for the MCHK Secretariat and to give honorarium to experts who provide assistance at the


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preliminary investigation stage, with a view to improving complaint handling through administrative means as far as possible. The long time taken by MCHK to handle complaints owes less to the efficiency of the MCHK Secretariat, but mainly to the bottlenecks under the Medical Registration Ordinance ("MRO"), including:

(i) Only one PIC can be formed;

(ii) There are four lay Council members in MCHK. A lay

Council member must be present in forming the quorum of a PIC meeting and all complaint cases are to be handled by the four lay Council members. Since a lay Council member who has served on PIC cannot attend the subsequent inquiry meeting of the same case, it is difficult to form a quorum to conduct inquiry meetings more frequently;

(iii) The legislation only allows MCHK to appoint one Legal

Adviser who must be present at every inquiry meeting. As a result, only one inquiry meeting can be conducted at one time;

(iv) As most of the doctor members of MCHK are engaged in

full-time work, it is difficult to schedule inquiry meetings more frequently; and

(v) Only legal officers of the Department of Justice ("DoJ") can

be present in inquiry meetings under the law and DoJ is prohibited from commissioning outside lawyers to discharge its functions.

Given the constraints of the existing legislation, it is necessary to amend MRO in order to expedite PIC investigations and disciplinary inquiries. The time required by MCHK for handling complaints could then be substantially shortened.

The Government has set up a Tripartite Platform on Amendments to MRO which aims to provide a platform to promote understanding and communication among doctors, persons representing patients' and consumers' interests and Members of the Legislative Council on improving the operation of MCHK, as well as to offer views and deliberate on amendment proposals to MRO.


The Tripartite Platform held its first meeting on 15 November. Matters discussed at the meeting include the composition of MCHK, the current situation of its complaint investigation and disciplinary inquiry mechanism, as well as major issues and concerns raised by the previous-term Legislative Council Members and the general public over the Medical Registration (Amendment) Bill 2016.

Members also discussed the work plan of the Platform and agreed to meet once a month in the next three months. The Platform will continue to discuss the complaint investigation and disciplinary inquiry mechanism at the meeting next month, taking reference of the relevant mechanisms of other jurisdictions. Members will then discuss possible amendment proposals to MRO at the two meetings in January and February next year.

President, there is a pressing need to amend MRO. The Government plans to re-introduce the Medical Registration (Amendment) Bill into the Legislative Council as soon as possible in the first half of next year.

Annex (1) Number of cases undergone pre-preliminary investigation stage and

handled by PIC

2011 2012 2013 2014 2015 Number of cases undergone pre-preliminary investigation stage and considered frivolous or groundless, and dismissed by the chairman and the deputy chairman of PIC in consultation with a lay member of PIC(1)

114 104 146 130 149

Number of cases handled at PIC meetings [(i)+(ii)+(iii)+(iv)](2)

99 95 89 95 129

(i) Cases referred to MCHK for inquiry 33 21 32 48 57


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2011 2012 2013 2014 2015 (ii) Cases considered minor

offences, and MCHK accepted the recommendation of PIC that no inquiries were needed

26 48 26 20 35

(iii) Cases referred to the Health Committee for hearing - - - - 1

(iv) Cases dismissed 40 26 31 27 36 Notes: (1) including cases received in the respective year only. (2) including cases received in the respective year or before. (2) Disciplinary inquiry cases handled by MCHK(3) 2011 2012 2013 2014 2015 Disciplinary inquiry cases handled by MCHK

21 16 30 23 21

Note: (3) including disciplinary inquiry cases referred to MCHK by PIC in the respective year or

before. MS ALICE MAK (in Cantonese): President, the Secretary stated in the main reply that inquiry for a new complaint case will take 72 months on average. I believe no members of the public in Hong Kong can accept such a situation. When the Medical Registration (Amendment) Bill 2016 was introduced to the Legislative Council for discussion last time, many people attributed the inefficiency of the operation of MCHK to the Secretariat, considering that additional government funding would readily resolve the problem, but according to the Secretary's reply, that is not the case. The inefficiency is partly due to the constraints of the legislation. In the past―I do not know whether those people really do not understand or pretend not to understand―those people put forward many absurd or fallacious arguments. May I ask the Secretary what action the Government will take? Apart from submitting a timetable to the Legislative Council, does the


Government have any specific work plan to remove as much as possible such fallacies and falsehood before re-introducing the Bill to the Council, so that members of the public will not be misled again? SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, as pointed out by Ms Alice MAK just now, I have explained in the main reply that if the operational efficiency of the Secretariat can be enhanced, the operation of the whole MCHK, especially in respect of the handling of complaints, will certainly be improved, but the efficiency of the Secretariat is not the only nor the most important reason for the relatively long time required for handling complaints. As I have pointed out in the main reply earlier, the existing MRO has its own limitations. There are five factors in play which I am not going to repeat here. Hence, the Government considers it necessary to amend MRO in order to thoroughly improve the operational efficiency of MCHK and substantially improve the current waiting time for handling complaints. Indeed, during our discussion on the Medical Registration (Amendment) Bill 2016 before the end of the last term of the Legislative Council, there were many different views. A lot of them were actually untrue or did not tally with the facts. Regarding this, I actually tried my best to clarify them both inside and outside the Legislative Council during the course of the debate. This time we have established the Tripartite Platform which comprises members who are the main stakeholders relating to the amendments to MRO, namely representatives of doctors, Legislative Council Members, patient groups and patients' rights advocates. I believe that through this Tripartite Platform, we can sit down together and the Government and the MCHK Secretariat will provide relevant information for conducting practical discussions. I am confident that we can clarify these misunderstandings that exist among different stakeholders, thereby removing all obstacles to amending MRO with our best efforts. DR PIERRE CHAN (in Cantonese): President, the unduly long time required for inquiry was in fact a problem of the Government's own making. Over the past few years, bills defeated in the Legislative Council were seldom re-introduced to the Council for discussion. As a matter of fact, doctors are very sincere about the reform of MCHK. They hope the Bill can be re-introduced to and passed by the Legislative Council. I hope Members will understand what the doctors think. They did not intend to drag it down right from the beginning.


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Four of the items (i) to (iv) in part (3) of the Government's main reply are actually unrelated to doctors. The Secretary may dodge the question, saying that it has nothing to do with the Secretariat, but the officers of DoJ are also officers of the Secretariat. According to the information provided by the Government to the Tripartite Platform, actually more than half of the waiting time spent was on waiting for complainants to take the oath, release of expert reports … PRESIDENT (in Cantonese): Dr CHAN, please raise your supplementary question. DR PIERRE CHAN (in Cantonese): My supplementary question is, given the criticism that MCHK is inefficient in handling complaints, is the Secretary willing to set a performance pledge to address the problem of the congestion of complaint cases? If he will do so, what are the details and the timetable? If not, what are the reasons for that? SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, I partly agree with what Dr Pierre CHAN has said. We do not have any view on who should be held responsible for the Medical Registration (Amendment) Bill not being passed at the moment. However, as I have pointed out earlier, the problems inherent in MRO have led to bottlenecks. This is a fact. For example, as I have mentioned in item (ii) of the main reply, there are currently only four lay Council members in MCHK who need to participate in both the preliminary investigation work and the formal inquiry which MCHK may have to conduct subsequently. Hence, leaving aside the need for increased participation of members of the public or patient representatives in the work of MCHK, the number of such members has indeed caused a bottleneck. For this reason, it is necessary to amend MRO to especially bring in more lay Council members. As regards Dr Pierre CHAN's question about whether we can set a performance pledge, I must point out that in the case of public health care service, what we do is to enhance the service efficiency as far as possible, and that also applies to MCHK. However, concerning the handling of complaint cases, I believe it is still difficult to actually set a deadline and take it as a performance pledge, because it relates to the number of new complaint cases received each


year. Nevertheless, we know that MCHK has already set up a dedicated team to study the possibility of setting a performance pledge for handling complaints. The dedicated team will look into the feasibility of setting a performance pledge depending on such factors as the additional resources provided by us and whether MRO can be amended successfully. DR KWOK KA-KI (in Cantonese): President, the staff of the MCHK Secretariat are actually civil servants, and over the years, the chairmanship of MCHK has been held by doctor representatives preferred by the Government. To date, the Government has never admitted any responsibility for any of the work of MCHK apart from pushing it. As a matter of fact, many other groups have already adopted more reasonable and faster approaches, such as mediation, to expedite the handling of disputes involving non-serious allegations. I would like to ask the Government a question. If the Government cannot even do such a simple mediation and refuses to admit responsibility for the backlog of the Secretariat, is it time for it to hand back MCHK to doctors for them to manage on their own, so that MCHK, including its Secretariat and a number of the leading personnel, will be free of government manipulation? SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, Dr KWOK proposed that another approach for complaint handling be adopted for MCHK, such as introducing mediation to enhance efficiency. We have all along maintained a positive attitude about this. However, I may not totally agree with Dr KWOK that mediation is a very simple thing to do. I believe Dr KWOK understands it himself. First of all, we must study in depth whether it is necessary to make separate legislative amendments for introducing a mediation mechanism in the operation of MCHK. Mediation will involve various kinds of personnel, including the Secretariat staff, legal officers and mediators, and it may even need doctors' participation. Actually, it depends on the specific details of the work. Hence, on the one hand, we will invite MCHK to study how and whether a mediation mechanism needs to be introduced. In the meanwhile, I believe I have stated very clearly in the main reply that, regarding the present backlog of complaint cases, if there are still other bottlenecks which must be resolved through amending MRO after the operation of the Secretariat has improved with the availability of additional funds, I think this is something we still have to face.


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DR KWOK KA-KI (in Cantonese): President, the supplementary question which I put to the Secretary just now is whether it is time to hand back the power to lead the Secretariat and MCHK to doctors, given such lousy performance of the Secretariat. He did not answer that. PRESIDENT (in Cantonese): Dr KWOK, you have raised two questions, and the Secretary has answered your first one.

MR KWOK WAI-KEUNG (in Cantonese): The Secretary mentioned in part (3) of the main reply that according to the latest estimate by the MCHK Secretariat, if everything remains unchanged, it will take an average of 72 months to handle a new complaint case starting from the day of receipt of the complaint to the conduct of inquiry. That means six whole years. As we can imagine, if we dial the 1823 hotline, we will already feel impatient after listening to the music on hold for one-odd minute, not to mention that the complainants will have to wait for six years. President, from the patients' perspective, it was absolutely wrong to drag down the Medical Registration (Amendment) Bill 2016 in the last term. President, here I must emphasize that there was a medical case in the past in which the complainant filed a civil claim and succeeded in seeking compensation after the case was rejected twice by MCHK, and only then did MCHK overturn its two original rulings, thus giving people a deep impression of "doctors harbouring each other". Given that now the Tripartite Platform has been put in place to lay the foundation for the passage of the amendments to MRO in the future, has the Tripartite Platform actually come up with any specific ideas or implemented any measures to avoid the recurrence of such cases for which there seems to be no avenue of redress? SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, in respect of the supplementary question raised by Mr KWOK just now, I would like to point out again that when the Medical Registration (Amendment) Bill 2016 was not passed by the last-term Legislative Council, we were aware that different stakeholders, including representatives of doctors and patient groups, had different interpretations and views on the operation of MCHK and reasons for its inefficiency in handling complaints―certainly, many of the interpretations were wrong―For this reason, this time we have established the Tripartite Platform. One of the important functions of this platform is to carry out communications by


engaging representatives of all the three parties. The Government and the MCHK Secretariat can present the basic facts and analysis of the issues to the representatives of the three parties so that they will understand and fully grasp the operation of MCHK as well as the statutory constraints which have posed these problems to MCHK. We hope that through such work, we will enable the stakeholders of the three parties to better grasp the relevant situation and dispel misunderstandings as far as possible. Only then can we take the second step to conduct more effective discussion on our proposal about how to amend MRO and improve the operation of MCHK. Hence, as I have explained earlier, we have tentatively planned for the Tripartite Platform to hold four meetings. The first meeting has already ended. At the second meeting, we should have established a certain basis. After understanding the operation and problems of MCHK, we will draw more reference from overseas experience. After that, at the third and fourth meetings, we will focus on the next step about how to reach a consensus on amending MRO and what the consensus should be, in the hope of minimizing disputes and enabling the Bill to be passed expeditiously when it is re-introduced to the Legislative Council, with a view to improving the operation of MCHK. PRESIDENT (in Cantonese): Second question. Improving the transport system for Lantau Island 2. MR HOLDEN CHOW (in Cantonese): The target completion date of the Hong Kong section of the Hong Kong-Zhuhai-Macao Bridge is the end of 2017. Some residents on Lantau Island have pointed out that in order to capitalize on the development opportunities brought about by the commissioning of the Bridge and facilitate the continuous development of Lantau Island, it is imperative that the authorities expeditiously resolve the existing problems of frequent traffic congestion on Lantau Island arising from overloading of roads and insufficient transport infrastructure facilities. In this connection, will the Government inform this Council:

(1) whether, to tie in with the development of Lantau Island, the authorities will accord priority to road improvement projects on the Island, including the construction of a trunk road linking North and


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South Lantau, so as to enhance the connection among the various parts of the Island and alleviate the traffic burden on Tung Chung Road and South Lantau Road;

(2) whether it has plans to improve the road traffic network in the

vicinity of tourist attractions on Lantau Island, including expeditiously completing the road widening projects at Keung Shan Road connecting Tai O and Ngong Ping, and conducting a study on the construction of a coastal highway in North Lantau connecting Tai O, Tung Chung, etc., with a view to improving the external transport services of areas such as Tai O, etc.; if so, of the details; and

(3) whether it will draw reference to overseas practices and construct a

regional elevated monorail system on Lantau Island, so as to alleviate the existing traffic congestion occurring frequently on the Airport Island and in Tung Chung town centre, and to provide residents and visitors in Tung Chung with more convenient and efficient transport infrastructure facilities?

SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, at present, the developments of North Lantau mainly include infrastructure and tourism facilities such as Tung Chung New Town, the Hong Kong International Airport and the Hong Kong Disneyland. North Lantau Highway, Tsing Ma Bridge and the Tung Chung Line and Airport Express of the Mass Transit Railway are the main external transport links. The development of South Lantau, on the other hand, focuses mainly on conservation. South Lantau is linked with North Lantau and other places on Lantau Island by Tung Chung Road, South Lantau Road and Tai O Road (see the Road Network in Annex 1). To tie in with the commissioning of the Hong Kong-Zhuhai-Macao Bridge ("HZMB"), the Government has made plans for the overall transport network to cope with the additional traffic flow. Vehicles connecting to the Hong Kong Boundary Crossing Facilities ("HKBCF") of HZMB can use the new access road leading to the Hong Kong International Airport or the Tuen Mun-Chek Lap Kok Link ("TM-CLKL") to travel to the urban area or the New Territories. The Highways Department ("HyD") assessed earlier that the southern section of TM-CLKL would not be completed by end-2017. Vehicles travelling to


HKBCF of HZMB during the transition period would be routed through Airport Road and North Lantau Highway without going through Tung Chung City Centre. Therefore, there will be no direct impact on the traffic within the Tung Chung City Centre. The preliminary development strategy for Lantau Island put forward by the Development Bureau and the Lantau Development Advisory Committee in January this year has proposed that the North Lantau Corridor will mainly focus on strategic economic and housing developments, whereas the north-eastern part of Lantau will develop into a node for leisure, entertainment and tourism. A study will also be undertaken for developing the East Lantau Metropolis into a core business district, while other parts of Lantau Island will be used for conservation, leisure, and cultural and green tourism. The future transport infrastructure will tie in with the planning of relevant development. My reply to the various parts of Mr Holden CHOW's question is as follows:

(1) According to the observations of the Transport Department ("TD"), traffic flow on the roads on Lantau Island is currently smooth in general, and traffic congestion is infrequent (see Annex 2). The roads of South Lantau, including South Lantau Road, Tai O Road, etc., are closed roads, the use of which is restricted to vehicles issued with a valid closed road permit. Currently, the traffic volumes of the roads in South Lantau are also low, and traffic congestion is rare (see Annex 3). TD has been closely monitoring the use of roads on South Lantau. Where necessary and practicable, TD will carry out appropriate improvement works in conjunction with HyD. In 2009, for example, HyD completed the widening works for Tung Chung Road and has since significantly improved traffic flow between the north and south of Lantau.

(2) In recent years, HyD has completed many road bend improvement

projects on the roads of South Lantau, including different locations on Keung Shan Road and South Lantau Road, with a view to further ensuring safe and smooth driving. As at November this year, HyD has completed 10 road bend improvement projects on Keung Shan Road and four such projects on South Lantau Road, while striving to complete the seven remaining ones for completion by the end of next year.


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In addition, TD has been monitoring the traffic demand in Tai O and considering whether there is a need to construct a coastal road linking Tai O to Tung Chung. However, in view of insufficient traffic demand as well as environmental and conservation concerns, and the fact that Tung Chung Road can cope with the traffic between the south and north of Lantau, we do not consider there is sufficient justification to support the construction of such road at this moment.

The Government will generally plan transport infrastructure in the light of district development. Apart from North and Northeast Lantau, the rest of Lantau Island is mainly used for conservation and recreation purposes and no large-scale development is recommended. Therefore, whether there is a need to construct a coastal road linking Tai O to Tung Chung depends on the overall development plan, timetable, the expected traffic demand and other factors.

(3) According to TD's observation, although the loading and unloading

points near Tung Chung railway station are busy during peak hours, the traffic on all roads in Tung Chung City Centre, Chek Lap Kok South Road and Airport Island is smooth. There are a number of franchised bus routes to and from Tung Chung City Centre, Airport Island and all districts in Hong Kong to cater for the daily needs of the public.

The Civil Engineering and Development Department ("CEDD") is making preparations for the setting up of the Sustainable Lantau Office, which will be tasked with taking forward and managing the development scheme for Lantau, including conducting an overall traffic and transport study for Lantau in early 2017 for targeted completion in mid-2018. The study mainly covers the ways to improve traffic in Lantau, such as traffic network from Tung Chung Town Centre to Airport Island, feasibility of a coastal road from Tung Chung to Tai O, a trunk road connecting the north and south of Lantau, etc. The local community and stakeholders will be consulted during the study. The proposal of a regional elevated monorail system for Lantau may be explored in the study.

President, the Development Bureau and the Planning Department are undertaking the study "Hong Kong 2030+: Towards A Planning Vision and Strategy Transcending 2030", which will cover two strategic growth areas in East


Lantau Metropolis and north New Territories respectively. A six-month public consultation exercise is being conducted from October this year under the study. The Transport and Housing Bureau has been involved in the planning of transport infrastructure in the study and will launch a strategic study for railways and major trunk roads beyond 2030, examining the transport infrastructure required for the planning and development of Lantau, north-west New Territories and north New Territories to cope with traffic needs so generated, in response to the economic and livelihood needs of the public. Railways and strategic roads are transport infrastructure requiring immense investment and must therefore be justified in terms of overall development needs as well as social and economic benefits. The Government's transport infrastructure planning objective is that transport infrastructure and development projects should go in parallel so as to make the best use of public resource.

Annex 1

Existing Road Network on Lantau Island


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Annex 2

Peak Hour Traffic Situation in the Vicinity of Tung Chung, North Lantau

Road Traffic Flow(1) (Vehicles/hour)

Design Capacity (Vehicles/hour)

Volume/Capacity ("V/C") Ratio

Chek Lap Kok South Road (West Bound) 710 2 800 Around 0.3 North Lantau Highway (from Tung Chung Eastern Interchange to Western End at Chek Lap Kok) (West Bound)

1 900 4 700 Around 0.4

Shun Tung Road (East Bound) 680 2 800 Around 0.3 Notes: (1) The data of traffic flow is extracted from "The Annual Traffic Census 2015" published by TD. (2) Peak Hours are from 7:00 am to 10:00 am and from 4:00 pm to 7:00 pm. (3) V/C ratio is normally used to reflect traffic situation during peak hours. A V/C ratio below or equal to 1.0

is considered acceptable. A V/C ratio between 1.0 and 1.2 indicates a manageable degree of congestion. A V/C ratio above 1.2 indicates serious congestion.

Annex 3

Traffic Flow and Capacity of Roads in South Lantau

Road Average Daily Traffic Daily Design Capacity Tung Chung Road 4 800 vehicles 10 000 vehicles South Lantau Road 2 900 vehicles 8 000 vehicles Keung Shan Road from South Lantau Road to Sham Wat Road

2 610 vehicles 8 000 vehicles

Keung Shan Road from Sham Wat Road to Tai O Road

1 080 vehicles 8 000 vehicles

Tai O Road 1 080 vehicles 8 000 vehicles Notes: (1) The above traffic data is based on Average Daily Traffic. (2) The data of traffic flow is extracted from "The Annual Traffic Census 2015" published by

TD.


MR HOLDEN CHOW (in Cantonese): President, if TD thinks that there is no traffic problem on Keung Shan Road and South Lantau Road, it should pay attention to the traffic accidents that occurred in bad weather and then it will be able to find out the crux of the problem. Regarding the remark made by TD that there are no problems with the traffic between the Airport Island and Tung Chung town centre, I consider that TD is merely turning a blind eye to the problems. Currently, buses between the two places are basically going around in circles. With the completion of the Three-Runway System ("3RS") in the future, 140 000 jobs are expected to be created, thereby encouraging the Tung Chung residents to live and work in the same district. Since the population in Tung Chung is expected grow to 270 000, mass transport, such as light rail, must be provided in Tung Chung. The authorities may also urge the Mass Transit Railway Corporation Limited ("MTRCL") to undertake studies on the extension of the Tung Chung Line to the airport to enable Tung Chung residents to reach the airport direct by MTR while tourists may choose to take Airport Express. This two-pronged approach will greatly alleviate the traffic needs arising from the growing population in the future. I hope the Bureau can address this issue squarely and urge MTRCL to undertake relevant studies. SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, the current traffic conditions, as I mentioned in the main reply just now, are also based on the assessments and observations of TD in relation to the traffic flow and vehicular movement of the relevant roads. Certainly, whenever accidents occur, we will promptly take emergency measures to deal with the relevant accidents and divert traffic by other means. I would like to point out that, in considering the overall transport infrastructure developments, the Bureau will in general conduct assessments in the light of the traffic trend. Such factors as an increase in people flow due to the completion of 3RS or the number of workers during the construction period, etc., will certainly be taken into consideration. When planning is undertaken for the next stage of development of road network in Lantau, should the roads in some places be widened? And as Mr CHOW said just now, given the increase in the number of people working on


1039

the Airport Island and that of tourists using the airport, should the Bureau consider undertaking other transport infrastructure projects as well? The growth in population brought about by the development of Lantau Island and the resultant traffic demands, as I mentioned in the main reply just now, will be considered jointly when an overall traffic study is undertaken by the Bureau in the future. DR JUNIUS HO (in Cantonese): President, I support the question raised by Mr Holden CHOW. I would also like to respond to part (2) of the main question in relation to improving the road traffic network in the vicinity of tourist attractions on Lantau Island, including expediting the widening of roads connecting Lantau, Ngong Ping and Keung Shan. In fact, the Secretary pointed out in Annex 3 of the main reply that the traffic flow and capacity of roads in South Lantau had basically not reached capacity. However, I find his remark contradictory because the daily design capacity mentioned here is designed for restricting the daily capacity, but the current average traffic is between 20% and 50% only. We must bear in mind that the entire Lantau is a remarkable and versatile tourist area. Therefore, the content of Annex 3 is something of self-intoxication and self-consolation. Regarding the road network development of the entire Lantau, government officials should be forward-looking and tie in with the efforts of a taskforce to be set up shortly in the Legislative Council by the Development Bureau in relation to the development of Lantau. Will the Secretary inform this Council of his outlook on the future development? We should not merely look at the vehicle flow because it is restricted. Moreover, there are conservation issues. If conservation is involved, it is basically impossible for development to take place on the entire Lantau … PRESIDENT (in Cantonese): Dr HO, please raise your supplementary question. DR JUNIUS HO (in Cantonese): … but we must be forward-looking. PRESIDENT (in Cantonese): Dr HO, please sit down. Secretary, do you wish to give a response?


SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, regarding the three parts of the question raised by Mr Holden CHOW, I have already pointed out in the main reply the vehicle flow and traffic congestion according to the current observations of TD. Certainly, the entire Lantau will be further developed on various fronts. In this connection, the Development Bureau, CEDD and the Transport and Housing Bureau will work together to undertake road and other transport infrastructure development projects to cater for the future development needs. MR KENNETH LAU (in Cantonese): President, with the completion of HZMB, the number of people driving private vehicles to and from Lantau is expected to rise significantly, which might lead to explosion in Tung Chung at any time. Has the Administration studied the provision of more parking spaces in places in the vicinity of HKBCF, such as Tung Chung, Siu Ho Wan and the Airport Island, and even considered the construction of a multi-storey car park, with a view to providing proper feeder transport to achieve diversion of traffic to satisfy the needs of the public and tourists? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, the car park situated in HKBCF of HZMB will provide approximately 650 parking spaces. Since no vehicles will enter Hong Kong from other places to reach the urban areas after the commissioning of HZMB, coupled with the availability of other means of transport, such as shuttle buses serving HZMB, to provide relevant transport services, we expect that the public's needs for parking spaces are not expected to be so keen. Nevertheless, in making further development planning for HKBCF, the Development Bureau will take into consideration the feasibility of providing additional parking spaces. MR WU CHI-WAI (in Cantonese): President, in part (2) of the main reply, the Secretary pointed out in the last paragraph that "the Government will generally plan transport infrastructure in the light of district development. Apart from North and Northeast Lantau, the rest of Lantau Island is mainly used for conservation and recreation purposes and no large-scale development is recommended". Will the Secretary's remarks be taken as the present guiding


1041

statement in pursuing "conservation in the south and development in the north" on Lantau to ensure that specific development planning, if proceeded with, will not be turned into a major development project? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, I have elaborated in the main reply the Government's views on the direction for Lantau development. Certainly, they also represent the preliminary development strategy put forward by the Development Bureau and the Lantau Development Advisory Committee at the present stage. Generally speaking, large-scale development will be carried out in North and Northeast Lantau, and there is also the East Lantau Metropolis development, whereas projects related to conservation, tourism and green tourism will presumably be undertaken in South Lantau. In making transport infrastructure planning in the future, we must take the entire development layout of Lantau into consideration. Relatively speaking, the current transport need in South Lantau is indeed not so keen. MR WU CHI-WAI (in Cantonese): President, I asked the Government whether it would ensure that no large-scale development projects would be undertaken in South Lantau. PRESIDENT (in Cantonese): Since you have already stated the part of supplementary question which has not been answered, please sit down. Secretary, do you have anything to add? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): I can hardly add anything because this planning initiative is led by the Secretary for Development. Today, I will respond mainly to the preliminary concept of the Lantau Development which has already been announced. However, if the relevant planning is affirmed after public views are received, the Transport and Housing Bureau―which will also participate in the strategic transport infrastructure planning―will definitely cooperate.


MS ALICE MAK (in Cantonese): President, I note that the Secretary mentioned in the main reply that CEDD would undertake studies, including conducting an overall traffic and transport study for Lantau in early 2017. In fact, the Hong Kong Federation of Trade Unions has put forward proposals repeatedly, and even proposed motions in this Council, to urge the Government to abolish the Tsing Ma Bridge toll. Now that not only the Bridge toll has not been scrapped, the toll booths for TM-CLKL have also been completed. This implies that all the roads linking Lantau in the future will be tolled roads. Will the Government request CEDD to look at the travelling expenses in the context of the studies to be undertaken to see whether or not the tolls for Tsing Ma Bridge and TM-CLKL can be scrapped, so that the burden of travelling expenses on Tung Chung residents or employees can be alleviated? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, this is not the function of CEDD since it is responsible mainly for works projects. Road or tunnel tolls are related to transport policies, whereas the policy basis of the Transport and Housing Bureau is that tolls for roads and tunnels will generally be collected to meet operating costs. Nevertheless, separate consideration will be given if there are traffic concerns, such as waiving tolls will be conducive to maintaining a smooth and effective traffic flow. Hence, we can hardly generalize, for the specific circumstances of each and every tolled road or tunnel have to be taken into account. MR LEUNG CHE-CHEUNG (in Cantonese): President, I hope the Secretary can explain in detail some of the information and circumstances mentioned in the main reply. The Secretary pointed out in the table showing the traffic flow of roads in South Lantau that the design capacity of South Lantau Road was 8 000 vehicles, but the current traffic is 2 900 vehicles only. I understand that the Government's estimated design capacity was made decades ago because South Lantau Road was built several, not one or two, decades ago. Given that the design capacity is 8 000 vehicles, why are only 2 900 closed road permits on average issued during the peak period to allow vehicles to enter Lantau? This number is far from the design capacity. In this connection, will the Government consider allowing more road users in closed areas to use South Lantau Road? For instance, since quite many vehicles will go to Tai O on Saturday or Sunday, can the authorities, in view of the current traffic flow data, further open up Tai O for more vehicles?


1043

SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, I have also mentioned in the main reply that some roads of South Lantau are closed roads with traffic flow being restricted. It is mainly because the Government has been attaching importance to the conversation of Lantau and hoping that the traffic of the roads of South Lantau will not be increased excessively. This explains why the design capacity of South Lantau Road is 8 000 vehicles. In fact, TD has issued more than 8 000 permits in respect of South Lantau Road, of which up to 4 300 one-year non-temporary permits are issued for use by local residents and business operators. The remaining permits, which are temporary in nature, are issued to members of the public with special needs to go there to deal with affairs related to weddings, funerals, and so on. As regards the actual utilization, reference should be made to the data in Annex 3. The average daily traffic of South Lantau Road is 2 900 vehicles. PRESIDENT (in Cantonese): Third question. Protecting the rights and interests of employees of outsourced service contractors 3. MR LUK CHUNG-HUNG (in Cantonese): President, at present, quite a number of non-skilled workers are employed by outsourced service contractors ("outsourced contractors") to provide services such as cleaning and security to government departments ("outsourced workers"). It is learnt that the remuneration packages for them are far inferior to those of civil servants and employees of other private enterprises with comparable duties. Some outsourced contractors have even evaded by various means, kind of crafty tactics, their obligation to pay outsourced workers severance payment ("SP") and long service payment ("LSP") upon expiry of outsourced service contracts. In this connection, will the Government inform this Council:

(1) of the number of requests for assistance received in the past three years by various government departments from outsourced workers seeking help to resolve their disputes with employers, with a breakdown by the issue involved; whether the Labour Department and the departments outsourcing services have at present designated


dedicated teams or manpower to deal with the employment arrangements and disputes relating to outsourced workers upon expiry of the outsourced service contracts;

(2) whether it knows the respective numbers of outsourced workers who

changed jobs to work as non-civil service contract staff and civil servants in the past three years; if it knows, of a breakdown by government department; if not, whether the authorities will collect the relevant data in future or acknowledge their experience as an important consideration in civil service recruitment; and

(3) whether it will consider reviewing expeditiously the relevant tender

documents for outsourced service contracts and the Standard Employment Contract concerned to prevent outsourced contractors from evading their obligation to pay SP and LSP; if it will, of the details and timetable; if not, the reasons for that?

UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, outsourcing is one of the ways adopted by government departments to deliver public services. Whether services should be outsourced is at the discretion of individual departments having regard to their operational needs. The government department which decides to outsource its services should put in place a mechanism to ensure that the service contractor performs to the standard laid down in the contract and complies with the contract terms. My reply to the three parts of the question is as follows:

(1) Regarding the first part of the question, for government service contracts that rely heavily on the deployment of non-skilled workers, based on the information provided by the four major procuring departments, namely the Food and Environmental Hygiene Department ("FEHD"), Government Property Agency ("GPA"), Housing Department ("HD") and Leisure and Cultural Services Department ("LCSD"), the number of cases received by respective departments in relation to disputes between outsourced service


1045

contractors and their employees for the last three years and until 31 October this year are set out at Annex and tabled for reference. Generally speaking, each department handled up to around 15 to 17 cases every year.

The four major procuring departments would monitor the

performance of the service contractors after contract award. While no dedicated team or manpower is designated to handle the disputes between service contractors and their employees, the procuring departments would, upon receipt of requests for assistance from outsourced workers, normally refer the cases to the Labour Department ("LD") for follow-up, with a view to resolving the labour disputes through LD's conciliation service.

The Labour Relations Division of LD provides conciliation services

to employers and employees outside the government sector, including government outsourced service contractors, to help them resolve labour disputes through a network of 10 offices across the territory. Outsourced workers who have disputes with their employers over employment arrangement and/or termination compensation under the Employment Ordinance ("EO") and employment contract upon expiry of the outsourced service contract may approach LD for assistance. If no settlement could be reached after conciliation, the conciliation officer may, at the request of the employee, refer the claim to the Minor Employment Claims Adjudication Board or the Labour Tribunal for adjudication.

In addition, labour inspectors of LD conduct proactive inspections to

workplaces to check service contractors' compliance with the legislative provisions and the Standard Employment Contract ("SEC") and to educate employees on the protection accorded to them under labour laws and SEC. Suspected breaches, when detected, will be thoroughly investigated by labour inspectors of LD. Prosecution will be instituted against offending service contractors wherever there is sufficient evidence.


(2) Regarding the second part of the question, the Civil Service Bureau and the four aforementioned major procuring departments do not collect information on the number of outsourced workers subsequently employed by the Government as civil servants or non-civil service contract staff. As government departments do not require applicants to declare if they are or were employed by government service contractors during the recruitment process, the departments concerned do not and have no plan to collect the relevant information.

(3) Regarding the third part of the question, like employees in the

private sector, employees of government service contractors are accorded protection and benefits under EO, including severance payment ("SP") and long service payment ("LSP"). Under EO, if an employee who has been employed under a continuous contract for not less than 24 months and is dismissed by reason of redundancy, he is in general entitled to SP. Under the same Ordinance, an employee who has been employed under a continuous contract for not less than five years is entitled to LSP if the requirements as specified in EO are met. On termination of employment, the employer shall pay all the termination payments, such as outstanding wages, payment in lieu of notice, annual leave pay, and SP/LSP, etc. as soon as practicable.

At present, departments may adopt the Standard Terms and

Conditions formulated by the Government Logistics Department as the terms of contract in procuring services. It is prescribed in these terms and conditions that service contractors shall observe all the applicable laws and regulations of Hong Kong, in particular those related to the rights and benefits of employees such as EO, the Mandatory Provident Fund Schemes Ordinance and the Occupational Safety and Health Ordinance. In addition, SEC prescribed by LD stipulates that service contractors shall comply with the requirements under EO. In other words, the statutory entitlements for SP and LSP have been included in the service contracts awarded by the four major procuring departments, as well as SEC signed between the service contractors and their employees.


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In case a service contractor or its permitted sub-contractor has breached the relevant legislation or failed to fulfil the contractual obligations, the procuring department will take regulatory actions in accordance with the contract. The contract may even be terminated if the contractor or its permitted sub-contractor is convicted of a breach of EO or other relevant ordinances.

To tighten up the management of contractors of government service

contracts that rely heavily on the deployment of non-skilled workers (excluding construction service contracts), the Government has put in place a mandatory requirement under the prevailing procurement arrangement: if a contractor has obtained any conviction under EO which individually carries a maximum fine corresponding to Level 5 or higher within the meaning of Schedule 8 to the Criminal Procedure Ordinance, its tender offer(s) shall not be considered by government departments for a period of five years from the date of conviction. Under this mechanism, a contractor failing to make SP and LSP to outsourced workers in accordance with EO will be considered to have committed the relevant offences. Unless its application for review is accepted, the contractor shall not be awarded any government service contract for a period of five years from the date of conviction.

LD will continue to adopt a multi-pronged approach, which include

reminding employers of the importance of timely payment of statutory benefits through educational and publicity efforts targeted at employers and employees, and proactively assisting employees who suspect their rights and benefits being infringed to pursue their claims against employers through the provision of user-friendly consultation and conciliation services. Where there are any suspected breaches, LD will thoroughly investigate into the matter and institute prosecution against the offending employers and the responsible persons whenever there is sufficient evidence.


Annex

Number of requests for assistance received from outsourced workers and the issues involved

Nature of

requests for

assistance

received from

outsourced

workers

2013 2014 2015 2016

(as at 31 October)

Government

department To

tal

Government

department

Tota

l

Government

department

Tota

l

Government

department

Tota

l

FEH

D

GPA

HD

LCSD

FEH

D

GPA

HD

LCSD

FEH

D

GPA

HD

LCSD

FEH

D

GPA

HD

LCSD

(a) Non-payment

of wages 9 0 0 0 9 13 0 0 0 13 8 0 0 0 8 2 0 0 0 2

(b) SP and LSP 3 0 1 0 4 1 0 0 0 1 3 0 2 0 5 1 0 3 0 4

(c) Redundancy/

Dismissal 2 0 2 0 4 0 0 2 0 2 1 0 1 0 2 0 0 0 0 0

(d) Variation of

the terms of

the

employment

contract

1 0 0 5 6 1 0 0 2 3 0 0 0 6 6 0 0 0 2 2

(e) Cessation of

business/

Bankruptcy

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

(f) Others* 2 0 8 7 17 0 0 7 6 13 3 0 6 5 14 0 0 1 3 4

Total 17 0 11 12 40 15 0 9 8 32 15 0 9 11 35 3 0 4 5 12 Notes: * Others include absence of standard employment contract, non-payment of MPF contributions and issues

related to calculation of salary, work arrangements, holidays, working environment and equipment, and rest breaks, etc.

FEHD: Food and Environmental Hygiene Department GPA: Government Property Agency HD: Housing Department LCSD: Leisure and Cultural Services Department

MR LUK CHUNG-HUNG (in Cantonese): President, the reply provided by the Bureau is as expected, yet I would like to follow up on a few points.


1049

First, in the past few years, the Hong Kong Federation of Trade Unions ("FTU") had analysed the statistics on outsourced services provided by the Government. We noted that the number of outsourced workers in each of past years was extremely stable, reflecting that there is a fixed demand for their services. Will the Government consider converting the employment of some of the outsourced workers to permanent terms or recruiting them directly? Second, in the judgment of a case involving a cleaning company in 2013, the High Court pointed out that for workers who have signed a SEC, the outsourced contractor should pay SP to these workers when it lost its bid for the tender for providing services at the original venue of work. However, I would like to tell the Secretary that, in reality, upon the completion of their contract, many outsourced contractors will adopt all kinds of crafty tactics, such as encouraging workers to resign voluntarily, or threatening workers that the succeeding company will not offer continual employment if they refuse to resign voluntarily … PRESIDENT (in Cantonese): Mr LUK Chung-hung, please state your supplementary question. MR LUK CHUNG-HUNG (in Cantonese): So, may I ask the Secretary whether the Government will consider the legal viewpoint in the said judgment and include it in SEC for improvement? Third … PRESIDENT (in Cantonese): Mr LUK Chung-hung, you have asked two supplementary questions. Please sit down. Secretary, you may answer one of the two supplementary questions. UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, for the first part of the supplementary question, that is, why the Government does not recruit these workers direct via permanent contracts, it is because direct recruitment is not the only approach for delivering public services.


All along, the Government has involved the private sector in the provision of public services. This practice is conducive to maintaining a small and effective civil service establishment on the one hand and creating business and employment opportunities in the private sector on the other. In general, the private sector enjoys higher flexibility than the Government in human resource management and resources deployment, and it can provide reliable services with cost-effective means in most cases. For instance, they can deploy manpower at short notice to handle large events and cope with some particularly demanding service requirements, and they may also help the Government to respond promptly to the public at peak demand periods. President, turning to the second part, that is, whether the Government can amend SEC to protect outsourced workers. SEC is drawn up by LD, which is applicable to non-skilled workers employed by outsourced contractors. For example, in terms of transfer arrangements, when outsourced contractors deploy outsourced workers to work in other workplaces, they can only do so within the specified period stated in SEC under an urgent situation or on an ad hoc and limited basis. Hence, this provision is not applicable to workers whose redeployment is necessary due to expiry of service contracts. On the other hand, provisions have been laid down in the existing EO to protect the interests and rights of employees upon expiry of service contracts and regulate the payment of SP by employers. As for the reason why the Government does not make mandatory provisions to require contractors to pay SP or LSP to employees affected upon the expiry of contracts and the difficulties we encountered in this aspect, it is stipulated in EO that if an employee who has been employed under a continuous contract for not less than 24 months and is dismissed by reason of redundancy, he is in general entitled to SP. Moreover, if an employee has been employed under a continuous contract for not less than five years, he is entitled to LSP if his service satisfies the specific requirements. However, when the service contract expires and the employer offers to renew the contract of employment not less than seven days before the date of the expiry of the contract, with employment terms no worse than those in the previous contract, if the employee unreasonably refuses the offer, the employee concerned may not be able to recover his SP successfully.


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The scenario just mentioned mainly involves arrangements upon the expiry of service contracts between outsourced contractors and the Government. More often than not, outsourced contractors will deploy those outsourced workers affected to other posts. In Hong Kong, such transfer arrangements have all along been made between employers and employees at their liberty through negotiation. If the Government imposes mandatory requirement for contractors to dismiss all employees upon expiry of contracts and pay them SP, it may be against the will of contractors who wish to offer continual employment to affected employees or against the will of employees who wish to stay in the employment. Moreover, this is not conducive to the building of long-term employment relationship between them. MR POON SIU-PING (in Cantonese): President, FTU has all along opposed this kind of outsourcing arrangement. Earlier on, the Secretary mentioned that the number of labour disputes was included in the Annex to the main reply. I have read the Annex. According to the information therein, there were only 10-odd cases for each of the four departments in each of the past years. There were a total of 119 cases for all these departments, of which 50 cases were from FEHD. I note that there were 32 cases on non-payment of wages and eight cases on SP and LSP for the FEHD, and of course, HD also has 33 cases. The Secretary pointed out earlier that if outsourced contractors breached EO, there was chance that their contracts might be terminated, and if convicted, the contractor would not be granted any service contracts of the Government for five years. May I ask the Secretary the number of cases in which the outsourced contractors' contracts were terminated and the number of cases in which the service contracts were not awarded by the Government in the past few years? UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, since the introduction of the demerit point system in April 2005, the Government has issued 35 default notices to 22 outsourced contractors. The contractors concerned have been deducted one point on every issue of default notices. By now, there is one contractor who has all three points deducted, which means that three notices have been issued, and its price quotations and tender proposals submitted between 2006 and 2011 were not considered. All government departments will implement this demerit point system strictly. We consider that the small number of cases incurring point deduction reflects that the demerit point system has brought about the intended


deterrent effect. According to the figures, in 2005 and 2006 when the demerit point system was first introduced, the number of cases incurring point deduction was higher, but the number has reduced in recent years. It is evident that with the implementation of the demerit point system, contractors have paid special attention to the compliance of contract and EO. Therefore, when outsourced contractors take up such contracts, they will cautiously fulfil the requirements for protecting and safeguarding employees. Moreover, in tendering exercises, procuring departments will require tenderers to submit information relating to their breaches of relevant ordinances, provide all records of convictions or make declaration of no conviction, for the purpose of tender assessment. Therefore, if tenderers have been convicted of breaching relevant ordinances, during the prohibition period, they will not be allowed to submit price quotations and tenders or obtain acceptance from us. According to the information of LD, between 2013 and October 2016, there were only two cases of conviction of breaches of requirements of EO, and only one employer was involved. The Government will not consider any tender proposals submitted by the contractor concerned for a period of five years from the date of conviction. Moreover, according to the record of LD, during the aforementioned period, no outsourced contractor was convicted of breaching the Employees' Compensation Ordinance. DR CHIANG LAI-WAN (in Cantonese): President, I had urged the authorities to review the tendering mechanism for outsourcing cleaning services of the Government and the demerit point system at the Panel on Manpower. According to the surveys we conducted in recent years, there are over 40 000 outsourced workers employed via the Government in Hong Kong now. We note that these outsourced workers are not covered by any retirement protection. Although they are entitled to MPF under the law, after several rounds of offsetting, all their money for retirement would have been offset. By the time of their retirement, their MPF account will only be left with a zero balance. Moreover, they lack occupational safety protection. In reality, many outsourced workers, such as those responsible for cleaning parks, are only provided with one pair of gloves. For workers of the Government, they can get a new pair of gloves if the old pair is broken, but for those outsourced workers, they cannot get any replacement for their broken gloves.


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We are of the view that these situations may be resulted from certain systems which have been implemented for many years. For the sake of these several tens of thousands of outsourced workers, should the Government conduct a comprehensive review? In the present situation, for those outsourced contractors, the Government … PRESIDENT (in Cantonese): Dr CHIANG, please state your supplementary question direct. DR CHIANG LAI-WAN (in Cantonese): Alright, my supplementary question is: Will the Government consider conducting a comprehensive review of the relevant mechanism or adjust the price and quality proportion under the marking scheme from 7:3 to 5:5? UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, in the past three years and as at 31 October this year, among the contracts awarded by the four procuring departments I mentioned earlier, namely, FEHD, GPA, HD and LCSD, every year, some 400 of them are government service contracts employing mainly non-skilled workers and involving about 35 000 workers. As for the marking scheme mentioned by the Member just now, we also continuously adopt a flexible approach. Under the marking scheme adopted by the departments for assessing tenders involving the employment of non-skilled workers, the scoring criteria consist of technical and price scores. Among them, technical score accounts for 70% of the weighting and price score accounts for 30%. The departments may raise the weighting of technical score to 40% and reduce that of price score from 70% to 60% as necessary. We make adjustments flexibly in this respect. In May this year when a review was conducted on government contracts involving the employment of non-skilled workers, the Government adjusted the marking scheme adopted by departments. We particularly reminded the departments concerned that in assessing the tenders submitted to them, they should consider both the technical and price aspects, especially those terms


relating to the proposed wage levels and working hours of non-skilled workers, and should include them in the assessment criteria. In other words, when examining the technical aspect, regardless of whether the technical score is 30% or 40%, the department will take into account the terms relating to the wages and working hours proposed by the tenderers. Under this arrangement, when the assessment criteria adopted by a department remain unchanged, a tenderer will get higher scores in the technical aspect if the tenderer is willing to offer higher wages to non-skilled workers or allow these workers to work shorter hours. This is the review conducted by the Government in May this year. With such an adjustment, a tenderer who offers more favourable terms in wages or working hours will get higher scores in the technical aspect, and its chance of a successful bid will be higher. As such, the adjustment can help encourage outsourced contractors to improve the treatment for non-skilled workers in terms of wages and working hours. PRESIDENT (in Cantonese): Fourth question. Management of public records 4. MR CHARLES PETER MOK (in Cantonese): It is learnt that at present, quite a number of advanced countries have enacted archives laws to set out the requirements in respect of matters such as the preservation and management of and access to important public records on social policies and policies relating to people's livelihood, so as to ensure the integrity of public records and safeguard people's right to know. On the other hand, the Hong Kong Government has all along been using merely administrative directives and guidelines with no legal effect to regulate the management of public records. Regarding the management of public records, will the Government inform this Council:

(1) given that the Law Reform Commission formed subcommittees in May 2013 to conduct studies on archives law and access to information respectively, of the latest progress and outcome of the studies conducted by these two subcommittees;


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(2) given that the Government Records Service collaborated with the Office of the Government Chief Information Officer last year to conduct a study to gauge the implementation of electronic records management by various policy bureaux and government departments ("B/Ds"), of the latest progress and timetable of such study; and

(3) of the B/Ds that are using the Electronic Recordkeeping System

("ERKS") on a trial basis at present or have formally adopted ERKS; whether the authorities have assessed and reviewed the use of ERKS; if they have assessed, of the relevant criteria; when the authorities will expand ERKS to cover all B/Ds, and of the estimated expenditure concerned?

CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, the Government fully recognizes the importance of records management and is committed to identifying and preserving government records having archival value. The Government has put in place administrative arrangements to comprehensively regulate the management of government records. The Government Records Service ("GRS") is tasked to oversee the overall management of government records and ensure that government records are properly managed and those with archival value are preserved for public access. Although Hong Kong has not implemented an archives law at present, the essential principles of records management adopted internationally have been implemented in Hong Kong through administrative arrangements. These principles include promulgation of recordkeeping standards; designation of obligations and responsibilities of government agencies relating to creating, keeping, maintaining and protecting government records; destruction of records to be subject to prior authorization of archival authority; setting out responsibility for safe custody and conservation of archival materials; and provision for public access to public records. In the past few years, GRS has also implemented a number of new measures and strengthened its manpower support, with a view to further improving the present records management system within the Government. These measures include enhancing the arrangements in respect of records creation, disposal, transfer and public access, provision of more training courses, enhancement of the monitoring mechanism to oversee the records management practices of bureaux and departments ("B/Ds") and provision of relevant advice, and release of more information relating to the records management in the Government so as to enhance transparency. We believe that


formulating and implementing an effective framework of administrative arrangements is essential to the refinement of the records management in the Government. When developing our present records management system, we have made reference to those of different countries and regions such as the United Kingdom, the United States and Australia, and so on, as well as adopted internationally recognized standards and practices. We have also sent our staff for overseas visits and exchange so as to keep abreast of the latest information and trend on records and archives management abroad. As an ongoing effort, the Government keeps the current administrative arrangements under review and will improve on them as and when appropriate. My reply to the question raised by Mr MOK is as follows:

(1) The Law Reform Commission ("LRC") set up two Subcommittees in 2013 under the chairmanship of The Hon Andrew LIAO, SC, and Mr Russell COLEMAN, SC, respectively, to study the subjects of archives law and access to information. The two Subcommittees are studying the existing systems and the laws of other jurisdictions, and will conduct public consultation at a later stage, with a view to making appropriate recommendations on possible options for reform if need be. The Government will examine carefully the recommendations to be made by LRC before mapping out the way forward.

(2) With the support of the Office of the Government Chief Information

Officer ("OGCIO"), GRS issued questionnaires to all B/Ds in February 2015 to gauge their electronic records management situations. GRS also subsequently conducted random checks and carried out on-site inspections to the B/Ds concerned to verify the information gathered from the questionnaires. The study was completed in September 2015. The results showed that B/Ds had no major problems in electronic records management. B/Ds had strictly followed the Government's mandatory "print-and-file" requirement for handling electronic mails. "Print-and-file" means that if a B/D has not yet implemented an electronic recordkeeping system ("ERKS"), after it has sent or received an electronic mail record, it should print the electronic mail record and file it in a paper-based recordkeeping system. As regards the deployment of shared drive facilities, B/Ds used them to store non-records or copies


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of electronic records only in order to facilitate internal sharing of knowledge and information rather than to replace the official recordkeeping system.

The study results also revealed that three B/Ds had to take some

improvement measures of which one department needed to ensure those electronic records stored in the shared drive facilities would be filed in the department's recordkeeping system as soon as possible, while another two departments needed to regularly circulate the guidelines on "print-and file" in order to remind their staff to understand the mandatory requirement. The B/Ds concerned have taken immediate improvement measures after receiving GRS' advice.

(3) The Efficiency Unit ("EU"), GRS, Communications and Creative

Industries Branch of the Commerce and Economic Development Bureau, Rating and Valuation Department and Drainage Services Department are the early adopters of ERKS. The Electronic Information Management Steering Group ("EIMSG") of the Government conducted an initial assessment and review on the ERKS implementation in the above mentioned five departments in 2014. The review criteria included the implementation experience, as well as costs incurred and benefits, such as savings in manpower, paper, rental for file storage space, and so on. The results showed that all the five departments had successfully implemented their ERKS, effectively minimizing the problem of duplicate filing in different units of the department and gradually reducing paper consumption and file storage space. EIMSG later decided to recruit B/Ds with more complex recordkeeping requirements for the second phase of implementation so that a comprehensive review could be conducted before a full-scale implementation of ERKS across the Government.

The second phase of implementation started from late 2015 with the

participation of six B/Ds and a budget of over $100 million. Among them, the Intellectual Property Department and OGCIO have successfully launched their ERKS. For the remaining four departments, namely the Administration Wing, Civil Engineering and Development Department, Architectural Services Department and Marine Department, ERKS will be implemented by phases


starting from the end of 2016. Upon initial completion of the second phase implementation of the system in 2017-2018, EU together with OGCIO and GRS will conduct an assessment and review of the use of the system in the six departments, with a view to formulating a long-term strategy and expenditure estimates for further extension of ERKS to other B/Ds.

MR CHARLES PETER MOK (in Cantonese): Strangely enough, in her main reply the Chief Secretary did not say that in the absence of legislation, actually it is useless no matter how reference is made to the overseas system. The Ombudsman and others have long pointed out why legislation is needed, and I will not repeat this point. With regard to the part on the work of LRC, I found that the Chief Secretary's main reply is the same as her reply to Ms Emily LAU two and a half years ago on 16 April 2014 as she said in both replies that LRC had already been holding meetings. But two and a half years have passed and there has been zero progress. With such slow progress and as the Government keeps on destroying records, I am afraid that LEUNG Chun-ying will be more rampant in the remainder of his term. As at April this year, the current-term Government has destroyed an average of nearly 300 million sheets of documents a year, which was double the number in any of the two previous terms of Government. President, my supplementary question is: While the enactment of legislation has been consistently delayed over the past decade, how many records of archival value have been transferred to GRS in accordance with the records retention and disposal schedules? We would like to see whether the trend is indicative of an increase or a decrease instead. CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, I do not have the figures requested by Mr MOK up my sleeves. Perhaps we can provide them after this meeting. (Appendix I) However, before replying to the supplementary question asked by Mr MOK just now, I wish to briefly make three points in response. First, the existing administrative arrangements for records management are stringent and mandatory, and are subject to the supervision of GRS which is under the Chief


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Secretary for Administration. So, it is for the senior levels of the Government to ensure strict compliance by B/Ds with these principles of records management established with reference to international practices. Second, Mr MOK opined that the two Subcommittees have made slow progress. In fact, the terms of reference of both Subcommittees are very important and it takes time for them to carry out their work. If Mr MOK is interested in knowing some new information, I can tell him that since the establishment of the two Subcommittees, about one meeting is held monthly and so far, over 30 meetings have been held. Apart from reviewing the situation in Hong Kong, the Subcommittees have also made comparisons among and conducted studies on a number of overseas jurisdictions. Therefore, I beg to differ from the view that the two Subcommittees are slow in their work. Third, the procedures for destroying records and the decision-making process are stringent too. The destruction of records by all B/Ds is subject to the supervision and approval of GRS. It is far from comprehensive to draw a comparison merely based on the number of records destroyed because we need to look at what records had reached the expiry of the retention period back in those years or are approved for destruction under the current policies. In many cases, actually a large quantity of the records destroyed is made up of forms, such as application forms for non-tourist visa of the Immigration Department, tax-related records or personal data under the Inland Revenue Department, and so on. MR CHARLES PETER MOK (in Cantonese): Can the Chief Secretary provide a written reply to the supplementary question that I asked earlier? PRESIDENT (in Cantonese): The Chief Secretary already said that supplementary information would be provided. MR MARTIN LIAO (in Cantonese): President, public records are the source and foundation of the preservation of important government and social data, and with technological development and popularization of Internet technology, electronic records have become increasingly more important. In 2014 the Government confirmed that consideration would be given to implementing ERKS across the board and appropriate timetable would be provided for various departments. I am more concerned about two aspects, namely, the disposal and


security of electronic records. May I ask the Government whether there are uniform standards for the disposal and security of electronic records in B/Ds that are using ERKS on a trial basis or have adopted ERKS, especially when cross-department records are involved? CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): I thank Mr Martin LIAO for his supplementary question. As I said in my main reply earlier, with regard to ERKS, we are currently taking it forward and putting it on trial in phases. Therefore, a comprehensive assessment has to be carried out on its completion in certain departments. Notwithstanding this, whether it be electronic or paper-based recordkeeping, compliance with the same set of records management guidelines is required. IR DR LO WAI-KWOK (in Cantonese): President, there have been media reports about a decline in the percentage of public access to government records. Of course, I do not know how accurate these figures are. In this connection, I wish to ask the Chief Secretary about the situation of public access to government records. Will the Government review the provisions of the Code on Access to Information with a view to improving and facilitating public access to open information? CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): Actually I have said in my main reply that the Government has in recent years introduced a number of new measures which aim to, among others, enhance the arrangement for public access to information. It is because these records are very good education on history and so, we hope to encourage more members of the community to access these historical records which have been made public, in order to better understand the development of the history of Hong Kong. Therefore, to put it simply, we will make ongoing efforts to improve this area of work. For instance, we have uploaded onto the website a table of contents of the records available for public access, so that people who are interested can find out from the website what records are available for their access without having to visit the office of GRS in person to find out these details. Besides, Members may have noted that GRS has adopted a more lively, vivid approach by presenting certain categories of records by way of storytelling, hoping to arouse public interest. We will continuously carry out work in this area.


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DR KWOK KA-KI (in Cantonese): President, the records destroyed by LEUNG Chun-ying have outnumbered those by the previous terms of government under TUNG Chee-hwa or Donald TSANG. I was greatly shocked by the reply given by the Chief Secretary. We all know that there is the Wang Chau incident or scandal recently. The Government initially said that meetings were held for soft lobbying and there was no record. Then it corrected itself and said that there were some records, adding subsequently that there were records not only for one meeting but two meetings. This is an incident involving significant public interest and yet, the Government could, on various occasions and in the limelight, arbitrarily distort the facts. The Government has now come to a state where it does whatever it pleases … PRESIDENT (in Cantonese): Dr KWOK Ka-ki, please ask your supplementary question direct. DR KWOK KA-KI (in Cantonese): President, I am just about to ask it. The Government has been acting arbitrarily, and the only way to provide protection is to enact laws for the purpose. In her reply earlier the Chief Secretary mentioned that the two Subcommittees have already been doing everything, sounding as if this is almost enough. Is it that the Chief Secretary agreed that legislation is not needed and she would keep on turning a blind eye to public interest by making these records vanish into thin air and burying forever the facts that should have been brought to public attention, hence making the many people of Hong Kong suffer? Does the Chief Secretary agree to and even support these acts? CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, I am already used to the way that Dr KWOK asked a supplementary question. On this issue, first, as I have said, the SAR Government fully recognizes the importance of records management and retention, and opens up records for public access after a certain period of time. Despite the absence of statutory regulation, some codes of practice for records management in line with international standards have been implemented on a mandatory basis within the Government. Having said that, we are open to legislating for this purpose. In this connection, LRC has set up two Subcommittees, and senior colleagues in the Government have also participated in the discussion of the Archives Law


Subcommittee over the past three years or so. But so far, as the Subcommittees have not yet completed their work, which includes compiling reports for public consultation and then reverting to LRC for its approval before publishing the final report, the Government will express its final position on this issue after the release of the report by LRC. DR KWOK KA-KI (in Cantonese): President, the Chief Secretary's reply is not clear. I asked the Chief Secretary if she would continue to shield and support such acts. Is she saying in reply that she would continue to do so? Would she please answer yes or no? PRESIDENT (in Cantonese): You have asked your follow-up question. Please sit down. Chief Secretary for Administration, do you wish to add anything? CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, I take exception to Dr KWOK's allegation that we had shielded illegal or unscrupulous acts. MR CHU HOI-DICK (in Cantonese): The Chief Secretary said earlier that the records could serve to enable Hongkongers to get to know history. I wish to add a more important point and that is, the enactment of an archives law serves to caution civil servants to be highly scrupulous and prudent in their work, knowing that they are subject to public monitoring and they have to bear legal consequences for not acting in accordance with the law. Administrative arrangements or the current Code on Access to Information cannot protect people's right to know; nor can they exercise adequate monitoring on the Government. I wish to ask a specific question. In her main reply earlier the Chief Secretary said in the foreword that when developing the records management system, reference was made to the practices of different countries and regions such as the United Kingdom, the United States, Australia, and so on, and that staff were also sent for overseas visits and exchange. I wish to ask the Chief Secretary this: Of the regions or countries to which reference was made and staff were sent for visits and exchange, is there any region or country where there is no archives law or law on freedom of information?


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CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, on the second question, if my memory does not fail me, the Director of Administration had personally made overseas visits for the purpose, and as to how many countries the Director of Administration had visited, as I do not have a good memory, I would like to provide a written reply after this meeting. (Appendix II) However, I think generally speaking, the places identified for overseas visits are places with an archives law. It is because we need to complement the studies conducted by the LRC and so, we would like to collect more information in order to understand the issues that need to be considered following the implementation of an archives law and in this respect, it is incumbent on any government to exercise caution and this may as well respond to the first point made by Mr CHU Hoi-dick just now. Certainly, as I said earlier, we are open to the enactment of an archives law and so, we support the work of the Subcommittees under the LRC. Yet, we must be careful with the making of any legislation and it is also necessary to conduct studies and assessment before implementation. MS TANYA CHAN (in Cantonese): President, as Dr KWOK said earlier, since he assumed office LEUNG Chun-ying has destroyed more records than the two previous Chief Executives. I can cite some specific figures. For instance, in 2014, close to 90 000 linear metres of records were destroyed, which are equivalent to 214 blocks of IFC or Two International Financial Centre ("Two IFC"), whereas in 2015, the records destroyed are equivalent to 147 blocks of Two IFC. The Chief Secretary said in her earlier reply that many of these records are probably forms but I do not see why there would be particularly more forms after LEUNG Chun-ying assumed office, or particularly more forms in 2014. Instead, what we saw more in 2014 might be incidents of great significance happening in Hong Kong, and has LEUNG Chun-ying destroyed all the records under these circumstances? I wish to ask the Chief Secretary whether the records destroyed have been filed. Can members of the public access information on what records have been destroyed?


CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, I must reiterate that all requests for destruction of records are processed in accordance with the requirements set out in the corresponding records retention and disposal schedules. The decision as to whether the records have any archival value or potential archival value is made when the records retention and disposal schedules are drawn up. For time-expired records having no archival value, GRS Director's approval would be given prior to their physical destruction by B/Ds. For those having potential archival value, they would be appraised again by the Public Records Office of GRS and only those confirmed to be of no archival value would be approved by GRS Director for destruction. There are certainly changes in the quantity of records approved for destruction each year, depending on the quantity and nature of the time-expired records of each policy bureau and government department in that year. As this is not the first time that this question is asked, let me add here that more records were destroyed in the past few years mainly due to the accumulation of quite a large number of time-expired records and records that need to be destroyed in B/Ds. Records approved for destruction by GRS Director include those cited by me as examples earlier, such as arrival and departure cards filled out by visitors, records relating to immigration matters, general records relating to the filing of tax demands, computer printouts, certificates, registration records, cargo manifests, general forms, and so on. If Ms CHAN wishes to know each and every record that has been destroyed, that would be impossible because if the many types of destroyed records cited by me just now have to be filed all over again, that would not be records management work. MS TANYA CHAN (in Cantonese): President, my question is whether there is a chance to at least find out about the nature of the destroyed records. Is there a chance for the public to find out about it? PRESIDENT (in Cantonese): Chief Secretary, do you wish to add anything? CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, with regard to their nature, I have already given an answer.


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PRESIDENT (in Cantonese): Fifth question. Guarding residents in residential care homes for persons with disabilities against sex crimes 5. MR CHAN HAN-PAN (in Cantonese): President, it has been reported that a former superintendent of a privately run residential care home for persons with disabilities ("RCHD"), the Bridge of Rehabilitation Company, was prosecuted for indecently assaulting two female residents with intellectual disability during the period between 2002 and 2004 but was acquitted. In addition, that person was prosecuted in 2014 for having unlawful sexual intercourse with a female RCHD resident with intellectual disability. However, the Department of Justice ("DoJ") withdrew the prosecution in May this year on the ground that the female resident was unfit to give evidence in court proceedings. The case has aroused public concerns about the monitoring of this type of residential care homes, protection for the rights and interests of the residents and law enforcement against sex crimes. In this connection, will the Government inform this Council:

(1) given that operators of RCHDs are required to comply with the principles, procedures, guidelines and standards for the operation, keeping, management or other control of RCHDs provided in the Code of Practice for Residential Care Homes (Persons with Disabilities), of the number of cases of contravening the Code uncovered by the authorities in each of the past three years; given that the Convention on the Rights of Persons with Disabilities has been in force in Hong Kong since 2008, why the Government has so far not introduced any legislation on the Convention to strengthen the protection for the rights and interests of persons with disabilities;

(2) of the number of prosecutions for sex crimes in each of the past three

years; among them, the number of cases in which the victims were unable to give evidence in court proceedings, and the respective numbers of those cases in which DoJ withdrew prosecution for this reason and continued with the prosecution, and the number of convictions; what factors DoJ considered when deciding whether or not to continue with the prosecution; and


(3) of the number of prosecutions for sex crimes in the past three years in which the victims resided in RCHDs; DoJ's considerations in deciding whether or not to institute prosecutions against the persons concerned, and whether such considerations include the previous prosecution and conviction records of them; if so, of the details; if not, the reasons for that?

SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, my reply to the question raised by Mr CHAN Han-pan is as follows:

(1) The United Nations Convention on the Rights of Persons with Disabilities ("the Convention") has entered into force for Hong Kong since August 2008. The rights of persons with disabilities as stipulated in the Convention have been implemented through various laws and other measures, including the Hong Kong Bill of Rights Ordinance, the Disability Discrimination Ordinance and the Residential Care Homes (Persons with Disabilities) Ordinance which I will mention later.

The Government attaches importance to the monitoring of residential

care homes for persons with disabilities ("RCHDs") and monitors RCHDs through a licensing system set up under the Residential Care Homes (Persons with Disabilities) Ordinance and administered by the Director of Social Welfare ("DSW"). It is stipulated that DSW may issue code of practice from time to time regarding the operation of RCHDs (i.e. the Code of Practice for Residential Care Homes (Persons with Disabilities)). The Licensing Office of Residential Care Homes for Persons with Disabilities ("LORCHD") of the Social Welfare Department ("SWD") conducts surprise inspections of RCHDs from time to time and will promptly conduct surprise inspections upon receipt of complaints. If any RCHDs are found to have contravened the Code of Practice for Residential Care Homes (Persons with Disabilities) during surprise inspections or investigation of complaints, LORCHD will, depending on the nature and severity of the irregularities identified, issue to the RCHDs concerned advisory or warning letters, or written directions on remedial measures under the Residential Care Homes (Persons with


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Disabilities) Ordinance. If the RCHDs concerned persistently fail to make improvement, LORCHD will, in accordance with the Residential Care Homes (Persons with Disabilities) Ordinance and the actual situation of non-compliance, take prosecution action against them, or consider revoking or refusing to renew their licences or certificates of exemption. From 2014-2015 to 2016-2017 (as at 31 October 2016), LORCHD issued 1 142 advisory letters and 30 warning letters and revoked the certificate of exemption for one RCHD.

(2) and (3)

As to parts (2) and (3) of the question concerning the prosecution for

sex crimes by the Department of Justice ("DoJ"), the reply from DoJ is as follows:

Based on available information, the numbers of prosecutions and

convictions under section 125 of the Crimes Ordinance (Cap. 200) (i.e. the offence of sexual intercourse with mentally incapacitated person) in the past three years are listed as follows:

2013 2014 2015 Not convicted 2 1 3 Convicted 4 2 2 Total 6 3 5

The Government does not maintain statistics on the withdrawal of

prosecutions owing to the non-availability of the witnesses (including victims) to testify in court, or statistics on the prosecution of sexual offences involving residents of care homes for persons with disabilities as the victims.

According to Chapter 5 of the Prosecution Code published by DoJ,

the decision to prosecute requires consideration of two factors: the first is that the admissible evidence available is sufficient to justify instituting or continuing proceedings; the second is that the general public interest must require that the prosecution be conducted. In respect of the first factor, there must be legally sufficient evidence to support a prosecution; that is, evidence that is admissible and reliable and, together with any reasonable inferences able to be drawn from


it, likely to prove the offence. The test is whether the evidence demonstrates a reasonable prospect of conviction. The public interest is not served by proceeding with cases that do not satisfy this test. Chapter 10 of the Prosecution Code also provides that a prosecutor remains under a duty continually to review a prosecution that has been commenced. The prosecution must be discontinued if, following a change of circumstances, a reapplication of the prosecution test at any stage indicates that the evidence is no longer sufficient to justify a reasonable prospect of conviction or the interests of public justice no longer require the prosecution to proceed.

Based on the principles mentioned above, in the event that the victim

is unable to give evidence in court, and the remaining evidence could not demonstrate a reasonable prospect of proving any criminal offence against the defendant, DoJ would need to withdraw the prosecution.

The above mentioned considerations in deciding whether to

prosecute are applicable to all cases, including sexual offences involving residents of care homes for persons with disabilities as the victims. In the prosecution process, apart from protection of the victims (in particular vulnerable victims), prosecutors must also be alert to the rights conferred upon an accused by law which are relevant to the prosecution process, including rights guaranteed under the Basic Law (i.e. equality before the law, the rights to have confidential legal advice, to be presumed innocent, and to have a fair trial without undue delay, etc.), and the right of a defendant to have a fair and public hearing guaranteed under Article 10 of the Hong Kong Bill of Rights. As such, generally speaking, a suspect's prosecution or conviction record is not part of the admissible evidence. However, when assessing whether it is in the public interest to prosecute a suspect, whether the suspect has any criminal history can be one of the factors for necessary consideration.

MR CHAN HAN-PAN (in Cantonese): President, there has been a long-term shortage of subvented residential places, especially those of RCHDs. Given the difficulty in securing a residential place, sometimes residents of care homes can


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only silently swallow their bitterness in times of mistreatments and abuses. The numbers provided by the Bureau indicate that over 1 000 advisory letters and 30 warning letters had been issued but only one RCHD had had its certificate of exemption revoked. It shows that when it comes to monitoring care homes, the Bureau would only pay lip service. What specific measures will the Bureau put in place to strengthen monitoring and increase residential places? To facilitate prosecution, the authorities can improve court facilities to encourage or help victims who are children or who are intellectually disabled testify in court. Will the authorities consider setting up a designated court to handle such kind of cases? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): Mr CHAN's supplementary question contains three parts. Allow me to give a brief explanation here. In the special meeting of the Panel on Welfare Services held on 1 November, which was also a three-hour public hearing, we carefully listened to Members' views and the Government also clearly illustrated a strategy encompassing more than 10 measures to tackle the problem. I will not repeat what was already explained at the meeting, but I would like to give a few key points. The strategy includes stepping up efforts in prosecution and inspection. The Bureau is also recruiting retired police officers to join the professional inspection team so that collection of evidence and prosecution will be conducted more adequately. Moreover, we will also provide training, such as requiring superintendents of care homes to have certain qualifications in future. I will not repeat those 10 plus measures which were explained at the meeting. Please refer to the relevant documents. I would like to emphasize that we will definitely prescribe the right remedy and spare no mercy and allow no tolerance. We will attach great importance to even one irregularity to ensure the rights of residents, in particular those with intellectual disabilities and the underprivileged who especially need our care. Mr CHAN's second point is about residential places. In this regard, we have a long-term plan with short-term, mid-term and long-term measures all aiming at increasing residential places. Giving a simple example, I will brief Members on two major projects. The first one is to set up a rehabilitation services complex at the site of ex-Siu Lam Hospital located at 16½ Milestone, Castle Peak Road. Construction works will commence in the first quarter next year to demolish the 3.5-hectare sizable building and build the biggest rehabilitation services complex in Hong Kong. Once completed, it will provide


a total of 1 150 residential places for three types of most demanded services: first, severe intellectual disability; second, mild to moderate intellectual disability; and third, severe physical disability. This is a large rehabilitation services centre. Moreover, we will set up an integrated rehabilitation services complex at the site of ex-Kai Nang Sheltered Workshop and Hostel in Kwun Tong. Construction works have just started and, on completion, the facility will provide 300 residential places to cope with the keen demand for the above types of residential places. Of course, outside of these two projects, other projects will be launched soon. We will waste no time to make use of the idle campuses of three primary and secondary schools in Tuen Mun, Tai Po and Sai Kung to construct integrated welfare buildings which will provide some residential places for persons with disabilities. Therefore, I want to make it clear that we have a whole set of short-term, mid-term and long-term plans to increase quality residential places. MR ALVIN YEUNG (in Cantonese): President, persons with disabilities are the most underprivileged in society. They often find themselves with no avenue of redress when they are taken advantage of. We agree with the recent recommendations made by the Law Reform Commission in respect of reforming the relevant legislation, which hopefully will fight for justice for persons with disabilities. However, instead of taking remedial actions after the problem has emerged, it is better to take precaution which may provide more effective assistance to them. President, I would like to ask the Secretary, in the light of the existing legislation, will the Bureau consider singling out certain records of the applicant, especially criminal records, as an independent factor for consideration while processing the application for care home licences? And will it also consider applying the same criteria to assess the qualification of managerial staff of care homes? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Mr YEUNG for his concern about the issue and his supplementary question. In fact, the authorities already explained at the public hearing on 1 November that we would conduct a comprehensive review on the legislation behind the entire existing monitory regime, with a view to formulating short-term, mid-term and long-term measures, because legislative amendments take time. Therefore, now we will first identify, and then implement, measures that can be implemented


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through administrative procedures without implicating the ordinance. But in the course of it we will also examine areas calling for improvements. Our ultimate goal is to provide support to those in need in accordance with the ordinance. We have dissected these problems and will make amendments to areas in the legislation which require revision, including verification of whether applicants have committed sexual offences and their relevant background, as Members have suggested. We will make a thorough consideration. A point to note is for care homes having already received warning letters, we are now seeking DoJ's advice on disclosure of a list of them to increase transparency. Putting them under pressure will allow the public to know which care homes have problems and need to make improvements, so as to strengthen monitoring for the public. We will undertake a series of work. DR LAU SIU-LAI (in Cantonese): President, regarding the Code of Practice for Residential Care Homes (Persons with Disabilities) mentioned in part (1) of the main question, I have the following supplementary questions. A working group, 永別康橋 , which concerns itself with the sexual assault at Bridge of Rehabilitation, has earlier visited the office of the Equal Opportunity Commission ("EOC") for a petition regarding strengthening prevention of sexual harassment and improvement of reasonable facilitation measures for care homes. EOC indicated that it would organize a series of seminars on incidents of sexual assaults in RCHDs and step up its promotion efforts on prevention of sexual harassment, targeting parents of persons with disabilities, carers and social workers. However, we note from the case of sexual assault at Bridge of Rehabilitation that the Code of Practice for Residential Care Homes (Persons with Disabilities) relating to the operation of RCHDs in fact does not set out any guidelines on handling sexual harassment in care homes. As such, I would like to ask the Bureau, in order to provide appropriate arrangements for staff and residents of different sexes in care homes, will it consider formulating some guidelines on prevention of sexual harassment in the Code of Practice for Residential Care Homes (Persons with Disabilities)? And will the Bureau put in place corresponding measures, such as conducting seminars or providing other services, to promote awareness of prevention of sexual harassment among the staff of service providers for persons with disabilities? Lastly, will the Secretary again …


PRESIDENT (in Cantonese): Dr LAU Siu-lai, you can only ask one supplementary question. DR LAU SIU-LAI (in Cantonese): Okay. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): The authorities attach great importance to the issue of sexual assaults. We also know that EOC is hugely concerned about it, so we will work in coordination with all parties. As a matter of fact, we all know that the Panel on Welfare Services will discuss this issue again. In response to the Chairman's request, we will definitely return to the Legislative Council to report on it. I also know that the Legislative Council has invited EOC to attend subsequent meetings, so we will all have an opportunity to engage in an in-depth discussion. As regards Dr LAU's concern, we will for sure follow up on the matter. In fact, on 1 November we undertook to review the ordinance. The Code of Practice for Residential Care Homes (Persons with Disabilities) is derived from the ordinance. If we identify any loopholes in the ordinance that need to be closed, we will do it on all fronts and not miss any chance. MR KWONG CHUN-YU (in Cantonese): President, one tossed stone raises a thousand ripples. The joint petition of 100 000 people in Hong Kong has forged a common aspiration, that is we do not want to see another Bridge of Rehabilitation. President, there are 312 RCHDs in Hong Kong, 80% of which are not granted licences and 251 RCHDs operate with certificates of exemption. I am thankful for media's assistance earlier, which exposed how terrible the environment in care homes was and how residents were abused and made to act as staff due to manpower shortage. Today, a former superintendent of a care home was again and again involved in sexual assaults against the residents in the care home under his management. Honourable colleagues, do we have the heart to see such situation continue to happen? PRESIDENT (in Cantonese): Mr KWONG Chun-yu, please ask your supplementary question.


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MR KWONG CHUN-YU (in Cantonese): President, I will ask my supplementary question shortly. The Residential Care Homes (Persons with Disabilities) Ordinance came into force in 2011 and was implemented in 2013. Today in 2016, 80% of care homes are yet to be granted licences. I want to ask the Bureau, against such background, the one and only revocation of licence was issued to Bridge of Rehabilitation, the very care home against which 100 000 people jointly petitioned. May I know if the Bureau has a timetable to assist the 80% of care homes which currently rely on certificates of exemption to continue operation to meet licensing requirements so that they can operate with official licences? Was monitoring inadequate in the past, causing one tragedy after another? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I thank Mr KWONG for his efforts made in the incident, which I do appreciate as we all know it is a matter of public concern. We explained clearly at the 1 November public hearing, as well as in relevant documents, why there are still over 200 care homes possessing certificates of exemption instead of official licences. I already clarified the general misunderstanding that they are operating without a licence. These care homes are not issued the official licences because, as the ordinance sets out certain structural requirements for the care home buildings, such as fire safety, architecture, and so on, some of them simply cannot meet such hardware requirements at once. Therefore, we have allowed them some room and time to improve. However, given the widespread concern, we have once again reviewed the problem and found that there should not be an open-ended timetable, otherwise some care homes may never meet the requirements. Therefore, we have set a three-year limit. If some care homes cannot meet the requirements within three years, they are not allowed to continue operation. For this reason, we now adopt a two-pronged approach as many hardware problems, such as those involving the Fire Services Department, Architectural Services Department and Buildings Department, cannot be solved at once; a lot of procedures have to be followed. And as far as resources are concerned, we will first provide assistance to all care homes, privately-run or subvented, and the cost will be fully funded by the Lottery Fund. If the care homes concerned have a genuine intention to seek formal registration, they cannot use financial difficulty as a reason or an excuse for not properly following certain procedures, except for various reasons expressly stated in the ordinance. Otherwise, lack of resources is not a reason


for failing to meet the licensing requirements. We will first remove this biggest obstacle. Secondly, we will also as far as possible assist them in handling the procedures involved. Some care homes may eventually still fail to meet the requirements. Then we will inform them honestly that they cannot continue operation. We have decided to take three years to deal with this problem. MR MICHAEL TIEN (in Cantonese): Secretary, this is indeed a thorny problem because the victims may not be able to express themselves clearly. So, there are two major problems. The first is the difficulty in proof and prosecution in relation to such kind of sexual assaults and abuses. I have pointed out at the public hearing that it is possible to install closed-circuit television cameras at spots such as wall corners within the premises of residential care homes housing persons with moderate to severe disabilities, so as to solve the issue of getting victims to testify in court. The second problem is about filing a case. The Secretary said the other day that retired members of the disciplined services would be recruited as care home inspectors. But the problem is the victims may not know how to make a complaint. Therefore, it is necessary for the inspectors to receive professional training so that they know how to understand from facial expressions and body language of persons with disabilities if they want to say something but cannot do so, and then guide them to speak out what has happened and information like locations and time, supplemented by closed-circuit television footage for follow-up. Therefore, Secretary, my supplementary question is: Can the authorities identify these problems through inspections undertaken by care home inspectors with the help of technology? Nowadays prosecution of illegal parking also utilizes the closed-circuit television system, and there is no reason not to do the same to tackle these problems. Secretary, in the long run, the authorities can adopt a two-pronged approach to deal with the problem, that is, conducting surprise inspections and installing closed-circuit television systems. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Mr TIEN for his several supplementary questions. First, we will study his good suggestion of installing closed-circuit television systems in depth. However, it involves privacy issues which require consent of parents and staff. SWD will


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definitely follow up on this. Installation of closed-circuit television systems can serve a monitory purpose but may infringe upon privacy at the same time, so consent of relevant parties has to be sought. I reckon many parents would agree but we need to discuss with individual care homes to see how the staff would think. SWD will definitely follow up on it. This is the first point. Second, we said we will recruit some retired police officers. The purpose is to leverage on their experience in criminal investigation to help our staff locate irregularities. Our staff are professionals too―nurses, social workers and other professions―who work as a team. We will strengthen monitoring specifically on care homes with poor track records as a group and a team to make the process more targeted, instead of conducting individual inspections. On the other hand, Members have talked about whether there are ways to assist prosecution. As a matter of fact, the Director of Public Prosecutions already gave a detailed explanation at the 1 November public hearing. As you may all remember that he said he would, together with DoJ, explore ways to further put forward the recommendations made by the Law Reform Commission in its Report on Hearsay in Criminal Proceedings, that is to admit hearsay so as to prevent the hearing or prosecution from being discontinued due to the inability of mentally incapacitated persons to testify in court. In this regard, DoJ is happy to follow up to figure out how to sort out the matter in terms of laws or legislation or procedures, so as to ensure protection of the rights and interests of persons with disabilities. PRESIDENT (in Cantonese): Last oral question. Retirement protection 6. DR LAU SIU-LAI (in Cantonese): From December last year to June this year, the Commission on Poverty ("CoP") conducted a public engagement exercise on retirement protection. An independent consultant has been commissioned to collate, consolidate and analyze all the views received during the public consultation and to submit a report ("public views report") by the end of this year. At the same time, quite a number of community groups separately held a number of consultation forums and some academic institutions conducted opinion surveys, during which a total of about 18 000 submissions were received


and a majority of the public views supported the implementation of a universal non-means-tested retirement protection option. On the other hand, the Subcommittee on Retirement Protection of the last Legislative Council held a number of public hearings on the matter and submitted its report ("the Subcommittee's report") in July this year, urging the incumbent Government to formulate a concrete execution plan for retirement protection within its term of office. In this connection, will the Government inform this Council:

(1) whether the public views report will incorporate all of the views collected through the community groups' consultation exercises and the opinion surveys, the views set out in the aforesaid some 18 000 submissions, as well as the views in the Subcommittee's report; if the report will not, of the reasons for that; if the report will, given that the simulated options, developed on the bases of the "regardless of rich or poor" principle and the "those with financial needs" principle and put forward by CoP in its consultation document, are different from the universal retirement protection options which have all along been discussed in the community, whether the authorities know how the independent consultant will handle, in the public views report, such views collected on such different bases;

(2) whether it has drawn up the contents and timetable for the follow-up

actions after the publication of the public views report; if it has, of the details; on the premise that the public views report indicates that the majority of the public views support the establishment of a universal non-means-tested retirement protection system, whether the Government will undertake to the public that it will implement right away such a retirement protection system in accordance with the consultation outcome; and

(3) as the Chief Executive ("CE") has promised in his election manifesto

to "set aside adequate moneys in a special Fund" to support the elderly, of the current implementation progress of such policy; as CE indicated when attending a forum during his election campaign that "implementing universal retirement protection needs not to be on a spectacular scale, but requires earnestness", and some grassroots members of the public therefore have high expectations on the authorities' realization of universal retirement protection, whether it has assessed, under the circumstances that the Chief


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Executive fails to fulfill the pledge he made during the election in respect of implementing a retirement protection system within his term of office, if CE and the Chief Secretary for Administration in her capacity as the Chairperson of CoP should be held accountable to the public in this regard?

SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, my reply to the question raised by Dr LAU Siu-lai is as follows: In December 2015, the Commission on Poverty ("CoP") led by the Chief Secretary for Administration launched a six-month public engagement exercise to gauge public views on ways to enhance Hong Kong's retirement protection system. The Government agrees that the multi-pillar retirement protection system currently adopted in Hong Kong should be improved to provide better protection for the retirees and $50 billion has been set aside for this purpose. During the six-month public engagement exercise, government officials and members of CoP organized or attended a total of 110 different types of public engagement activities to listen to the views of various sectors of the community on retirement protection, including organizing public forums, attending House Committee special meetings and other subcommittee meetings of the Legislative Council, visiting the 18 District Councils, holding consultation sessions with government advisory bodies, attending meetings with other organizations (including those held by community groups), conducting stakeholders' meetings and attending youth exchange sessions and talks. The public engagement exercise on retirement protection ended on 21 June this year. An independent consultant commissioned by the Government is working hard to consolidate the views collected during the consultation period through different channels, including discussions at subcommittee meetings of the Legislative Council, public opinion polls on retirement protection carried out by various organizations during the consultation period, as well as over 18 000 written submissions. The views that we received touch upon a wide variety of subjects. Apart from the two major approaches of "regardless of rich or poor" and "those with financial needs", there were also views about the Mandatory Provident Fund ("MPF") (including the "offsetting" issue debated by Members last week), voluntary savings, annuity scheme, family support, and health care and elderly services. This shows that for the public, retirement protection is not confined to providing financial assistance but straddles many


areas of concern. The poll results sourced through different channels also showed divergent views, depending on the design and wording of the questionnaires concerned. For example, according to the public opinion polls conducted by the University of Hong Kong and The Chinese University of Hong Kong during the public engagement exercise, respondents had diverse views about the "regardless of rich or poor" and "those with financial needs" approaches. We expect that the consultancy report will be submitted to CoP by the end of this year. I would like to point out that the Government has never made any commitment to provide a "universal retirement protection" as mentioned by Dr LAU. On the contrary, on various public occasions, the Chief Executive, the Chief Secretary for Administration, the Financial Secretary and myself have stressed that given the rapidly growing elderly population and limited public resources in Hong Kong, the allocation of resources must be targeted and specific enough to address the problem of elderly poverty effectively. The Government aims to set a clear future policy direction on retirement protection within this term of the Government. As the implementation of the relevant measures is complicated and will necessarily take time, it may need to be followed up by the next-term Government. In mapping out the way forward, we will fully consider the views of the public and the community and take into account other factors including its implications on public finances and the economy, as well as the issue of targeting the distribution of resources at those in need. DR LAU SIU-LAI (in Cantonese): President, the Secretary did not answer my question. Will the report touch on what was originally known as the "Scholars' Scheme for Universal Pension Scheme" ("Scholars' Scheme"), which has been renamed "The Universal Pension Scheme 2064", that is, the proposal which has been frequently discussed by community groups and the public? How is the Government going to incorporate and discuss this proposal? The Secretary did not answer my question, so I call on him to do so later. My supplementary question is: The Secretary also mentioned just now that $50 billion had been set aside for the implementation of universal retirement protection, so what is the plan on using this $50 billion? This is because no reference is made to this aspect in the report, nor was it mentioned during the consultation period.


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SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Dr LAU for her supplementary question. First, this sum of $50 billion underlines the determination, sincerity and commitment of the current-term Government and shows the importance attached by the Government to this matter. After we have come up with a plan and the overall direction, and know how to travel down this road, we have to make an application to the Finance Committee and obtain an approval from it, so we will brief Members in due course as this matter has a close bearing with the relevant plan and direction. On how to utilize the resources, or the earmarked money, it all depends on the direction and the proposal. In view of this, we will give Members a briefing before the end of the term of this Government. The second supplementary question is on whether or not the Scholars' Scheme will be reflected in the independent consultancy report. As far as I know, from the public, the consultant also received many … coincidentally, Dr LAU mentioned that 18 000 representations had been collected from community groups and it so happened that the independent consultant also collected 18 365 representations―these two figures are quite close but this is purely coincidental―and there are also many representations from the community. As far as I know, the Scholars' Scheme can also be found therein. We will not interfere with the operation of the independent consultant but I believe they will surely examine everything comprehensively and not a single letter will be omitted. After the independent consultant has thoroughly examined this matter, made analyses and drawn conclusions, we will brief Members on the conclusions. MR LEUNG KWOK-HUNG (in Cantonese): President, as the saying goes, "Liar, liar, lose a molar", LEUNG Chun-ying will be good for nothing even if he does not die because he cheated old ladies. The Secretary said that the Government has made no mention of this. However, when the head of the Government ran for office, apart from saying that he had not carried out any excavations underground, he also made some election promises. President, I will quote, "Implementing universal retirement protection needs not to be on a spectacular scale, but requires earnestness." What did he mean? President, I heard about his manifesto very clearly, that is, a fund will first be accumulated, then a retirement system will be devised. Secretary, the $50 billion allocated by the Government is definitely not the result of saving up; rather, it was transferred from the universal mandatory health contributions account (also known


as "mandatory medical insurance") and the President is also aware of this. May I ask the Secretary if LEUNG Chun-ying has ever told him how much money has been saved? Has he? Has $180 billion or $200 billion been saved, or is it the case that in addition to the $220 billion in the "Future Fund" introduced by John TSANG, the proceeds from land sales have also been included? May I ask the Secretary to give an account of whether or not LEUNG Chun-ying has ever talked about how much money has been saved? How did he save money on a spectacular scale? How did he save money in earnest? How is it possible to introduce retirement protection without money? Will the Secretary please reply? PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. MR LEUNG KWOK-HUNG (in Cantonese): Yes, President. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Mr LEUNG for his comments. In fact, I have given an account clearly in the main reply. On the earmarked sum of $50 billion, the position of the Government has actually been very clear from the outset … (Mr LEUNG Kwok-hung stood up) MR LEUNG KWOK-HUNG (in Cantonese): President, that sum of $50 billion came from the "mandatory medical insurance", which was never used and was left behind by Donald TSANG. How much money has the current-term Government saved? PRESIDENT (in Cantonese): It is the time for the Secretary to reply. Please sit down. MR LEUNG KWOK-HUNG (in Cantonese): I asked him to explain because he does not know his stuff.


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SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, all funds, be it those in the Government's Budget or its resources, are all government funds and no matter by what means they were derived, they are all public resources. Therefore, as the President knows, after the introduction of the plan but prior to the consultation exercise, the Government had already earmarked a sum of $50 billion. As the saying goes, "Food and fodder should go ahead of troops and horses", so this shows the determination, sincerity and commitment of the Government. MR LEUNG KWOK-HUNG (in Cantonese): President, the Secretary really did not answer me. I pointed out that that sum of money is not the result of any effort made by him to save … PRESIDENT (in Cantonese): Mr LEUNG, please sit down. MR LEUNG KWOK-HUNG (in Cantonese): Therefore, my comment is that he did not save any money at all. President, you are a senior Legislative Council Member, so you also know that that sum of $50 billion was allocated for the purpose of implementing "mandatory medical insurance" and in this regard, I have carried out lobbying for a long time. May I ask the Secretary: Does he think that when lying, there is no need to do so on a spectacular scale but has to do so in earnest and furtively instead? I am asking him if he has any comment. PRESIDENT (in Cantonese): Mr LEUNG, please sit down. Secretary, do you have anything to add? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I wish to reiterate one point. The Government attaches great importance to retirement protection and is committed to it. The Government also hopes that within its term, that is, in the remaining time, a clear direction can be identified and an account can be given to Members. I only wish to put across this point.


MR SHIU KA-CHUN (in Cantonese): President, since the report covering the 18 000 representations will be published in late December, may I ascertain on which day it will be published? Is it necessary to be so equivocal and secretive? Another question is … PRESIDENT (in Cantonese): Mr SHIU Ka-chun, you can only ask one supplementary question. Please sit down. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, our present timetable is that by the end of this year, the independent consultant―as the term shows, since the consultant is independent, we must give it room to operate and we do not tell it how to do the assignment―but the contract specifies that a report must be submitted by year end. After receiving the report, we will definitely brief CoP at the earliest opportunity as CoP plays a leading role and the report will also be submitted to the Panel on Welfare Services. In addition, I know that this morning, the Legislative Council has established a subcommittee and its chairman and deputy chairman have been elected. We will also brief and consult Members and listen to their views at the earliest opportunity. MR SHIU KA-CHUN (in Cantonese): Today is already 23 November. May I ask the Secretary if a report can be submitted within one month? PRESIDENT (in Cantonese): Secretary, do you have anything to add? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, we cannot provide a specific date but I have already reiterated that by the end of next month, that is, by the end of this year or in December, the report must be submitted because we must also deal with this matter. In addition, the contract specifies that the whole report must be submitted by the end of December, so this is the responsibility of the consultant.


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MR WILSON OR (in Cantonese): President, although the consultation period has ended, as far as I know, the public have many views on the proposals and they even put forward proposals during the consultation period to revise the proposals set out in the consultation document. In addition, Dr LAW Chi-kwong also proposed the idea of "annuity payment", so it can be seen that this public engagement exercise on retirement protection is not sufficiently comprehensive. May I ask if the authorities will consider the community's proposals and put forward a revised proposal? If the answer is in the affirmative, what is the specific timetable? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Mr OR for his view. In fact, retirement protection is a wide-ranging issue and Members all know this. It is also mentioned in the main reply that the issues raised in the more than 18 000 representations received by us is not just confined to the provision of what is called a cash subsidy to the elderly each month, rather, many other matters were also raised, including annuity payment, reverse mortgage and other types of support. In fact, they are multi-faceted and diverse. A number of scholars also put forward various proposals and we have also been listening to and monitoring views. In view of this, we hope that the proposals and directions put forward by us can take into account various aspects, including the views of the public mentioned by the Member just now. We will surely consider all of them at the same time. MR CHAN CHI-CHUEN (in Cantonese): President, I would like to ask the Secretary if he remembers that four years ago, that is, in 2012, and also at about the same time of the year, the authorities applied to the Finance Committee for funding for the Old Age Living Allowance ("OALA") and a great deal of controversy was aroused. We demanded that no means test be introduced and the pro-establishment camp also considered the asset limit to be too harsh. At that time, the Secretary undertook to introduce OALA first and conduct a review two years later. In fact, I also pursued this matter with the Secretary in a subcommittee, saying that four years had passed but the authorities had still not conducted any review. In reply, the Secretary said that this matter would be reviewed under the entire retirement protection scheme.


However, when the Secretary gave his reply just now, he said that the current-term Government could not really do anything and it is necessary to wait for the next-term Government to undertake the relevant work. In that case, you have back-pedalled, that is, the asset limit of OALA will not be reviewed and relaxed within this term of the Government. If no consensus proposal is ever floated, the approach adopted in relation to OALA will continue to be followed. In that case, you will have gone back on your words. Back then, you said that a review would be conducted after implementation. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, Mr CHAN has a good memory and I also remember that I said so and gave an undertaking. Everyone knows about this. However, since we are talking about retirement protection, we have to consider it in a comprehensive manner and OALA is only one aspect that we have to look into. Therefore, when I brief Members, I will brief them on the overall direction that we believe should be taken. We believe that some measures can be classified as short-term, medium-term or long-term ones. If some of them can be implemented within a short period of time and are not complicated―for example, amending legislation is certainly complicated―but if some measures can be implemented within a short period of time, we will introduce them a bit earlier. We are adaptable and flexible and the aim is to put the elderly first and our foremost consideration is the interests of the elderly. We will surely do our work bearing in mind this point. MR CHAN CHI-CHUEN (in Cantonese): President, I am asking the Secretary if the current-term Government will review the asset limit for OALA. PRESIDENT (in Cantonese): Secretary, do you have anything to add? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I can tell Members that in the process of carrying out comprehensive planning on future retirement protection, this point will be examined at the same time. It will definitely be looked at.


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DR CHENG CHUNG-TAI (in Cantonese): President, I agree very much with the Secretary's comment that when the Government plans for future retirement protection, comprehensive consideration should be given. However, it can be seen from government papers and various types of public forums that in terms of the objective, the universal retirement protection being discussed this time around actually overlaps in many areas with MPF, which has all along been in place. In addition, in terms of operation, many wage earners will also have to face the prospect of making two sums of contributions. Given such a principle and direction, and the comprehensive consideration given to this matter, may I ask the Secretary whether or not the Government has any plan to abolish the MPF Scheme? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Mr CHENG for his question. Perhaps let me say briefly that we adopt a multi-pillar retirement protection system and actually, the mode proposed by the World Bank is adopted. We have four pillars, the first one being social security. In fact, there is actually no need to make contributions in this regard and only government resources are used. The examples include OALA, "fruit grant", Comprehensive Social Security Allowance, and so on. Members are already familiar with all these. The second pillar is MPF, which is placement-tied and privately managed but Members also know that the Government made fund injections at an early stage. The third pillar is personal savings. The fourth pillar is the other in-kind benefits, for example, health care, transport concessions and even other personal assets. These four pillars are mutually complementary and they are actually also mutually supportive. For this reason, it is worthwhile and necessary to retain MPF. Nevertheless, many people are concerned about MPF. As we all know, the Legislative Council conducted a debate on "Abolishing the Mandatory Provident Fund offsetting mechanism" last week and Members expressed diverse views. We also explained in detail that MPF must be enhanced properly to boost the confidence of the so-called "users", by such means as the introduction of Default Investment Strategy and the reduction of annual fees and charges. The Mandatory Provident Fund Schemes Authority will also take this series of measures. We believe that we must take this opportunity to consolidate this pillar called MPF, so that it can serve its purpose of retirement protection even better. (After the President had called on Dr Fernando CHEUNG to speak, Dr CHENG Chung-tai stood up)


DR CHENG CHUNG-TAI (in Cantonese): President, I am sorry but I want to ask a supplementary question. PRESIDENT (in Cantonese): Dr CHENG Chung-tai, which part of your supplementary question has not been answered? DR CHENG CHUNG-TAI (in Cantonese): As the Secretary pointed out in his supplementary reply, he actually … PRESIDENT (in Cantonese): Dr CHENG Chung-tai, you only have to point out which part of your supplementary question has not been answered. DR CHENG CHUNG-TAI (in Cantonese): The Secretary said that universal retirement protection consists of four pillars. Does he mean … PRESIDENT (in Cantonese): This is not relevant to your supplementary question. Please sit down. DR CHENG CHUNG-TAI (in Cantonese): The universal retirement protection mentioned by him … PRESIDENT (in Cantonese): Please sit down. DR CHENG CHUNG-TAI (in Cantonese): I have not yet spelt out my whole question. PRESIDENT (in Cantonese): You still have not pointed out which part of your supplementary question has not been answered.


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DR CHENG CHUNG-TAI (in Cantonese): No, the Secretary will give me a reply. PRESIDENT (in Cantonese): Please point out which part of your supplementary question has not been answered because you can only ask one supplementary question. DR CHENG CHUNG-TAI (in Cantonese): The part that the Secretary did not reply to is … will the secretary please clarify … PRESIDENT (in Cantonese): Dr CHENG Chung-tai, please sit down. DR CHENG CHUNG-TAI (in Cantonese): I will now ask my supplementary question clearly … PRESIDENT (in Cantonese): Dr CHENG Chung-tai, please sit down. DR CHENG CHUNG-TAI (in Cantonese): Will the Secretary please clarify … PRESIDENT (in Cantonese): Dr CHENG Chung-tai, if you still do not sit down, I will rule that your conduct is disorderly. Please sit down. DR CHENG CHUNG-TAI (in Cantonese): President, the Secretary wants to answer my supplementary question. PRESIDENT (in Cantonese): Please sit down. (Dr CHENG Chung-tai remained standing and spoke aloud)


PRESIDENT (in Cantonese): Please sit down. (Dr CHENG Chung-tai remained standing and spoke aloud) PRESIDENT (in Cantonese): Dr CHENG Chung-tai, sit down now. DR FERNANDO CHEUNG (in Cantonese): President, the Secretary said in the main reply, "The Government aims to set a clear future policy direction on retirement protection within this term of the Government. As the implementation of the relevant measure is complicated and will necessarily take time, it may need to be followed up by the Government of the next term." I think this so-called policy direction is: Will this retirement protection be universal, or will it a means-tested approach be adopted? In addition, in the main reply, the Government also says that the public's views on these two directions are diverse, so this means the decision will be a political one: Will it be universal in nature or will it means-tested? May I ask based on what he can make such an important political decision for the next-term Government before the end of his term? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, the public engagement exercise on the retirement protection system and the whole―we consider it to be a project ―was carried out by summoning up our political courage. As we all know, this is a complicated and daunting task but we did not shy away from the issue, rather, we spelt out all the issues, so that they can be discussed. As we all know, the views expressed during the discussion period were quite strong and diverse, so there were many conflicting views but I think we should face the reality and rise to the challenges. It is hoped that through the debate this time around, this matter can be discussed thoroughly in society. If all parties accept the direction after it has been announced, we will have a way out. For this reason, I ask Members to give us some scope and some time. We hope that a way considered by all parties to be feasible can be identified among all the conflicting views. Our chief objective is to benefit the elderly.


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Therefore, we believe that if a consensus can really be forged after undertaking such a daunting task, which also involves the participation of the legislature and the whole community in the discussion of the relevant matters, the next-term Government will not deviate rashly from such a direction or refuse to implement the relevant measures. I believe that the next-term Government will not examine this issue afresh because as we all know, we have really spent a lot of time on this issue and all parties have expressed a lot of views. This is what we mean when we say we hope that collective wisdom can be tapped and a way forward can be found. DR FERNANDO CHEUNG (in Cantonese): President, he did not answer my supplementary question. What I asked the Secretary is: His term is about to end, this is an important political decision and no one knows who will take over the next-term Government, so based on what can he decide whether it should be universal or means-tested? Based on what can he make this decision on the direction of retirement protection for the next-term Government? PRESIDENT (in Cantonese): Secretary, do you have anything to add? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, as we can all see, in the last paragraph of the main reply―this paragraph is very important―we have explained that when formulating the future direction, we will surely consider the public's views and other factors (including the implications on public finance and the economy). All these are supported by figures and are calculable items. We will examine a basket of issues altogether, such as how targeted is the distribution of resources. Given such an objective approach and comprehensive examination, and the results obtained after in-depth discussions by the public, I believe the next-term Government will respect this decision to a certain extent. PRESIDENT (in Cantonese): Oral questions end here.


WRITTEN ANSWERS TO QUESTIONS Replacement of signalling systems of railway lines 7. MR LUK CHUNG-HUNG (in Chinese): President, the MTR Corporation Limited ("MTRCL") is progressing with the replacement of the signalling systems of, and the conduct of on-site tests for, the East Rail Line and seven urban railway lines one after the other. MTRCL will conduct tests on the signalling system on various sections of a railway line during non-traffic hours at night, during which the new signalling system will be activated while the existing one will be suspended. MTRCL will stop testing and revert to the existing signalling system before departure of the first train in the morning. Some members of the public have expressed their worries that the testing arrangements may result in the existing signalling system not working smoothly, thus giving rise to disruptions of railway service. If such service disruptions occur during morning peak hours, tens of thousands of passengers may be affected. In this connection, will the Government inform this Council:

(1) whether it knows the schedules for replacing and conducting tests on

the signalling systems of various MTR lines; if it knows, set out such information by MTR line and station;

(2) as MTRCL has formulated contingency plans to deal with railway

service disruptions which may be caused by the tests on the signalling systems, how such plans deal with railway service disruptions during morning peak hours caused by the tests, including (i) the passenger flow management plan of MTRCL, (ii) the staffing establishment of the Customer Service Rapid Response Unit of MTRCL, and (iii) whether MTRCL has assessed if that staffing level is sufficient to cope with incidents of large-scale disruptions to railway service; whether the relevant government departments and other operators of public transport have formulated contingency plans to deal with the aforesaid service disruptions; if they have, of the details of the contingency plans;

(3) whether it knows if MTRCL has briefed the relevant District

Councils and local residents on (i) the railway sections and stations involved in, and the risk of railway service disruptions caused by, the tests on the signalling systems, and (ii) the details of the contingency plans formulated for service disruptions; and


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(4) how the authorities monitor the progress of the signalling system replacement projects and test runs as well as the appropriateness of the overall arrangements, in order to ensure that MTRCL maintains the provision of safe and reliable railway services?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, the signalling system is the hub of railway operation. It comprises different components, including central computer, computers at different levels, train-borne computers, back-up computers, as well as equipment which are installed at trackside and inside equipment rooms along railway lines. At present, the signalling systems of various MTR railway lines deploy more than 8 100 train trips every day in total, providing safe, reliable and smooth railway services to passengers. Since the loading of the signalling systems of certain railway lines have reached their limits, only by means of upgrading the signalling systems can the carrying capacity of various railway lines be increased and the overall reliability and efficiency of railway services be further enhanced. The MTR Corporation Limited ("MTRCL") will introduce new signalling systems for seven MTR lines (including Tsuen Wan Line, Island Line, Kwun Tong Line, Tseung Kwan O Line, Disneyland Resort Line, Tung Chung Line and Airport Express), of which works will be completed in phases starting from 2018. The commissioning schedule of the new signalling systems is at Annex 1. After the completion of the signalling system upgrading works, the carrying capacity of those railway lines which are benefited from the works can be increased by around 10% respectively. The last phase of the works is expected to be completed by 2026. Besides, as part of the future "North-South Corridor" of the Shatin to Central Link, the signalling system of the East Rail Line has to be upgraded to cater for the increase in train frequency. It is anticipated that after the replacement of the signalling system, the East Rail Line will be able to increase the train frequency from currently 20 trips per hour to a maximum of 27 trips per hour. As the signalling system involves tens of thousands of electronic components, internationally, no railway signalling systems are completely fault-free. Major signalling system upgrades may cause the system to become unstable, and the railway service may be more vulnerable to disruption. This is


inevitable during all system upgrading works. Overseas experiences indicate that, to avoid such risks, some railways would have their services suspended completely when their signalling systems are undergoing major upgrades until the completion of works. Similar practice is not appropriate for implementation in Hong Kong, because public transport services (including railway) in other places are generally not as well developed as in Hong Kong and the number of passengers affected by service suspension is relatively smaller. The popularity and unique position of the Hong Kong public transport system requires the MTRCL to maintain but not lower its service level during its signalling system upgrade. Therefore, it is crucial and rather challenging to complete a smooth upgrade of the signalling systems while minimizing the risk of subjecting the railway service to the impact of the works. My reply to various parts of Mr LUK Chung-hung's question is as follows:

(1) Prior to commissioning, the new signalling systems have to be subject to a long period of tests conducted in a progressive manner to ensure its smooth operation. Such tests include simulation tests at the test-tracks in depots and on-site tests at main lines. To minimize the impact on train services, the on-site tests at main lines will be conducted during non-traffic hours at night.

According to MTRCL, the on-site tests at main lines for the signalling system of the East Rail Line commenced in late October this year. The first stage test covers the sections near the Racecourse Station. Every time when conducting the test, the new signalling system will be activated after the end of passenger train services for trains to run at these sections, while the existing signalling system will be suspended, to test whether the new system is able to control train operation with precision. After completion of tests at night, MTRCL will switch the signalling system back to the existing one to prepare for provision of train service next morning. Subject to the progress of the first stage test, MTRCL plans to progressively extend the test to sections near the University Station and Fo Tan Station in end 2016 and the first quarter of 2017, and then progressively to other sections of the East Rail Line. The entire test will last for an estimated two to three years and will be completed progressively between end 2018 and 2019.


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Similar on-site tests will commence along the Tsuen Wan Line in end 2016 or early 2017. The first stage on-site test will cover sections between Mei Foo Station and Lai Chi Kok Station and will extend progressively to other sections. The entire test is scheduled for completion in 2018.

As the new signalling systems of other railway lines will be put into operation later, the testing timetable will also be formulated at a later time.

(2) As mentioned above, major signalling system upgrades may cause

the system to become unstable, and the railway service may be more vulnerable to disruption. As indicated by MTRCL, the testing of the new system, which involves switching to and from the existing system, may cause some hiccup or malfunctioning at times. When a problem occurs, safety always comes first and MTRCL has to ensure that the problem is fully rectified before resuming normal train service. As such, the train service of the next morning may be affected. Once there are malfunctions, according to experience, completion of repairs normally takes about dozens of minutes to two hours, depending on the causes and seriousness of the malfunctioning. During emergency repairs, trains may have to reduce speed or stop and passengers may need to be detrained.

In view of possible railway service disruptions during signalling system upgrades, MTRCL has carried out risk assessment covering all possible risks during the different stages of works and testing. Relevant measures have been formulated on the basis of the existing contingency mechanism for railway service delays (salient points of existing contingency plans are at Annex 2). In case of railway service delays, MTRCL will, where situation warrants, activate suitable measures, including deploying more staff to the affected stations to assist passengers. MTRCL has established a dedicated Customer Service Rapid Response Unit ("CSRRU"), with around 90 members, to provide additional support focusing on customer service on top of the manpower stationed at individual stations. MTRCL will from time to time review the number of members of CSRRU as necessary. Should train service be suspended due to incidents,


MTRCL will provide shuttle bus services to take passengers to nearby unaffected MTR stations to continue with their journey. The contingency plan formulated by MTRCL for railway service disruption is subject to the agreement of the Transport Department ("TD").

If there are large crowds at stations due to railway service disruption in individual stations, MTRCL will activate appropriate crowd management measures, including adjusting the direction of escalators linking the concourse and platform or closing some entry gates, to control the number of passengers at the platform.

Moreover, in case of railway service disruption, MTRCL will disseminate train information to passengers through different channels as soon as possible, including broadcasts at stations and inside train compartments, LCD information panels at stations, web page and smartphone applications.

According to MTRCL, the above contingency measures were activated to meet actual needs during past railway incidents, and these measures could reduce the impact of the incidents on passengers. MTRCL will from time to time review the effectiveness of these contingency measures with reference to actual operational experience.

In case of a railway incident, the 24-hour Emergency Transport Co-ordination Centre of TD will, in response to the situation, communicate and coordinate with MTRCL, other government departments and the public transport operators, with a view to implementing relevant public transport service arrangements, including enhancing franchised bus and Green Minibus services in the affected area where necessary to help divert passenger flow.

It should be emphasized that although the contingency plans can help ease the inconvenience to passengers caused by any service disruption that may arise from MTRCL's major signalling system upgrades, railway is after all a mass carrier system of the largest scale with high carrying capacity. If service disruption of a more


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serious nature occur unfortunately, even with other road-based public transport modes, including franchised buses, providing emergency support services, their carrying capacities and efficiency would not be comparable with that of the railway system. Such circumstances would inevitably cause inconvenience to passengers to a certain extent, hence passengers' understanding will be needed.

(3) According to MTRCL, it has been communicating with various

stakeholders in the community and, depending on actual situation and needs, arranging briefing with the Legislative Council and District Council ("DC") Members on the MTR train service, from time to time. In view of the upgrade of the signalling system of the East Rail Line and the on-site test being conducted, MTRCL has earlier briefed members of the Traffic and Transport Committees of the North, Tai Po and Sha Tin DCs on the details of the upgrading works and tests, risks that they may involve and the potential impact on railway services, and relevant contingency measures. With the commencement of tests on the signalling systems of the other railway lines progressively, MTRCL will provide stakeholders (including DC members) with timely updates through different channels and by various means subject to actual circumstances.

In addition, MTRCL will directly provide all passengers with information on the signalling system upgrades through platforms such as the electronic media, newspapers and social media, including producing short videos for airing on television and social media, and inviting the press to briefing on the upgrading works, so as to strengthen public understanding of the necessity of the works and the contingency measures put in place by MTRCL.

(4) As the statutory regulatory authority on railway safety, the Electrical

and Mechanical Services Department ("EMSD") monitors the signalling system upgrades of various railway lines, to ensure that the new signalling systems will operate safely and railway safety will not be compromised in the course of the upgrading works and tests for the new signalling systems. MTRCL will appoint independent experts to offer advice in respect of the upgrading works. It is also required to submit a risk assessment report to


EMSD to ensure that the new systems meet international safety standards. EMSD holds regular meetings with MTRCL to hear the Corporation's report on the upgrading works, including the results of safety performance tests conducted in respect of the new systems by MTRCL. EMSD personnel will observe the on-site tests on the new signalling systems conducted by MTRCL to ensure their safe operation. In case of railway incidents due to signalling system faults during the upgrading works and tests on the new signalling systems, EMSD will conduct investigations as per established mechanism to look into the causes. Where necessary, EMSD will ask MTRCL to make improvements, and will follow up on MTRCL's progress in implementing the improvement measures.

Besides, TD will continue to liaise closely with MTRCL to understand possible railway incidents and their potential impact on railway services in the course of the upgrading works and tests for the new signalling systems. TD will also discuss with MTRCL relevant contingency plans to ensure that such plans can be effectively activated where necessary to minimize the impact of incidents on passengers.

Annex 1

Commissioning schedule of the new signalling systems of various railway lines

Railway line Expected commissioning time (year) East Rail Line End 2018 to 2019 Tsuen Wan Line 2018 Island Line 2019 Kwun Tong Line 2020 Tseung Kwan O Line 2021 Tung Chung Line, Disneyland Resort Line and Airport Express

2026


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Annex 2

MTRCL's contingency plans for railway service disruptions Purpose The MTRCL has drawn up contingency plans for various service disruption situations specific to the needs of individual stations. They are made available to the staff assigned to contingency duties. For information that is of use to passengers, it is made available to them in stations and in the Internet. This note gives an account of the MTRCL's contingency plans for railway service disruptions. Handling of railway service disruptions 2. When a serious incident happens and is expected to lead to a prolonged suspension of railway services for 20 minutes or more, the MTRCL will issue a "Red Alert" message to inform government departments including the TD, other public transport operators and media organizations of the incident. Upon notification by the MTRCL, other public transport operators will provide appropriate supportive services as best as they can under the coordination of the TD. On its part, the MTRCL will suitably adjust its railway service to minimize impact and arrange free MTR shuttle buses to carry passengers from the affected stations to convenient locations, such as the nearest MTR station with railway service still in operation. Alert System 3. "Red Alert" is defined as a signal which denotes that serious railway service disruption will continue or is expected to continue for 20 minutes or more, and emergency transport support services from other public transport operators are required. Upon being alerted, public transport operators will urgently mobilize their resources to provide appropriate supporting services as quickly as possible. 4. Prior to the issuance of a Red Alert message, the MTRCL may issue an "Amber Alert" message. "Amber Alert" is defined as an early warning in respect of an incident which may lead to a serious disruption of service. After


receiving this Alert, other public transport operators will alert their emergency unit, get prepared for possible emergency actions which may be demanded for at short notice and keep close contact with the MTRCL. 5. The MTRCL is also required to notify TD within eight minutes on any service disruption incident which has lasted for eight minutes or is expected to last for eight minutes or more. Train service disruption incidents refer to those incidents that lead to a suspension or delay of service at a railway station or a Light Rail stop, or on a section of a railway line. 6. Besides, according to the Mass Transit Railway Regulations (Cap. 556A), the MTRCL shall report to the EMSD any incident that occurs at any part of the entire railway premises and which has a direct bearing on the safe operation of the railway. Dissemination of information during incident 7. Regarding dissemination of information to passengers, the MTRCL has formulated measures to ensure effective communication with passengers during service disruption, with a view to assisting them to make appropriate alternative travel arrangements. These measures include:

(a) broadcasting details of the service situation at stations and in trains; (b) providing information of alternative public transport service such as

franchised bus routes, bus stop locations and free MTR shuttle bus boarding/alighting points on large information displays installed at stations;

(c) displaying signs from concourse ceilings and at street level to mark

routes to free MTR shuttle bus boarding/alighting points when free shuttle bus service is ready;

(d) during service disruption, using LCD screens installed at visible

locations near station entry gates of to provide train service information and other important notices;


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(e) posting railway service disruption message and information on free MTR shuttle bus services on the MTR website and MTR Mobile App "Traffic News";

(f) displaying alternative public transport information on maps in the

concourse of affected stations; and (g) distributing "Rail Service Suspension―Passenger Guide" to

passengers. Operation of train and free MTR shuttle bus during serious railway service disruptions 8. In the event of serious service disruption, the MTRCL will endeavour to minimize the area being affected and provide train service to the farthest extent by: (a) reversing trains at designated track sections to maintain train service

in unaffected sections; (b) diverting trains through supplementary track sections to bypass the

affected section; (c) diverting trains across lines through designated track sections to

reduce the impact of service disruption; and (d) diverting trains through spare track sections to reduce the impact of

service disruption (for example, when the cross-harbour section of Tseung Kwan O Line is suspended, depending on which section is affected, cross-harbour train service can be maintained via the Service Connection Tunnel of Kwun Tong Line to provide linkage between Lam Tin Station and Quarry Bay Station).

9. The MTRCL has formulated free shuttle bus deployment plans for railway incidents and agreements have been entered into with bus operators for the provision of such services during railway incidents to take affected passengers to the nearest MTR station still under normal operation to continue their journeys.


Operation of free MTR shuttle buses 10. Free MTR shuttle bus service is a supplementary measure to assist passengers to travel to convenient locations. Given the limited carrying capacity of shuttle buses, it is not intended to be a substitute for normal train service. It brings passengers to the nearest station outside the affected section of a railway line where service is disrupted, to enable them to continue with their journeys. Shuttle buses would also stop at stations in the affected section to provide services to passengers. Activation of free MTR shuttle bus services 11. The number of free MTR shuttle buses and the level of shuttle bus service to be deployed during a railway incident will depend on which section of the railway line is involved and the seriousness of the situation. Generally speaking, according to the agreement between the MTRCL and the Public Omnibus Operators Association ("POOA"),(1) when free MTR shuttle bus service is needed, the POOA will arrange about seven buses to provide service within 30 to 45 minutes after receiving the MTRCL's notification; an additional 40 buses, if required, will be deployed within 1 to 1.5 hour; and about 100 buses in total after 2 to 2.5 hours. The actual number of buses to be deployed will depend on the extent of impact to train service and road traffic condition. Depending on the actual situation, the MTRCL may operate additional shuttle buses or modify the operating details of shuttle bus services to suit the need of the affected passengers. 12. Information on the estimated arrival time, locations of and routes to boarding and alighting points of free MTR shuttle buses is included in MTRCL's "Rail Service Suspension―Passenger Guide" which is tailor-made for each station for distribution in the station. The Guide is also uploaded to MTRCL's website <http://www.mtr.com.hk/en/customer/services/needs_index.html>.

(1) POOA is the confederation of non-franchised public bus operators in Hong Kong. At

present, more than 200 non-franchised operators are members of the POOA, and together having a fleet of about 4 000 buses which accounts for about 60% of the total non-franchised buses operating in Hong Kong.


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13. Since the carrying capacity of shuttle buses is far below that of the railway, they can only serve as a support service to assist affected passengers to continue with their journeys. It is not possible for shuttle buses to serve as replacement for the entire railway service. Therefore, lines queuing for such bus service are expected and most passengers may have to change to other unaffected MTR lines or take alternative public transport services to travel to their destinations. Manpower Deployment 14. In response to a service disruption incident, the MTRCL staff would be on duty at each MTR station to carry out crowd management duties, make public announcements, issue station notices and help passengers on fare matters according to the established procedures in times of incidents. The number of station staff will be increased as needed. 15. The MTRCL has also established a dedicated CSRRU with around 90 members to provide additional support focusing on customer service on top of the manpower stationed at individual stations. The MTRCL will from time to time review the number of team members of the CSRRU as necessary. 16. Upon calling out the free MTR shuttle bus services during serious service disruption, the Operations Control Centre ("OCC") of the MTRCL will mobilize team members of CSRRU to affected stations to provide extra support on: - setting up facilities for the implementation of free MTR shuttle bus

services; - maintaining order at affected stations and free MTR shuttle bus

boarding/alighting points; - making timely reports to the OCC during incidents to facilitate more

effective coordination with relevant government departments such as the Police for better crowd management;

- handling enquiries and advising passengers on alternative routes and

transport choices; and - providing guidance and assistance to passengers.


17. Upon notification of deployment, CSRRU team members will proceed to the affected stations by the best available means of transport, including taxi. The first team would likely arrive within 20 minutes in most cases according to past experience. CSRRU team members are easily identifiable in their pink vests. Regular review and updating 18. The MTRCL will continue to regularly review and update its contingency plans for railway service disruption in consultation with relevant government departments, in the light of operational experience gained. Unscrupulous sales practices and contracts involving pre-payment for services of fitness centres 8. MR HOLDEN CHOW (in Chinese): President, earlier on, the Consumer Council has sent its staff to pose as consumers to conduct investigations at more than 10 fitness centres in the market, and found that the contract periods for membership of fitness centres were generally rather long (with 60 months being the longest), and that the pre-paid membership fees were as high as several tens of thousand dollars. The Consumer Council has also found that when a fitness centre chain was approaching closing down, the centres' employees allegedly contravened the Trade Descriptions Ordinance (Cap. 362) through employing various misleading or aggressive tactics to promote memberships and fitness courses among consumers. In this connection, will the Government inform this Council:

(1) whether the authorities have, since January this year, conducted investigations into and taken law enforcement actions against the various types of unscrupulous sales practices employed by fitness centres to promote services; if they have, of the details; if not, the reasons for that;

(2) as it has been reported that some fitness centres have, in promoting

memberships, claimed that the contracts contain cooling-off period provisions under which a refund may be made if they are cancelled


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within five or seven days, and yet when consumers did request to cancel the contracts, the centres refused to refund or only partially refunded the payments on various grounds unheard of when the contracts were signed (such as refund arrangements are applicable only to cases in which the services have not been used or to members registered for the first time, and entrance fees and administration fees are deductible from the refund amounts), whether the authorities have assessed if such practices of fitness centres have contravened Cap. 362; if they have assessed and the outcome is in the affirmative, whether they will conduct investigations and take law enforcement actions; if the assessment outcome is in the negative, whether they will look into measures to curb such practices; and

(3) given that, in reply to a question of this Council on 24 February this

year, the authorities indicated that the operators of some industries in Hong Kong (including insurance industry, beauty industry, telecommunication industry and retail banking industry) had currently implemented self-regulatory cooling-off period arrangements, whether they know the implementation and effectiveness of such arrangements; whether the authorities will consider amending Cap. 362 expeditiously to require that contracts adopting pre-payment mode of transactions must include cooling-off period provisions, and introduce a ceiling on the contract periods for such contracts, so as to enhance protection of consumers' rights and interests; if they will not, of the reasons for that?

SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Chinese): President, the Government attaches great importance to consumer protection. With effect from July 2013, the Trade Descriptions Ordinance (Cap. 362) ("the Ordinance") prohibits some commonly seen unfair trade practices, including false trade descriptions of services, misleading omissions, aggressive commercial practices, bait-and-switch, bait advertising and wrongly accepting payment. Convicted traders are liable to a maximum penalty of imprisonment for five years and a fine of $500,000.


My reply to the three parts of the question is as follows:

(1) The Government has been adopting a three-pronged approach to implement the Ordinance, including promoting compliance among traders, actively handling complaints and taking enforcement actions, as well as carrying out consumer education and publicity activities. The Ordinance covers a wide range of goods and services. As the primary enforcement agency of the Ordinance, the Customs and Excise Department ("C&ED") adopts a risk-based approach under which priority is accorded to handling cases that may have significant implications on consumers, traders or the general community at large, in order to optimize the use of enforcement resources.

In promoting compliance among the fitness industry, C&ED conducted large-scale seminars in July 2013, November 2015 and July 2016, with a view to strengthening understanding of the Ordinance by the management and frontline staff of the industry. Over 600 industry participants attended the seminars. C&ED also convened a number of meetings with the management of several large-scale fitness centres in May and October this year. At the meetings, C&ED reminded traders of their supervisory responsibilities, and encouraged them to train their staff and formulate staff codes of practices and guidelines, so as to prevent frontline staff from deploying unfair trade practices. The management of the fitness centres said they cared about the trade practices of frontline staff, and undertook to see to it that their staff complied with the law. A number of large-scale fitness centres began to offer cooling-off periods on a voluntary basis, allowing consumers to cancel contracts within a specified period of time.

As for enforcement actions, C&ED has been exerting earnest efforts towards combating unfair trade practices deployed by the fitness industry. The department has so far made arrests in six cases involving fitness centres suspected of deploying aggressive commercial practices. The number of complaints received by C&ED involving aggressive commercial practices in fitness centres


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has been on the decline in recent months, from an average of 23 cases per month from January to June this year, to an average of 8 cases per month from July to October.

On the other hand, following the closure of a chain of fitness centres in July, C&ED has suitably deployed staff to expedite the handling of complaints. As at October 2016, C&ED had received 1 670 complaints regarding the fitness centre chain wrongly accepting payment and applying false trade descriptions. C&ED has contacted all complainants for case details and is currently conducting investigations. Arrests have been made accordingly.

On public education, C&ED and the Consumer Council maintain close liaison and cooperation. In May 2016, C&ED held a seminar for the members of all 18 District Councils and their staff to improve their understanding of the protection conferred by the law, as well as the points to note when reporting unscrupulous traders so that complaint referrals can be made more efficiently. C&ED also distributed booklets on cases to participants of the meeting, so as to strengthen their understanding of the Ordinance. Moreover, taking into account the allegations in some complaints, C&ED has held six seminars at rehabilitation centres for persons with mild mental handicap from February to June 2016, to help them and their family members understand common unfair trade practices. C&ED and the Consumer Council also make use of various media to promote "smart consumption", enhance awareness of unscrupulous trade practices and remind consumers of the risk with pre-payment.

(2) Trade descriptions provided by traders to consumers must be

accurate. According to the Ordinance, the definition of a trade description in relation to a service includes "the method and procedure by which, manner in which, and location at which, the service is supplied or to be supplied". Moreover, traders should also provide accurate information in a timely manner to avoid misleading consumers. For products in relation to which there is a right of withdrawal or cancellation, the existence of that right is also material information that may influence the purchasing decision of the consumer. According to the Ordinance, a trader who applies a


false trade description, or omits or hides material information, may commit an offence of "applying a false trade description" or "misleading omissions" under the Ordinance.

Whether there is any contravention of the Ordinance in a case depends on the facts of the case. In its investigations, the law enforcement agency will thoroughly consider all relevant facts and evidence.

(3) We note that in Hong Kong, certain trades or operators provide for

cooling-off periods in respect of their goods or services. The implementation situation is as follows:

- Since 1996, a cooling-off period is applicable to purchases of

new life insurance products. This allows policyholders to scrutinize the terms and conditions in their policies, and to reconsider their decision to purchase the life insurance product. The policyholders have the right to cancel their policies during the cooling-off period and claim back any paid amounts (less market value adjustments, where applicable). The cooling-off period was initially 14 days. With effect from February 2010, this was extended to 21 days.

- In 2010, the Communications Association of Hong Kong

promulgated the Industry Code of Practice for Telecommunications Service Contracts. The code, which is a self-regulatory initiative of the telecommunications industry, aimed at drawing up contracts that are balanced, fair and reasonable for both the consumers and the industry. The code stipulates that a cooling-off period of no less than seven days shall apply in telecommunications service contracts concluded during an unsolicited visit to a customer's home. From July 2011, major fixed and mobile network operators have implemented the code. A fixed network operator even voluntarily implemented better cooling-off period arrangements, which include providing a cooling-off period for contracts concluded through other sales channels and setting a 14-day cooling-off period.


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- In 2010, the Hong Kong Monetary Authority issued guidelines requiring retail banks to provide a pre-investment cooling-off period of at least two days when selling unlisted derivative products to certain retail customers, so that they have sufficient time to understand the product and consider the appropriateness of the investment before subscription. All retail banks have implemented this requirement since January 2011. Also, since the inception of the Code on Unlisted Structured Investment Products in 2010, issuers of any unlisted structured investment products authorized by the Securities and Futures Commission with a scheduled tenor of more than one year shall confer on investors a cooling-off or unwind right of at least five business days after the investor places an order for the relevant product.

In addition to the above, some retailers (such as clothing shops and department stores) and service providers (such as beauty parlours and fitness centres) also allow consumers to return their goods, obtain a refund or cancel their service contracts within a specified period of time.

We appreciate that consumers may have aspirations for a cooling-off period. However, considerations for a mandatory cooling-off period should be premised on respecting contracts for sale and purchase freely entered into between traders and consumers. The Government must have sufficient and reasonable grounds before intervening in a contract entered into between two parties, including conferring the right to one party to cancel a contract unconditionally, or to impose a ceiling on the contract periods for certain types of service contracts.

To impose a ceiling on the contract period of a prepayment contract is a direct intervention of the business plan of a trader. This may affect law-abiding traders of many businesses, as well as consumers who enjoy the discounts or stability offered by long-term contracts, and may not be the most appropriate solution.


Generally speaking, the calls for imposition of mandatory cooling-off periods primarily target unfair trade practices deployed by certain traders in the context of accepting pre-payment. C&ED has been sparing no effort in law enforcement. It has taken prosecution action against unscrupulous traders engaging in aggressive commercial practices and wrongly accepting payment in the course of accepting pre-payment, thereby combating unfair trade practices at source.

Certain fundamental issues that should be considered in relation to the imposition of mandatory cooling-off periods are not simple and are controversial, such as whether the mandatory cooling-off period should be imposed indiscriminately on all contracts of goods and services involving prepayment, how small-value transactions should be handled, whether consumers can enjoy the goods and services concerned during the cooling-off period, and whether consumers having enjoyed part of the goods and services concerned during the cooling-off period should be required to pay for the enjoyed part if they request to cancel the transaction, and how the payment should be computed, etc. Some practical issues also cannot be disregarded, including how consumers should exercise the contract cancellation right and how the refund should be made, etc. Some trades consider that a mandatory cooling-off period would only increase the costs for honest traders but would have little deterrent effect on unscrupulous traders. We consider that imposing a mandatory cooling-off period will change the course of transactions and have significant implications on both traders and consumers. It is necessary to consider the matter carefully.

The Government has provided resources to the Consumer Council to conduct research on cooling-off periods and will consider the findings of the research. Meanwhile, the Government will continue to monitor the effectiveness of the Ordinance in tackling unfair trade practices and keep a close watch on the community's views on imposing mandatory cooling-off periods.


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Disbursement of living subsidy to the N have-nots 9. MR CHAN HAN-PAN (in Chinese): President, in order to alleviate the financial pressure on low-income households, the Community Care Fund ("CCF") launched an assistance programme in December 2013 to disburse one-off living subsidy to "low-income households not living in public housing and not receiving Comprehensive Social Security Assistance" (commonly known as the "N have-nots"). CCF disbursed such living subsidy again on two occasions in January last year and January this year. On the other hand, the Chairperson of the CCF Task Force disclosed to the media in September this year that since the policy objective of the living subsidy assistance programme was to provide financial assistance for the aforesaid persons who could not benefit from the Budget's relief measures, and a number of relief measures were cut in the 2016-2017 Budget (including the relief measure of paying rent for public housing tenants), CCF would not disburse the living subsidy again next year. However, some households which have been given living subsidy previously are very dissatisfied with such a move. They pointed out that most of the N have-nots are living in sub-divided units and the living subsidy helps alleviate the financial pressure brought to them by the incessant rise in the rents of sub-divided units. In this connection, will the Government inform this Council:

(1) whether it has assessed if the policy objective of the living subsidy assistance programme has been met; if it has, of the assessment outcome; if not, the reasons for that;

(2) whether it has compiled statistics on (i) the rate of increase in the

rents of sub-divided units and (ii) the percentage of rent in the expenditure of households of sub-divided units, in each of the past four years; if it has, of the relevant details set out by District Council districts; if not, whether it will compile such statistics; and

(3) given that (i) quite a number of those households which have been

given living subsidy previously are strongly dissatisfied that they will not be given living subsidy again, (ii) the rents of sub-divided units are still rising incessantly at present, and (iii) the Hong Kong Housing Authority's target of maintaining the average waiting time for general applicants (i.e. family and elderly one-person applicants) for public housing at around three years cannot be met in the


coming few years, whether the authorities will consider continuing to disburse living subsidy or launching alternative assistance measures; if they will, of the details; if not, how the authorities will address the discontent of the N have-nots?

SECRETARY FOR HOME AFFAIRS (in Chinese): President, the question involves different bureaux and departments, and the Government's consolidated reply is as follows: The One-off Living Subsidy for Low-income Households Not Living in Public Housing and Not Receiving Comprehensive Social Security Assistance ("CSSA") programme, launched by the Community Care Fund ("CCF") in the light of the short-term relief measures introduced by the Budget released in the financial year of the launch, provides one-off cash subsidy to the "N have-nots" who cannot benefit from such measures. The CCF launched the programme thrice in December 2013, January 2015 and January 2016 respectively, through which eligible "N have-nots" may also receive short-term relief. As fewer short-term relief measures were announced in the 2016-17 Budget, for example, no longer paying rent for tenants living in public rental housing ("PRH"), there is insufficient justification for the CCF to re-launch the programme to provide cash subsidy to those "N have-nots" not living in public housing and not receiving CSSA. On the other hand, comparing with the annual one-off cash subsidy provided by the CCF to "N have-nots", regular cash programmes, such as the Low-income Working Family Allowance ("LIFA") launched in May this year and the Work Incentive Transport Subsidy, can provide a more sustainable and effective way to relieve the financial pressure of those "N have-nots" and their families. We will pay close attention to the application situation of the LIFA to ensure that families in need, including eligible "N have-nots" families, can receive timely assistance. In addition, the CCF will, taking into account views of the public and stakeholders, continue to launch other programmes to assist the underprivileged and low-income families. As regards housing rental, the Thematic Household Survey on Housing Conditions conducted by the Census and Statistics Department in 2014 and 2015 consecutively covered sub-divided units ("SDUs") in private domestic/composite


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buildings (excluding village houses) aged 25 and above in Hong Kong. According to the survey findings, the median monthly rental payments of SDU households in Hong Kong were $3,800 in 2014 and $4,200 in 2015, while the corresponding median rent to income ratios were 30.8% and 32.3%. Owing to sample size constraint, the two surveys cannot yield sufficient data for compiling breakdown statistics by 18 districts. On the other hand, the two surveys did not collect information on expenditure of households living in SDUs. The Government is concerned about the impact of rising rental on private housing tenants. To solve the problem, we need to increase housing supply. The Government's total housing supply target for the 10-year period from 2016-2017 to 2025-2026 is 460 000 units, of which 280 000 units are public housing units (including 200 000 PRH units and 80 000 subsidized sale flats), so as to tackle the tight housing supply at source. For those who have pressing housing needs, they may apply for Compassionate Rehousing through the recommendation of the Social Welfare Department, or apply for earlier PRH allocation under the Express Flat Allocation Scheme. Matters relating to red tides and massive fish deaths 10. MR STEVEN HO (in Chinese): President, it is learnt that since December last year, severe red tides have repeatedly occurred in Tolo Harbour in Tai Po and neighbouring waters, resulting in massive fish deaths in the marine fish culture farms there. Massive fish deaths were also found along Shing Mun River in Sha Tin. Some mariculturists consider that the Government's current mechanism for monitoring red tides and its investigations into the causes of massive fish deaths are in need of improvement, and the assistance it provided to affected mariculturists is also insufficient. In this connection, will the Government inform this Council:

(1) given that the authorities have merely confirmed after tests that the red tides mainly comprised Karenia mikimotoi without explaining the causes of their formation, and some mariculturists suspect that the occurrence of red tides was related to the use of mosquito control pesticides and the discharge of sewage not properly treated, whether the authorities have studied the relationship between the formation of red tides and sewage discharge as well as mosquito


control pesticides; of the monthly average quantities of mosquito control pesticides used along Lam Tsuen River and Shing Mun River for carrying out anti-mosquito operations in the past three years and the composition of such pesticides; how such quantities compare with those used in other watercourses; whether they have assessed the impacts of mosquito control pesticides on the marine ecological environment and the mariculture industry; if they have assessed, of the details; if not, the reasons for that; whether the authorities have obtained any latest investigation result showing that apart from the red tides comprising Karenia mikimotoi, there were other causes for the aforesaid massive fish deaths in waters around Tolo Harbour; if they have, of the details; if not, the reasons for that;

(2) as some mariculturists have relayed to me that this year,

mariculturists affected by the massive fish deaths were given only a grant of $6,780 and a special grant of $7,260 under the "Emergency Relief Fund", making a relief fund of only $14,040 in total, which reflects that the assistance provided under the current mechanism is just a drop in the bucket for what is needed for them to resume business, of the date(s) on which the authorities last reviewed the ceilings for the relief fund and the mechanism for providing the fund, and whether they will conduct another review expeditiously, so as to help affected mariculturists to resume business as soon as possible;

(3) whether the authorities will consider setting up a "natural disasters

protection mechanism for the agriculture and fisheries industry", which includes (i) an insurance scheme for the mariculture industry, (ii) interest-free loans for post-disaster business resumption and (iii) post-disaster provision of fry or sea fish feed; if they will, of the details; if not, the reasons for that; and

(4) given that although the tests, conducted repeatedly in the past by the

Environmental Protection Department and the Agriculture, Fisheries and Conservation Department on the water quality of the waters/watercourses where massive fish deaths occurred, had shown that the water quality there was normal, some mariculturists have queried whether the water quality standards concerned are so low that fish is unable to survive in the river water/sea waters even if the


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latter meets such standards, how the authorities currently conduct tests on whether the water quality of the marine fish culture zones around Tolo Harbour is suitable for mariculture activities, and of the relevant details; the date(s) on which the authorities last reviewed such water quality standards and the mechanism for conducting the tests; whether they will expeditiously conduct a comprehensive review in this regard and devise appropriate water quality standards for the mariculture industry; if they will, of the details; if not, the reasons for that?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, it is the Government's policy to promote the long-term sustainable development of fisheries. We seek to assist the development of the industry and enhance its overall competitiveness through a series of measures including technical support, training, financial assistance and loans, as well as red tide monitoring. Over the years, the Agriculture, Fisheries and Conservation Department ("AFCD") has been collecting samples in different areas of Hong Kong waters to monitor the planktonic algae in water and the water quality in fish culture zones ("FCZs"). AFCD will collect additional samples for testing and issue timely warnings to mariculturists in case of abnormal increase in the quantity of phytoplankton or irregularities in the water quality. In the cultured fish kill incident happened in the waters of Tolo Harbour to Long Harbour from late December last year to mid-February this year, AFCD had sent red tide forewarnings to mariculturists by telephone short message service. Following the incident, concerned Government departments kept in touch with the mariculturists, fishermen's organizations and local bodies and provided multi-pronged assistance, including the provision of grants under the Emergency Relief Fund ("ERF") to the mariculturists concerned. AFCD's surveillance covers all FCZs in Hong Kong, and will study ways to further enhance its red tide monitoring mechanism and technologies, with a view to forewarning mariculturists of red tides as soon as possible and help minimize their losses. The Government is also committed to maintaining the cleanliness of local rivers/watercourses and protecting the local ecological environment. Should pollution occur in rivers/watercourses, the Government will investigate and take appropriate actions to reduce the impact on the community.


My reply to the various parts of the question upon consolidating inputs from concerned bureaux and departments is as follows:

(1) Red tide is a natural phenomenon, caused by rapid growth of algae which led to discolouration of seawater. Its formation and duration are determined by various factors such as sunlight intensity, water temperature, salinity, trace elements in seawater, water flow and whether the seawater is polluted.

In the cultured fish kill incident happened in the waters of Tolo Harbour to Long Harbour from late December last year to mid-February this year, red tides caused by Karenia mikimotoi coincided with the deaths of cultured fish in a few FCZs. In addition, upon conducting field studies on the response of fish to Karenia mikimotoi, and toxicological studies on Karenia mikimotoi as well as pathological analysis on the gill tissues of the affected fish by AFCD and laboratories of three universities, AFCD and the Red Tide Expert Group comprising local and Mainland red tide experts have come to believe that the fish kill was highly likely caused by the red tides formed by Karenia mikimotoi.

In the prevention and control of mosquitoes, the Food and Environmental Hygiene Department ("FEHD") has been using the methods recommended by the World Health Organization ("WHO"). If there are potential mosquito breeding grounds that are unlikely to be cleared within days, FEHD will apply larvicides in the water to prevent their breeding.

The common breeding grounds of mosquitoes are water contained in abandoned tyres, broken bamboo stems, tree holes, puddles on rocks, disused fountains, man-made containers, uneven ground surface, uneven canvas covering, clogged drains and sand filters of drains etc. Their distribution is wide and changes all the time. In other words, FEHD will only use larvicides in stagnant water. Since flowing rivers or moving water bodies are not breeding grounds of mosquitoes, FEHD does not apply larvicides directly in them.

The larvicides used by FEHD include Bacilius thuringiensis ("Bt") granules, Temephos sand granules and larvicidal oil as recommended by the WHO. Bt is a natural bacteria that can kill


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mosquito larvae quickly. To a small number of hosts such as mosquitoes, it works effectively against such specific targets. However, it is safe to other non-targeted aquatic vertebrates and invertebrates. It is mainly used in waters that are suitable for mosquito breeding and not heavily polluted. Temephos is a chemical compound of sulphur and phosphorus which can kill mosquito larvae. It is mainly applied in mosquito-breeding waste water. Larvicidal oil, a mineral oil, works primarily in suffocating the larvae in water within a short period of time.

FEHD makes every effort to avoid bringing adverse effects on the ecological environment in its work of mosquito prevention and control. Under normal circumstances, only very small quantities of larvicides are applied by FEHD. For Bt granules, Temephos sand granules and larvicidal oil, the recommended usage level is just 0.25 g to 1 g, 0.55 g to 2.2 g, and 4 ml respectively per square metre of stagnant water surface. FEHD does not maintain breakdowns on the methods and types of larvicides used in the vicinity of Lam Tsuen River and Shing Mun River.

Regarding water quality, following the implementation of sewage management and water quality improvement measures, including the discharge of treated water that meets the stringent standards in waters outside the district after the sewage has been treated by Sha Tin and Tai Po Sewage Treatment Works, the total pollution load in Tolo Harbour has drastically reduced by 80% from mid-1980s to the present. As shown in the surveillance of the Environmental Protection Department ("EPD"), the pollutants and nutrients in waters, including 5-day biochemical oxygen demand, total inorganic nitrogen, ammonia nitrogen and orthophosphate phosphorus, have substantially decreased, resulting in significant improvement in water quality.

(2) Mariculturists who are affected by natural disasters may apply for

Primary Producers Grants under ERF. The grants are used to provide prompt assistance for persons who are in need of relief as a result of fire, flooding, tempest, typhoon or other natural disasters. The grants are meant for relief but not compensation. The Government adjusts the amounts of the grants annually, taking into account the operational situation of the industry as well as changes in


wages and other expenditure items. We believe that the existing grants provided to mariculturists can already serve the purpose of providing a certain degree of financial relief during emergencies. The Government will examine the current mechanism for providing grants to see whether there is room for adjustment to better suit the needs of fishermen and fish farmers affected by natural disasters.

(3) As the scale of operation of the mariculture industry is relatively

small, there is a lack of commercially viable insurance scheme in the market. However, apart from ERF, mariculturists, affected by natural disasters and in need of capital to re-establish their business, may also apply to AFCD for loans under the Kadoorie Agricultural Aid Loan Fund. It is intended to provide low-interest loans to individual farmers, pond fish farmers and mariculturists for development and general operating purposes, including purchasing fry and feed and improvement to farm facilities. The suggestion of provision of government-purchased fish fry or feed to mariculturists affected by disasters may not be able to meet the needs of mariculturists since the types and quantities of fish fry or feed required as well as their plans and timetables for business resumption vary from one to another. The ERF and the Kadoorie Agricultural Aid Loan Fund mentioned above would be more effective in providing assistance to the mariculturists concerned.

(4) The water quality objectives relevant to seafood and fish culturing

include dissolved oxygen, pH level, temperature, salinity and ammonia concentration. According to EPD, Hong Kong's water quality objectives comply with the international standards for tropical and subtropical areas. In addition, AFCD has over the years been collecting samples in different areas of Hong Kong waters to monitor the planktonic algae in water and the water quality in FCZs. About 10 000 marine water samples have been tested this year, with over 5 000 samples coming from Tolo Harbour and the vicinity. AFCD is conducting 24-hour real-time monitoring of water quality of seven FCZs and monitors the remaining FCZs on a regular basis. The monitoring results show that all FCZs in Hong Kong, including those in Tolo Harbour, meet the water quality objectives and are suitable for fish culture.


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Burglaries of residential properties 11. MR JIMMY NG (in Chinese): President, recently, a number of burglaries of residential properties have occurred in various districts. Among such cases, items of a total value of several hundred thousand dollars were stolen from a villa and at least nine burglaries occurred in one housing estate in a fortnight. Quite a number of members of the public have expressed concern that the law and order situation in Hong Kong is deteriorating. In this connection, will the Government inform this Council:

(1) of a breakdown by District Council district of (i) the number of reports received by the Police on burglaries of residential properties and the estimated total value of the items stolen, as well as (ii) the number of such type of cases detected by the Police and the estimated total value of the items recovered, in each of the past three years;

(2) whether the Police have, in light of the recent spate of burglaries of

residential properties, taken targeted measures to curb such type of crimes, e.g. deploying more police officers to patrol districts with high burglary rates, and stepping up liaison with property management companies and District Fight Crime Committees; if the Police have, of the details; if not, the reasons for that; and

(3) whether, in respect of burglaries of residential properties involving

stolen items of a total value of $500,000 or more, it has assessed if the detection rate for such cases is unsatisfactory; if it has assessed and the outcome is in the affirmative, of the difficulties encountered by the Police in investigating such type of cases and the ways to resolve such difficulties?

SECRETARY FOR SECURITY (in Chinese): President, the Police pay close attention to burglary cases which occurred in different premises. In addition to actively taking measures against such crimes, the Police have been providing home security and anti-burglary advice to the public through various channels. My reply to the Member's question is as follows:


(1) The Police's crime statistics are broken down by Police District. Figures of burglary cases in domestic premises by Police District in the past three years (from 2014 to August 2016) are at Annex 1. The amount of loss involved and the detection rate are at Annex 2.

On the whole, the number of burglary cases in domestic premises in Hong Kong has been on a downward trend in the past three years. In some cases, the Police successfully recovered the stolen properties, but did not maintain figures of the total value of the recoveries.

(2) The Police have been making efforts in the combat and prevention of

burglary on many fronts. The Police will, in the light of crime trend analysis, step up patrols and inspection of security facilities in places with a higher risk of burglary, as well as watch out for and intercept any suspicious persons. During long holidays, frontline uniformed and plain-clothes police officers will step up anti-burglary patrols. To tackle burglary cases in domestic premises, the Police will continue to enhance intelligence gathering and take proactive intelligence-led law enforcement actions at the opportune time. In the first eight months of this year, the Police arrested a total of 291 burglary suspects, an increase of 15.5% over the same period last year.

As for publicity and education, the Police raise the public's crime prevention awareness through a multi-agency approach. The Police will continue to work closely with District Councils, District Fight Crime Committees, the Housing Department and the Housing Society, District Offices, owners' corporations, mutual aid committees, property management companies and village offices, etc. to launch anti-crime publicity. These include distributing anti-burglary leaflets (in different languages) to residents and organizing seminars on security matters.

In respect of residential burglary prevention, the Police have from time to time conducted anti-burglary talks for property management companies and their security personnel as well as maintain close


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contact with them to relay the latest crime information, including trends and modi operandi of burglary cases. Furthermore, all Police Districts and Regional Crime Prevention Offices inspect the anti-burglary measures of high-risk locations and premises under maintenance or with ongoing scaffolding works, and offer relevant security advice. All Police Districts will continue to launch "Security Guards Alertness Campaign" in a bid to test and enhance security guards' alertness against strangers entering the premises under their watch. In addition, the Police put up posters at the lobbies of public housing estates and private residential buildings to remind the public to step up home security. To tackle burglary cases in rural areas, the Police will continue to work with villages to combat village house burglary through distribution of "door and window contact alarms" and implementation of "One-Village-One-Officer Scheme", etc.

The Police call on the public to remain vigilant at all times to prevent their premises from being burgled, regardless of the types of residence. The Police will continue to collaborate with different community stakeholders and disseminate anti-burglary messages to the public and the property management sector through different means, such as Police Magazine, Hong Kong Police ("HKP") website, HKP YouTube channel, HKP Mobile Application, HKP facebook and security equipment exhibitions.

(3) The Police are aware that burglars tend to leave few traces for

investigation. Some burglary cases may have happened for quite a while by the time the victims discover that their premises have been burgled. Such cases are more difficult to detect due to the loss of evidence and clues for investigation over time. In this connection, prevention is the most effective way to combat burglary cases. The Police will continue to step up efforts in publicity and education to remind the public to ensure their home security at all times. In case of a burglary, a report should be made to the Police as quickly as possible and any damage of on-the-spot evidence should be avoided so that the Police can take follow-up actions.


Annex 1

Figures of Burglary Cases in Domestic Premises by Police District from 2014 to August 2016

Police District 2014 2015 2016

(January to August) Central 56 34 30 Wan Chai 64 57 32 Western 98 68 58 Eastern 60 69 48 Wong Tai Sin 121 140 59 Sau Mau Ping 51 61 43 Kwun Tong 129 119 65 Yau Tsim 120 96 59 Mong Kok 206 194 99 Sham Shui Po 234 241 137 Kowloon City 124 114 115 Border 35 31 20 Yuen Long 193 183 107 Tuen Mun 88 72 59 Tai Po 147 148 89 Tsuen Wan 64 76 41 Sha Tin 108 104 60 Kwai Tsing 74 54 28 Lantau 57 33 27 Airport 0 0 0 Marine Port 3 7 3 Marine Outer Waters 0 0 0 Railway 0 0 0 Total 2 032 1 901 1 179


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Annex 2

Amount of Loss and Detection Rate of Burglary Cases in Domestic Premises from 2014 to August 2016

2014 2015 2016 (January to August)

Loss ($ million) 191.09 110.15 96.84 Detection rate (%) 10.4 13.9 10.8 Monitoring of residential care homes for persons with disabilities 12. MR KWONG CHUN-YU (in Chinese): President, regarding the monitoring of residential care homes for persons with disabilities ("RCHDs") by the Social Welfare Department ("SWD"), will the Government inform this Council:

(1) of the number of reports received by SWD in the past three years on special incidents involving RCHDs, with a breakdown by name of RCHDs;

(2) of the number of reports received by SWD in the past three years on

accidents in RCHDs which involved RCHD residents, with a breakdown by name of RCHDs and type of accidents; the number of RCHDs in which the same type of accidents occurred more than once, and whether it knows the current condition of the residents concerned; the assistance provided to such residents by the Government;

(3) of the number of reports on the death of RCHD residents received by

SWD in the past three years, with a breakdown by name of RCHDs and the cause of death;

(4) of the number of reports, received by SWD or the Police in the past

three years, on RCHD residents allegedly having been sexually assaulted or harassed, the number of persons concerned who were prosecuted and, among them, the number of persons convicted;


(5) of the number of complaints against RCHDs received by SWD in the past three years, and set out, by name of RCHDs, the subjects of complaints and the follow-up actions taken by SWD; and

(6) of the respective numbers of RCHDs, since the Residential Care

Homes (Persons with Disabilities) Ordinance (Cap. 613) came into full operation in June 2013, whose licences were cancelled and whose certificates of exemption ("CoEs") were revoked, and set out, by name of RCHDs, the reasons for cancellation of their licences and revocation of CoEs; the criteria adopted by SWD for making such decisions?

SECRETARY FOR LABOUR AND WELFARE (in Chinese): President, my reply to the questions raised by Mr KWONG Chun-yu is as follows:

(1) to (3) According to the Code of Practice for Residential Care Homes

(Persons with Disabilities) ("Code of Practice") of the Social Welfare Department ("SWD"), residential care homes for persons with disabilities ("RCHDs") (including RCHDs operated by non-governmental organizations and private RCHDs) must report to the Licensing Office of Residential Care Homes for Persons with Disabilities ("LORCHD") of SWD within three days after a special incident occurs, including "uncommon death"/"death caused by severe injury of residents", "missing of residents requiring police assistance", etc. In the past three years, LORCHD received around 510 cases of special incident reports, among which 58 cases that occurred in RCHDs involved death of residents. The majority of the 58 cases (47 cases) were "fainted" or "in coma" owing to "illness at RCHDs" and "death after arrival at hospitals", and the rest (11 cases) involved "stumbling falls", "pushed by residents", "suicide due to mental/emotional illness", etc. Upon receipt of such reports, LORCHD will find out more information about the incident from RCHDs immediately and decide to investigate the incident or to take other follow-up action. LORCHD will contact the relevant case social workers when necessary to ensure that the case/family members could obtain the required assistance.


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In addition, home managers of RCHDs must set up and maintain a set of comprehensive and updated record system at RCHDs in accordance with the requirement of the Code of Practice. LORCHD will review the records of RCHDs, including records of accident and death/discharge from RCHDs when conducting surprise inspections to ensure that the RCHDs have detailed records of relevant information and have taken immediate remedial and follow-up actions after the occurrence of incidents.

(4) In the past three years, LORCHD received four cases of special

incident reports on residents suspected to have been sexually assaulted or harassed by RCHD staff and reported these cases to the Police. In addition, LORCHD received 15 cases of special incident reports on residents suspected to have been sexually assaulted or harassed by other residents in the past three years and 12 of these cases have been reported to the Police. As to the remaining three cases, RCHDs are conducting investigation and liaising with the victims' family members on the way forward.

Upon discovery of suspected sexual assault or harassment incidents,

RCHDs will provide support to residents concerned immediately and investigate the incidents and take follow-up action. LORCHD, upon receipt of relevant special incident reports, will find out more information about the incident from RCHDs immediately and decide to investigate the incident or to take other follow-up actions.

On the other hand, the Police indicates that it does not keep the

breakdown of figures on report, prosecution and conviction figures regarding sex crimes for victims who are RCHD residents.

(5) In the past three years, LORCHD received 136 complaint cases

regarding management of RCHDs, manpower arrangement, drug management, nursing and personal care services, etc.

LORCHD accords priority to conducting surprise inspections at the

RCHDs concerned and investigates the matters raised in the complaints. If RCHDs are found to have contravened the Residential Care Homes (Persons with Disabilities) Ordinance


("RCHD Ordinance") during surprise inspections or investigation, LORCHD will, depending on the nature and severity of the irregularities identified, issue to RCHDs advisory or warning letters, or written directions on remedial measures under the RCHD Ordinance. If a RCHD persistently fails to make improvement, LORCHD will, according to the RCHD Ordinance and the actual situation of non-compliance, take prosecution action against it, or consider revoking or refusing to renew its licence or certificate of exemption. SWD will step up the relevant work, including engaging, on contract terms, retired disciplined service officers to assist the professional team of LORCHD in carrying out inspections to RCHDs and strictly enforcing the law. LORCHD will also work closely with the Department of Justice so that LORCHD can take prompt and effective prosecution action against RCHDs with irregularities and poor track records. SWD will also seek legal advice to explore the possibility of making public the warning records of non-compliant RCHDs with a view to enhancing transparency.

(6) Since the full implementation of the RCHD Ordinance in June 2013,

the certificate of exemption of one RCHD (Bridge of Rehabilitation Company) has been revoked as it contravened the requirements on management and operation as stipulated in the Code of Practice and failed to make continuous improvement.

Incidents of severe flooding on Hong Kong Island 13. MR CHEUNG KWOK-KWAN (in Chinese): President, it has been reported that on the 19th of last month, flooding occurred in extensive areas in Hong Kong due to torrential rains. Many places on Hong Kong Island (such as Chai Wan, Wan Chai and Tai Tam Road) experienced severe flooding, causing great inconvenience to members of the public walking through the water. Moreover, floodwater poured into a number of shopping malls, resulting in pecuniary losses to quite a number of shop operators. In this connection, will the Government inform this Council:


1125

(1) of the number of flooding reports received by the Drainage Services Department ("DSD") and the number of flooding blackspots which experienced flooding on that day; whether DSD has investigated the causes for flooding on that day at locations which have not been classified as flooding blackspots; if DSD has, of such causes;

(2) as the Hong Kong Observatory had forecasted that rainstorms would

be brought about by two severe typhoons hitting Hong Kong one after the other within a few days' time, whether the authorities put in place corresponding measures to prevent flooding in light of such forecast; if they did, of the preventive measures implemented by the authorities at the flooding locations prior to the onset of flooding; if not, the reasons for that;

(3) of the maximum hourly rainfall that the existing flood protection

facilities on Hong Kong Island can handle; how the flood relieving capacity of such facilities compares with the relevant international standards; whether the rainfall on Hong Kong Island on that day had exceeded the flood relieving capacity of such facilities; and

(4) whether, in light of the aforesaid severe flooding occurred on Hong

Kong Island, it has conducted any comprehensive review to ascertain if there is any need to enhance the flood relieving capacity of the flood protection facilities; if it has, of the details and the measures in place to prevent the recurrence of severe flooding on Hong Kong Island?

SECRETARY FOR DEVELOPMENT (in Chinese): President, the Drainage Services Department ("DSD") has been implementing various drainage improvement works. A number of drainage tunnels and stormwater storage schemes have come into operation. These flood prevention infrastructures have operated effectively during the past rainy seasons and significantly reduced the flooding risk in the areas concerned. The Government will continue to review the Drainage Master Plans for all the districts in the territories in light of their latest developments. The objective is to examine the flood relieving capacities of existing stormwater drainage systems and recommend improvement proposals to suit the actual situation.


My reply to the various parts of the question is as follows:

(1) During the persistent severe rainstorm on 19 October 2016, Amber, Red and Black Rainstorm Warnings were issued in succession by the Hong Kong Observatory ("HKO") after 1:00 pm and stayed in force for 6.5 hours until 7:00 pm in the evening on the same day. The Black Rainstorm Warning issued is also the first ever issued in the month of October since the rainstorm warning system came into operation in 1998. The total rainfall recorded on that day reached 223 mm. The rain came suddenly and concentrated in a few areas, particularly in the Hong Kong Island East and the Southern District. The hourly rainfall exceeded 100 mm, which was far higher than the threshold level of 70 mm for Black Rainstorm Warning. DSD received 14 confirmed flooding cases at locations that have not been classified as flooding blackspots. Eleven of them involved minor flooding, which quickly subsided after discharge. The other three more serious cases occurred at the roundabout of Chai Wan Road, Tai Tam Road and Repulse Bay Road. On receipt of these flooding reports, DSD and the Highways Department ("HyD") immediately deployed staff to clear the inlets on the spot to help the traffic at these locations resume normal flow as soon as possible.

A detailed analysis of the flooding cases that occurred on that day by

DSD is currently underway. For the three relatively serious cases, preliminary findings indicated that the causes for flooding may be attributed to inadequate flood relieving capacities and blockage of upstream channels. During the year, Hong Kong has been affected by a number of typhoons. Indeed, HKO hoisted Tropical Storm Signal No. 1 and No. 3 during the period from 16 to 18 October 2016. A considerable amount of tree branches and leaves were torn down by strong winds and accumulated on the slopes upstream. They were washed down subsequently into the catchwaters and stormwater drainage systems downstream by the severe rainstorm on 19 October 2016, resulting in blockage of the drainage systems, and hence undermining their overall flood relieving capacities. DSD, in collaboration with Water Supplies Department ("WSD") and HyD, are implementing immediate improvement measures, including stepping up inspections of drainage channels at hillsides and catchwaters, provision of additional road gullies, etc. Formulation of long-term improvement measures for stormwater drainage


1127

systems is also underway. For its Drainage Master Plan Study on Northern Hong Kong Island, DSD will focus on examining and formulating recommendations for the existing drainage systems in the Eastern District of Hong Kong Island.

(2) DSD regularly attends inter-departmental meetings and engages the

relevant departments in discussion and implementation of flooding prevention measures in the districts. Apart from conducting regular patrols and clearance of stormwater drainage systems, DSD also steps up inspections and clearance of major drainage channels and inlets (particularly at flooding blackspots), both before the onset of typhoons and afterwards, to ensure that the drains are free from obstruction. DSD has also set up an Emergency and Storm Damage Organization to handle emergencies and flooding problems. It will also activate its Emergency Control Centre and deploy additional staff and resources to cope with flooding cases as well as emergency clearance of blocked drains and channels when a Red or Black Rainstorm Warning signal is hoisted, a special announcement on Flooding in the Northern New Territories is issued, or the Tropical Cyclone Warning Signal No. 8 or higher is in force. Furthermore, contingency teams are deployed to stand by at the locations prone to flooding during severe weather to ensure that inspections and drain clearance will be conducted in time to reduce flooding risk. During the severe rainstorm on 19 October 2016, the DSD Emergency Control Centre was activated according to the established mechanism and over 40 teams were mobilized.

(3) The design standards of stormwater drainage systems in Hong Kong

are developed with reference to the relevant international standards and with due consideration for land use, consequences of flooding and other relevant factors. Generally, the flood relieving capacities of drainage systems in the urban areas are designed to withstand rainstorms of a 50-year return period. While the rainfall recorded on 19 October 2016 did not exceed the threshold of the return period, certain locations at low-lying areas with ageing or unimproved drainage systems and with inlets susceptible to occasional blockage by refuse might still become flooded during the severe rainstorm. DSD would dispatch staff to carry out emergency flood relief measures at these spots as soon as possible to facilitate an early return to normal after the passage of severe rainstorm.


(4) The drainage master plan studies for all districts across the territories were completed in 2000 and their proposed construction projects were also completed in succession. Over the past years, new land use planning has brought about new developments, which have in turn brought significant changes to the drainage characteristics of catchment areas. Climate changes also pose new challenges to stormwater drainage systems, rendering old hydraulic models and related analysis cannot fully reflect the actual situation. In view of this, DSD has commenced studies on the stormwater drainage systems for all districts across the territories by stages since 2008. The study for northern Hong Kong Island is currently underway. The latest flooding cases will be analysed and appropriate improvement measures will also be developed to enhance the flood prevention levels in the areas concerned.

Statistics on poor households 14. MR LEUNG YIU-CHUNG (in Chinese): President, at present, a poor household is defined as one whose monthly household income before policy intervention (i.e. before tax and social benefit transfer) ("pre-transfer monthly income") is lower than 50% of the median pre-transfer monthly income of all households with the same number of members. Regarding the statistics on the working hours of working members of poor households and other households in 2015, will the Government inform this Council whether it knows:

(1) in the poor households in 2015, the respective total numbers of working members who worked (i) less than 144 hours and (ii) between 144 and 192 hours a month on average, broken down by the household sizes listed in the table below;

Household size (i) (ii)

One Two Three Four Five Six and above


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(2) in the households whose pre-transfer monthly income in 2015 was lower than 60% of the median, the respective total numbers of working members who worked (i) less than 144 hours and (ii) between 144 and 192 hours a month on average, broken down by the household sizes listed in the table below;

Household size (i) (ii)


(3) the respective total numbers of working members, in the households

whose pre-transfer monthly income in 2015 was (i) 50% of the median or below, (ii) 60% of the median or below and (iii) 70% of the median or below, and their breakdowns by the household sizes listed in the table below; and

Income range

Household size Total


(i) (ii) (iii)

(4) the respective numbers of working persons whose average monthly

working hours in 2015 were (i) less than 36 hours and (ii) between 36 and 72 hours?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, based on the data collected from the General Household Survey ("GHS") conducted by the Census and Statistics Department, the statistics for 2015 are given below (figures are rounded to the nearest hundred):


(1) Number of employed persons (excluding foreign domestic helpers) in poor households (before intervention) by household size and selected monthly hours of work* in 2015

Household

size Monthly hours of work

less than 144 hours* Monthly hours of work

between 144 and 192 hours* 1 4 400 600 2 17 300 8 000 3 24 100 24 000 4 25 600 20 900 5 6 200 6 100 6 and over 2 600 1 900 Note: * Hours of work in GHS refers to the number of hours which an employed

person actually worked in all employment during the seven days before enumeration. All paid and unpaid hours worked at the place of work are included, but meal breaks are excluded. The monthly hours of work are estimates derived by grossing up the above mentioned hours of work using a ratio that there are 52 weeks over 12 months in a year.

(2) Number of employed persons (excluding foreign domestic helpers)

in domestic households with monthly household income below 60% of the median (before intervention) by household size and selected monthly hours of work* in 2015

Household

size Monthly hours of work

less than 144 hours* Monthly hours of work

between 144 and 192 hours* 1 5 700 900 2 22 400 14 300 3 37 200 40 300 4 37 300 36 500 5 10 100 9 900 6 and over 3 800 3 800 Note: * Hours of work in GHS refers to the number of hours which an employed



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(3) Number of employed persons (excluding foreign domestic helpers) in domestic households by household size and monthly household income (before intervention) in 2015

Median monthly

household income

Number of employed persons in domestic

households

Household size

1 2 3 4 5 6 and over

(i) 50% and below

253 000 5 600 35 800 91 400 85 700 25 200 9 300

(ii) 60% and below

419 000 8 300 63 500 145 500 143 200 41 800 16 700

(iii) 70% and below

604 000 11 000 94 300 206 900 203 000 62 700 26 200

Note: Figures may not add up to the totals due to rounding.

(4) Number of employed persons (excluding foreign domestic helpers)

by selected monthly hours of work* in 2015

Monthly hours of work* Number of employed persons

(excluding foreign domestic helpers) Monthly hours of work less than 36 hours*

130 200

Monthly hours of work between 36 and 72 hours*

117 200

Note: * Hours of work in GHS refers to the number of hours which an employed



Promoting reading culture 15. MR LAU KWOK-FAN (in Chinese): President, since 1997, the Government has provided aided primary and secondary schools as well as special schools with the Chinese Extensive Reading Scheme Grant and English Extensive Reading Scheme Grant ("the two reading grants"), which aim at subsidizing these schools in the procurement of Chinese and English reading materials to facilitate the development of reading habits among students, thereby enhancing their reading literacy. On the other hand, the Education Bureau ("EDB") promulgated the updated "Expanded Operating Expenses Block Grant User Guide" in August 2016, in which EDB stated that it would cease the provision of the two reading grants with effect from the 2016-2017 school year. As a result, the amount of grant provided to an aided school each year will be reduced by a sum ranging from $8,298 to $34,468. In this connection, will the Government inform this Council:

(1) of EDB's saving in annual expenditure by cancelling the two reading grants;

(2) of the regular programmes to be put in place by EDB to promote

extensive reading after cancelling the two reading grants; and (3) as the Secretary for Education stated on 20 September this year that

the main reason for cancelling the two reading grants was the substantial changes in students' reading pattern in recent years, including the increased use of online information and e-books, whether it has assessed the effectiveness of the efforts in promoting e-learning in schools; if it has assessed, of the outcome; whether it has grasped the present situation of setting up e-book systems by various aided primary and secondary schools as well as special schools?

SECRETARY FOR EDUCATION (in Chinese): President, the Education Bureau attaches great importance to nurturing the reading habits of students and has provided schools with various forms of financial support for this purpose over


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the years. To tie in with the implementation of the Chinese and English Extensive Reading Schemes ("Reading Schemes"), the Chinese and English Extensive Reading Scheme Grants ("Reading Grants"), together with recommended book lists, had been provided to public sector primary and secondary schools since the 1997-1998 school year for purchasing suitable reading materials for students. Following the introduction of "Reading to Learn" as recommended by the Education Bureau in 2002, promoting reading through the concerted efforts of teachers of all subjects has been the direction that schools work in. To move along with the times as well as to accommodate the change in students' reading patterns, schools have generally implemented different forms of school-based reading schemes, including online reading. Hence, the promotion of reading is not limited to the Reading Schemes. Since the inauguration of the current-term Government, the recurrent expenditure on all education levels keeps increasing every year. In tandem with the increasing funding support for education, the Education Bureau has a duty to review, consolidate and rationalize provision to schools to ensure that public funds are spent properly and meeting the evolving needs. As a matter of fact, the two Reading Grants are not the sole source of funding for schools to purchase reading materials. Schools can flexibly deploy various resources under the Expanded Operating Expenses Block Grant ("EOEBG") to purchase books, multi-media reading materials, online e-databases, etc. The consolidation and rationalization of resources will not cause any lack of funding for schools to promote reading. We will continue to promote "Reading to Learn" through different strategies and provide schools with necessary support and resources as appropriate according to students' learning needs and in response to the latest development of the school curriculum.

My reply to Mr LAU's question is as follows:

(1) In the 2015-2016 school year, the Education Bureau provided each public sector primary and secondary schools with grants ranging from about $8,000 to $34,000 in total under the Reading Schemes. As the grants concerned have been subsumed under EOEBG, we do not have any record on the relevant expenditure breakdown. Despite the cessation of the two reading grants, the resources provided by the Government for schools have not been reduced.


Compared with the 2015-2016 Revised Estimate, the recurrent funding allocated for primary, secondary and special education in the 2016-2017 financial year has increased by about $1.129 billion.

(2) Since introducing "Reading to Learn" as one of the four Key Tasks

in the curriculum reform in 2002, we have been promoting reading among students proactively. Provision of the Reading Grants is only one of the supporting measures. We have been promoting "Reading to Learn" among students through diversified strategies, which include providing different types of reading resources and recommended book lists for each subject as well as organizing seminars and reading-related activities, etc. To help take forward the strategies on promoting reading, we will, starting from the 2016-2017 school year, enrich the teacher professional development programmes in respect of such contents as reading across the curriculum and information literacy at primary and secondary levels. The Quality Education Fund ("QEF") has identified "Effective Learning and Teaching of Languages" as one of the priority themes under the area of Learning and Teaching for this school year. Schools may consider applying for QEF for promoting reading in the light of their circumstances. Also, we have been encouraging schools to make good use of the relevant supporting initiatives of public libraries, the Hong Kong Education City ("HKEdCity") and the Standing Committee on Language Education and Research, such as online reading platforms and the annual World Book Day Fest, for promoting a reading culture.

(3) As mentioned in the opening paragraph of this reply, the cessation of

the two Reading Grants is not entirely due to changes in reading patterns. In parallel with increasing funding support, we have to review and consolidate relevant resources to ensure proper use of public funds. As mentioned in part (2) of this reply, we will continue to promote extensive reading through different channels. Regarding e-learning, the Fourth Strategy on Information Technology in Education has been implemented in full swing for over a year with good progress in all initiatives. Among these initiatives, the establishment of Wi-Fi campus has been completed in


1135

around 80% of some 1 000 public sector schools in Hong Kong. This enables students to search and read multi-media learning resources on the e-platforms of their schools or the Internet with mobile computing devices anywhere and anytime. According to our data collected through various means, schools are in general active in promoting e-learning and acknowledge the positive effects of e-learning on learning and teaching. Nearly 80% of the schools have included e-learning as one of the major concerns of their school development plans. In sum, schools reflected that the learning motivation and self-directed learning ability of their students have been strengthened. With enhanced Wi-Fi infrastructure in place, more schools are willing to explore and implement different strategies to make optimal use of mobile computing devices, such as wider adoption of e-learning resources and e-assessment. To tie in with the development of e-learning, HKEdCity has launched EdBookShelf which is equipped with cross-platform feature since the 2014-2015 school year. EdBookShelf not only allows students to subscribe for e-books by themselves but also enables schools to order and deliver e-books for their students online. EdBookShelf offers a wide range of e-books as well as learning and teaching resources, including reference books of different subjects, books for children, reference books for teachers and parents as well as leisure reading materials. Since its launch, EdBookShelf has been well-received by the school sector with total subscription volume reaching 1 237 000 items by the end of August 2016.

Levying of land departure tax 16. MR ALVIN YEUNG (in Chinese): President, to combat parallel trading activities, the Immigration Department ("ImmD") has drawn up a "watch list of suspected parallel traders" ("the watch list") to step up the interception of suspected parallel traders and refuse their entry. In addition, the Mainland authorities announced on 13 April last year the tightening of the policy on Shenzhen permanent residents visiting Hong Kong, under which the issuance of one-year multiple-entry Individual Visit Endorsements was stopped with immediate effect, and was replaced by the issuance of one trip per week


Individual Visit Endorsements only (i.e. the "one trip per week policy"). On the other hand, a political party has suggested that in order to raise the cost of parallel trading activities, the Government should levy a same-day land departure tax on visitors who depart by land within the past 24 hours after entry by land ("the departure tax"), and where the number of departures made by a visitor exceeds a certain number within a certain period of time (e.g. six months in the past), the relevant tax payable will increase progressively with the number of such departures. In this connection, will the Government inform this Council:

(1) of the following information per month from April 2014 to March this year (i.e. from one year before to one year after the implementation of the "one trip per week policy"):

(i) the number of Shenzhen permanent residents who departed on

the same day of their entry, (ii) the number of cases of such persons being found by the

Customs and Excise Department to have violated the restriction on powdered formula (i.e. each person aged 16 or above may carry, on his/her departure from Hong Kong within a 24-hour period, powdered formula for infants and young children under the age of 36 months of a total net weight no more than 1.8 kilograms), and

(iii) the number of times for which ImmD refused entry of such

persons in accordance with the watch list, and set out such figures in a table;

(2) whether it has regularly revised the watch list; if it has, of the

criteria for such revisions; and (3) given that the Government mentioned in the 1999-2000 Budget that

it would consider levying a land and sea departure tax, and it introduced in 2003 the Boundary Facilities Improvement Tax Bill to this Council (but eventually did not take forward the enactment of the Bill because of the divergent views on the Bill within the Council and the community at that time), whether the Government has


1137

examined (i) if it is reasonable in principle to levy a departure tax on parallel traders, (ii) if it is technically feasible to levy a departure tax, and (iii) the methods other than departure tax that can raise the cost of parallel trading activities; if it has examined, of the details; if not, the reasons for that?

SECRETARY FOR SECURITY (in Chinese): President, in consultation with the relevant Policy Bureaux and departments, our consolidated reply to the question is as follows:

(1) With effect from 13 April 2015, the Mainland authorities put in place the "one trip per week" Individual Visit Endorsements ("IVEs") to replace the "multiple-entry" IVEs for Shenzhen permanent residents. The Immigration Department ("ImmD") does not maintain any statistical breakdown on the number of Shenzhen permanent residents who departed Hong Kong on the same day of their arrival.

As regards the number of cases involving Mainland residents who

attempted to export unlicensed powdered formula detected by the Customs and Excise Department and the number of entries of Mainland residents being refused due to suspected involvement in parallel trading activities from April 2014 to March 2016, a breakdown by month is tabulated at Annex.

(2) ImmD has established a "watch list of suspected parallel

traders" which contains information of persons suspected to be involved in parallel trading activities collected through various means, including information of arrested and convicted persons, intelligence and analysis of immigration data. ImmD will examine these people when they enter Hong Kong again, and, if their purposes of visits are in doubt, will refuse their entry and repatriate them immediately.

(3) During 2002 and 2003, the Government planned to impose a

boundary facilities improvement tax on passengers departing Hong Kong via land or sea departure points as a measure to raise revenue,


so as to help finance the improvement of boundary facilities. Nonetheless, after taking into account various views of the society, the Government considered that it was not an opportune time to introduce the boundary facilities improvement tax given the then economic conditions. As a result, the plan was shelved.

Since September 2012, the law enforcement agencies have been

mounting large scale joint operations to suppress parallel trading activities, improve order at railway stations and boundary control points and uphold the daily lives of our residents. They have also refined their enforcement strategies in response to the mode of operation of parallel traders. Since the implementation of the "one trip per week" measure with effect from 13 April 2015, the Mainland arrivals, in particular the number of same-day visitors, have shown a downward trend. It shows that the measure has taken effect. At present, the Government has no plan to impose tax or other fees on same-day round-trip visitors travelling by land. Relevant departments will continue to closely monitor the situation and take various existing measures to crack down on parallel trading activities.

Annex

The number of detected cases involving Mainland residents

who attempted to export unlicensed powdered

formula(1)

The number of entries of Mainland residents being refused due to suspected

involvement in parallel trading activities(2)

2014

April 280 625 May 276 585 June 237 820 July 245 882 August 260 794 September 274 979 October 363 1 182 November 241 1 121 December 240 2 470


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The number of detected cases involving Mainland residents

who attempted to export unlicensed powdered

formula(1)

The number of entries of Mainland residents being refused due to suspected

involvement in parallel trading activities(2)

2015

January 308 2 867 February 199 1 379 March 240 2 102 April 257 2 628 May 202 2 432 June 138 2 340 July 141 2 137 August 120 1 794 September 154 1 923 October 161 1 543 November 146 1 421 December 158 1 248

2016 January 167 1 612 February 91 1 090 March 153 1 401

Notes: (1) Including all Mainland residents. Not limited to Shenzhen permanent residents. (2) Not limited to the people in the "watch list of suspected parallel traders" or Shenzhen

permanent residents. The Continuing Education Fund 17. MR JEFFREY LAM (in Chinese): President, the Government set up the Continuing Education Fund ("CEF") in 2002. Upon completion of a course on the "Reimbursable Course List" ("the List"), a CEF applicant may be reimbursed 80% of the course fee, subject to a lifetime maximum subsidy of $10,000 per person ("subsidy ceiling"). It has been reported that the results of a survey show that only 27.4% of Hong Kong people are pursuing continuing education, a percentage lower than those of other countries and places. Some members of the public have pointed out that as the scope of the courses covered by the List is


not comprehensive and the subsidy ceiling is too low, CEF is ineffective in encouraging members of the public to pursue continuing education. In this connection, will the Government inform this Council:

(1) since CEF's establishment, of (i) the annual numbers and successful rates in respect of the applications for fee reimbursement, (ii) the average amount of subsidy for each successful application, and (iii) the number to-date of people to whom the cumulative amount of subsidies granted has reached the subsidy ceiling;

(2) whether it will raise the subsidy ceiling for CEF so as to encourage

more working people to pursue continuing education; if it will, of the details; if not, the reasons for that;

(3) of the criteria currently adopted for deciding whether or not to

include certain types of courses in CEF's scope for subsidies; whether the Government will consider including driving courses and courses on ethnic minority languages (including Urdu, Tagalog, Indonesian, Thai and Nepali) on the List; if it will, of the details; if not, the reasons for that; and

(4) whether the Government will increase the flexibility of the

application procedure for CEF, such as relaxing the existing requirement that an application must be lodged before the commencement of a course; if it will, of the details; if not, the reasons for that?

SECRETARY FOR LABOUR AND WELFARE (in Chinese): President, the Government attaches importance to the continuing education of Hong Kong residents and set up the Continuing Education Fund ("CEF") in June 2002. Hong Kong residents aged between 18 and 65 who have successfully opened CEF accounts and completed CEF reimbursable courses ("CEF courses") may apply for reimbursement of 80% of the course fees, subject to a ceiling of $10,000. When CEF was launched in 2002, it received government financial injection of $5 billion. With a further government financial injection of $1.2 billion in 2009, the total funding provision for CEF was increased to $6.2 billion.


1141

My reply to the questions raised by Mr Jeffrey LAM is as follows:

(1) The numbers of claims for reimbursement received, success rates and the average amounts of reimbursement per successful claim since the establishment of CEF in 2002 are tabulated as follows:

Year Number of claims for reimbursement

Success rate (%)

Average amount of

reimbursement per successful claim ($)Note

2002-2003 1 879 98 5,074 2003-2004 21 570 99 5,672 2004-2005 47 981 99 6,344 2005-2006 69 674 99 6,728 2006-2007 73 138 99 6,927 2007-2008 65 637 99 7,337 2008-2009 57 857 97 6,951 2009-2010 52 972 99 6,554 2010-2011 45 136 99 7,017 2011-2012 34 850 99 7,212 2012-2013 29 283 99 7,352 2013-2014 26 007 99 7,618 2014-2015 22 570 99 7,762 2015-2016 20 539 99 7,577 2016-2017

(up to 31 October 2016)

11 949 99 7,849

Note: From the establishment of CEF to 30 November 2007, each applicant who had successfully opened a CEF account might submit a maximum of two claims for reimbursement within two years. Since 1 December 2007, each applicant who has successfully opened a CEF account may submit a maximum of four claims for reimbursement within four years. The average amount of reimbursement per claim is based on the amount of each claim for CEF submitted by an account holder.

Since the establishment of CEF in 2002 (up to 31 October 2016), a

total of 272 486 applicants have claimed the maximum subsidy of $10,000, accounting for 42.6% of the total number of holders


(around 638 500) whose CEF accounts were closed (i.e. the validity period of account has expired or the maximum subsidy was claimed).

(2) At present, there are nearly 8 000 CEF courses offered by around

300 course providers. The fees of around 70% of these courses fall below $10,000. As set out in part (1) above, more than half of CEF account holders did not use up the subsidy of $10,000. We shall keep the subsidy ceiling under review.

(3) At present, training courses under eight specified domains

(i.e. Business Services, Financial Services, Logistics, Tourism, Creative Industries, Design, Languages, and Interpersonal and Intrapersonal Skills for the Workplace) can be registered as CEF courses by application, subject to the assessment by the Hong Kong Council for Accreditation of Academic and Vocational Qualifications and approval by the Labour and Welfare Bureau. Besides, courses designed in accordance with the Specification of Competency Standards ("SCSs") drawn up by the respective Industry Training Advisory Committees under the Qualifications Framework of the Education Bureau and registered as SCS-based courses under the Qualifications Register may also apply for registration under CEF.

At present the CEF language courses covers English, written Chinese, Putonghua, French, German, Japanese, Spanish, Korean, Italian, Russian and sign language. We will consider and consult the relevant stakeholders on the suggestion of including ethnic minority languages and driving courses as CEF courses.

(4) Under the existing application procedure for CEF, after an applicant

has enrolled in a CEF course and before the course commences, the applicant has to submit the application (together with proof of course enrolment and fee payment) for opening an account. We will consider and consult relevant stakeholders to explore if there is room for relaxing this requirement.


1143

Tuen Mun-Chek Lap Kok Link and Tuen Mun Western Bypass 18. MR LEUNG CHE-CHEUNG (in Chinese): President, the Tuen Mun-Chek Lap Kok Link ("TM-CLKL") under construction consists of the Southern Connection and the Northern Connection, with construction works of the former to be completed in tandem with the commissioning of Hong Kong-Zhuhai-Macao Bridge and those of the latter estimated to be completed within 2018. The proposed Tuen Mun Western Bypass ("TMWB") will connect Kong Sham Western Highway in the north, Tsing Tin Road and Tuen Mun Road in the middle as well as TM-CLKL in the south. While the planning for TMWB has started 10 years ago, its alignment has yet to be confirmed and, therefore, no definite date has been set for its commissioning. In this connection, will the Government inform this Council:

(1) of the details of the planning and study carried out by the authorities for the TMWB project since its formulation (set out in a table by date in chronological order), as well as its final works schedule;

(2) of the criteria based on which the authorities will implement the final

proposal for the alignment of TMWB; (3) given that construction works of TMWB will not be completed when

TM-CLKL is commissioned, whether the authorities have assessed (i) the additional traffic volume for various roads in Tuen Mun, and (ii) the increase in vehicle/capacity ratio of such roads, which will be brought about by the commissioning of TM-CLKL; if they have assessed and the outcome shows that some of the roads will be saturated, of the proposals in place to relieve traffic congestion; and

(4) how the traffic volumes in Northwest New Territories and Lantau

estimated during the initial planning of TM-CLKL and TMWB compare with the current traffic volumes in those areas?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, our consolidated reply to Mr LEUNG Che-cheung's question is as follows:


In July 2007, the Government briefed the Legislative Council Panel on Transport on the outcome of the Northwest New Territories Traffic and Infrastructure Review and proposed the construction of the Tuen Mun-Chek Lap Kok Link ("TM-CLKL") and the Tuen Mun Western Bypass ("TMWB") to meet the anticipated traffic needs of the area. The investigation and preliminary design for TMWB commenced in August 2008 and public consultation was conducted soon afterwards. Having consulted the Tuen Mun District Council, the Yuen Long District Council, the Heung Yee Kuk and the relevant rural committees, the Highways Department ("HyD") suggested implementing the "Tuen Mun Road option" based on the consolidated views of relevant stakeholders and the research of different alignment options. Its alignment is made up of tunnels and viaducts. The southern tunnel will connect to TM-CLKL with a portal in the north at Tsing Tin Interchange, connecting to a proposed dual two-lane viaduct alongside Tuen Mun Road. The viaduct will then span over Lam Tei Interchange and run further north along Castle Peak Road connecting to Kong Sham Western Highway near Yick Yuen. The relevant alignment is at Annex 1. HyD conducted the preliminary design and associated assessments on the alignment of the "Tuen Mun Road option" in 2011, which was completed in 2013. During 2011 to mid-2012, some locals expressed strong objections to the project as they worried that the northern viaduct section and the portal of the southern tunnel section at Tsing Tin Interchange would have an adverse impact on the residents in the vicinity. Based on the most updated traffic forecast at that time and having regard to the views of the local community, HyD comprehensively reviewed the design of the TMWB and presented the proposed revised alignment of TMWB, which connects Tuen Mun Area 40 with Tsing Tin Road (see Annex 2), to the Tuen Mun District Council in March 2015. Having considered the comments of the Tuen Mun District Council on the revised alignment, its portal and design, and the latest development planning for Northwest New Territories, HyD further reviewed the TMWB project and further consulted the Tuen Mun District Council, Yuen Long District Council and Ha Tsuen Rural Committee in July and September 2016 on the latest proposed alignment (see Annex 3). Under this


1145

alignment, the project will connect TM-CLKL with Kong Sham Western Highway with a provision of a connection to Tsing Tin Road en route. As this consists of quite a substantial revision as compared to the "Tuen Mun Road option", the Government has to conduct an investigation study so as to ensure a proper balance among factors such as technical feasibility, traffic functions, environmental concerns and impact on stakeholders, etc., with a view to taking forward the project. The Tuen Mun District Council, Yuen Long District Council and Ha Tsuen Rural Committee do not have objection to conducting the investigation study based on this latest alignment as proposed by the Government. HyD is making preparation for the investigation study which is expected to take two years. Subject to the results of the investigation study, we will seek resources to conduct the detailed design and other work. According to the original plan, the completion time of the Southern Connection of TM-CLKL is to tie in with the commissioning of the Main Bridge of the Hong Kong-Zhuhai-Macao Bridge whereas the Northern Connection is targeted for completion in end 2018. However, due to technical difficulties encountered, the construction programme is very tight. It is believed that the above target completion date cannot be met. HyD is closely monitoring the work progress to overcome the technical difficulties and will endeavor to catch up with the progress. HyD will carry out a comprehensive review on the commissioning date for the TM-CLKL. According to the latest traffic study conducted by the Transport Department ("TD"), upon the commissioning of the TM-CLKL, the traffic demand of the busier major road sections in Tuen Mun, including Tuen Mun Road (Town Centre Section) and the slip road connecting to Wong Chu Road, would remain acceptable until 2026. TD will closely monitor the traffic demand and changes in the traffic conditions of the road network of Tuen Mun, and will formulate traffic management measures, such as junction widening works for road sections prone to traffic congestion, changes to traffic signal control, implementation of traffic diversion measures, etc., in a timely manner. Since the population growth and land development of the Northwest New Territories and Lantau Island have generally been slower than projected when the TM-CLKL and TMWB were first planned, the current traffic volumes are lower


than those then projected. The table below compares the traffic projections of 2016 in the report to the Legislative Council Panel on Transport in July 2007 on the outcome of the Northwest New Territories Traffic and Infrastructure Review and the actual traffic volumes of the "Annual Traffic Census 2015"(1) of TD:

Major Roads

Volume/Capacity (V/C) ratio(2) Traffic projections of 2016 under

the Northwest New Territories Traffic and Infrastructure Review

conducted in 2007

Actual traffic volumes under the "Annual

Traffic Census 2015"

Tuen Mun Road (Town Centre Section)

0.9 0.9

Tuen Mun Road (Siu Lam Section)

1.2 1.2

Tuen Mun Road (Sham Tseng Section)

1.2 1.2

Tai Lam Tunnel 1.0 0.8 Ting Kau Bridge 1.2 1.1 Lantau Link 1.2 0.7 North Lantau Highway 1.2 0.6 Notes: (1) The traffic data of 2016 is not yet available. (2) V/C ratio is an indication of the traffic conditions of roads during peak hours. A v/c

ratio equals to or less than 1.0 is considered acceptable. A v/c ratio between 1.0 and 1.2 indicates a manageable degree of congestion. A v/c ratio above 1.2 indicates more serious congestion.

Tuen Mun Road (Town Centre Section) and Tai Lam Tunnel are the two major external strategic roads of the Northwest New Territories. The then projected V/C ratio of Tuen Mun Road (Town Centre) was 1.0 by 2021. But according to the latest traffic study of TD, the projected V/C ratio of the concerned road section is 0.9 by 2021 and will increase to 1.0 by 2026.


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Annex 1

Tuen Mun Western Bypass ("Tuen Mun Road Option")― recommended alignment in 2010


Annex 2

Tuen Mun Western Bypass―recommended alignment in 2015


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Annex 3

Tuen Mun Western Bypass―recommended alignment in 2016


Provision of bank branches 19. DR FERNANDO CHEUNG (in Chinese): President, some residents of Tin Shui Wai have relayed to me that various retail banks often only pay regard to profits and losses when deciding whether or not to set up bank branches in a particular district, resulting in an extremely uneven distribution of bank branches at present. For example, in Mei Foo Sun Chuen, a middle-class community, there are 16 bank branches (i.e. one bank branch per 2 400 people), while in Tin Shui Wai North, a grass-roots community, there is only one bank branch (i.e. only one bank branch for some 120 000 people). Moreover, there are quite a number of disadvantaged groups (e.g. the elderly and persons with disabilities) living in communities without bank branches. As a result, they have to travel long distances to bank branches located in other districts in order to use banking services. Those residents consider that the banks' practice of not setting up branches in grass-roots communities amounts to the ignoring of residents' basic needs in daily lives, which constitutes banks' disregard for their social responsibilities and gives rise to an allegation of discrimination. In this connection, will the Government inform this Council:

(1) whether it knows the following figures in each year since 2000: (i) the number of bank branches serving general customers, (ii) the number of bank branches serving selected customers exclusively, (iii) the number of automatic teller machines ("ATMs"), (iv) the number of bank branches closed, and (v) the number of bank branches set up (set out the relevant information by District Council district);

(2) whether the authorities have studied the impact of closure of bank

branches on disadvantaged groups; if they have, of the details and whether they have formulated measures to ensure that the persons concerned have convenient access to basic banking services; if not, the reasons for that; and

(3) whether it knows if the Hong Kong Association of Banks will urge

various banks to put in place compensatory measures after closing branches, such as introducing easy-to-use ATM cards to facilitate the elderly's access to basic banking services via ATMs?


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SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President,

(1) According to the information collected by the Hong Kong Monetary Authority ("HKMA"), there were 1 174 branches (including 66 branches which only provide services to selected customers) and 3 249 automatic teller machines ("ATMs") operated by banks as at the end of 2015. Compared with 1 122 branches and 2 361 ATMs as at the end of 2005, the coverage of banking services has improved. The distribution of banking facilities is as follows:

District Branches ATMs

Hong Kong Island 382 876 Central and Western 136 327 Eastern 117 234 Southern 25 75 Wan Chai 104 240 Kowloon 421 1 108 Kowloon City 76 169 Kwun Tong 81 244 Sham Shui Po 73 194 Wong Tai Sin 45 117 Yau Tsim Mong 146 384 New Territories 371 1 265 Islands 19 83 Kwai Tsing 45 176 Northern 39 110 Sai Kung 40 130 Sha Tin 69 249 Tai Po 31 84 Tsuen Wan 46 130 Tuen Mun 38 140 Yuen Long 44 163 Total 1 174 3 249


Apart from the above services, there are "mobile branches" operated by two note-issuing banks in Hong Kong for provision of banking services at 10 public housing estates. They include Yan On Estate, Shek Mun Estate, Hoi Lai Estate, Tin Ching Estate, Tin Heng Estate, Kwai Luen Estate, Shin Ming Estate, Mei Tung Estate, Lei Yue Mun Estate and Cheung Shan Estate.

(2) HKMA's analysis on the coverage of banking network suggests that

branches and ATMs operated by Hong Kong retail banks are widely distributed in the territory. HKMA has all along reminded banks that, while operating on commercial principles, they should also take into account the need of the community (especially senior citizens and people requiring assistance) for physical branches in their planning of banking networks. HKMA also facilitates communication and cooperation between the banking industry and the LINK Asset Management Limited, with a view to improving banking services in the shopping centres of public housing estates.

Meanwhile, HKMA encourages banks to deploy flexible operation

modes to supplement the existing banking network. In view that certain public housing estates do not have branches located within walking distance, two note-issuing banks in Hong Kong have launched mobile branches to provide services for residents in these areas. HKMA will continue to monitor the situation and demand for mobile branches, and work with the banks concerned to enhance the services.

On the concern over banking services in Tin Shui Wai North raised

in the question, HKMA gathers that the issue arose from the renovation of a shopping mall in Tin Shui Wai North early this year. As a result, an affected bank had to relocate its branch to another shopping mall in Tin Shui Wai South in order to continue with service provision to the residents in Tin Shui Wai. Operationally speaking, re-provisioning a bank branch involves much more complicated processes, such as the installation of IT system and security facilities, than in the case of other retail business. It is therefore difficult for the bank to move its branch back to Tin Shui


1153

Wai North within a short period of time after the renovation of the shopping mall. Apart from a physical branch, at present there are other banking facilities in Tin Shui Wai North, including mobile branches operated by 2 banks and 19 ATMs operated by 6 banks. Besides, a bank will set up in Tin Shui Wai North a self-service banking centre, which will provide video teller machines ("VTMs") and have staff stationed there to provide other basic banking services such as the opening of bank accounts.

(3) At present, members of the public can conduct most financial

transactions through means other than physical banks (for example, through ATMs, Internet and phone banking services). At the end of 2015, there were about 10.41 million personal Internet banking accounts in Hong Kong. The financial transactions conducted at branch counters only accounted for around 30% of the total transactions in 2014. With the advancement of technology, it is believed that more and more banking services can be provided through channels other than physical branches in the long run.

In view of the increasing prevalence of ATM, Internet and phone

banking services, HKMA has been reminding banks to take special care of people in need, including senior citizens and grassroots who are not familiar with computer operation. Since 2007, the banking industry has introduced simplified ATM cards to streamline the options available at ATMs, reduce the steps required for cash withdrawal, and display larger fonts on the screen, so as to help senior citizens and other customers in need to operate ATMs more easily. Every year the Hong Kong Association of Banks also organizes over ten ATM education talks for senior citizens where the use of simplified ATM cards for basic banking services is demonstrated. HKMA will continue to encourage the industry to promote the use of simplified ATM cards.

Furthermore, some banks have arranged staff on-site to provide

assistance to customers at self-service banking centres. Several banks have introduced VTMs to provide interactive banking services (such as time deposit placement, foreign currency exchange,


exchange rate enquiries) to customers in a bid to complement traditional ATM services. Through video cameras at the VTMs, bank staff at customer service centres can have real-time conversation with customers, offering assistance in using VTMs and answering their enquiries on banking services. This is particularly useful for senior citizens and other people in need. In addition, a bank is currently exploring the application of biometric authentication technology in ATMs in order to facilitate the use of ATMs by the public.

Besides, members of the public can also withdraw cash at over 2 500

outlets of around 20 merchants when needed, including supermarkets and convenience stores. The maximum withdrawal amount is HK$500 by using EPS EasyCash upon purchase.

HKMA will continue to keep in view the coverage of banking

services and ensure that the public will have easy access to basic banking services.

Protection of consumers' personal data 20. MR KENNETH LAU (in Chinese): President, in recent years, with the increasing popularity of members of the public using various types of online payment facilities for conducting online transactions, there are concerns about the risk of personal data disclosed by consumers in the process of such transactions being misused by traders. The Consumer Council has revealed earlier that some traders keep, after termination of service by the customers, those customers' personal data for up to seven years and even indefinitely. Moreover, the provisional liquidator of a closed fitness centre chain plans to sell the personal data of the centre's members for use in direct marketing. In this connection, will the Government inform this Council:

(1) of the number of complaints received by the authorities in the past five years about misuse of consumers' personal data disclosed to traders in the process of online transactions and, among them, the number of those involving the use of cross-border payment services;


1155

the measures in place to curb the practice of non-local traders misusing the personal data disclosed by Hong Kong residents when conducting online transactions;

(2) of the existing mechanism or legislation restricting traders from

keeping customers' personal data for a prolonged period or misusing such data after the closing down of their business or expiry of the actual time required for the fulfillment of the purpose for which the personal data are collected; and

(3) whether it will consider amending the legislation to stipulate that

traders are not permitted to keep customers' personal data beyond (i) a statutory period or (ii) such period that they have indicated to their customers for which the data will be kept?

SECRETARY FOR CONSTITUTIONAL AND MAINLAND AFFAIRS (in Chinese): President, after consulting the Office of the Privacy Commissioner for Personal Data ("PCPD"), my consolidated reply to the questions raised by Mr LAU is as follows: From 1 January 2012 to 31 October 2016, PCPD received three complaints relating to the misuse of consumers' personal data provided during online transactions. There is, however, no information showing whether these cases involved the use of cross-border payment services. According to Data Protection Principle 2(2) under the Personal Data (Privacy) Ordinance (Cap. 486) ("PDPO"), data users (such as traders) should ensure that personal data is not kept for a period longer than is necessary to fulfil the purpose for which the data is used. Section 26(1) of PDPO also provides that, where personal data is no longer required for the purpose for which it was used, the data user must take all practicable steps to erase the personal data. Moreover, Data Protection Principle 3 protects the personal data of data subjects (such as consumers) from being used in purposes not expected originally. The Principle stipulates that personal data shall not, without the prescribed


consent of the data subject, be used for any new purpose other than the purpose for which the data were to be used at the time of the collection of the data or directly related purposes. Part 6A of PDPO further requires that, if a trader intends to provide customers' personal data to a third party for use in direct marketing, he must inform the data subjects in writing of his intention to so provide the data, and provide them with the prescribed information (including the kinds of personal data to be provided, the classes of persons to which the personal data is to be provided, etc.); if the provision of the personal data is for gain (such as in return for money), data subjects must also be informed explicitly in writing. Traders must obtain written consent from the data subjects before providing their personal data to a third party for use in direct marketing. Since different data users will collect, retain and use different kinds of personal data by different means and for different purposes, and the reasonable retention periods required are different,(1) PDPO does not specify a uniform statutory time limit for the retention of personal data. Nevertheless, whether or not the data user has stated a retention period for the personal data in its control, the requirements under PDPO are still applicable. PCPD will handle complaints about inappropriate collection, retention or use of personal data; and may initiate compliance checks or investigations if it has reasonable grounds to believe that there is any contravention of the requirements under PDPO. If a non-local trader is able to control, in or from Hong Kong, the collection, holding, processing or use of the personal data concerned, he is also subject to regulation under PDPO.

(1) For example, section 8.4 of the Guideline on Anti-Money Laundering and Counter

Terrorist Financing (For Stored Value Facility Licensees) issued by the Hong Kong Monetary Authority requires stored value facility licensees to keep a customer's identity document throughout the business relationship with the customer and for a period of six years after the end of the business relationship; section 3.4A of the Code of Practice on Consumer Credit Data issued by PCPD provides that, a credit reference agency may retain the account repayment data until the expiry of five years after account termination, if the data does not reveal a material default or a status of write-off due to a bankruptcy order.


1157

PCPD has been a participant in collaboration arrangements with international privacy enforcement authorities. If a data user is found contravening in another jurisdiction the privacy regulations of that jurisdiction, intelligence and information will be shared with the jurisdiction's privacy enforcement authority to facilitate their taking suitable actions. Combating sex crimes in train compartments and stations 21. DR CHIANG LAI-WAN (in Chinese): President, it has been reported that in the first half of this year, the Police received respectively 65 reports of indecent assaults and 55 reports of "under skirt photo-taking" which occurred within the Railway Police District. The figures rose by more than 20% compared to the same period last year, with the youngest suspect being just 13 years old. As pointed out by the Police, the perpetrators mainly chose to commit crimes in train compartments as well as on platforms and escalators, which were crowded. Some members of the public have pointed out that the MTR train compartments are getting more and more crowded due to increase in patronage, creating opportunities for perpetrators to commit crimes. They therefore suggested that the MTR Corporation Limited ("MTRCL") should designate during specified hours, on a trial basis, some train compartments for the exclusive use of women, children, the elderly and persons with disabilities. However, MTRCL refused to implement the suggestion on the grounds that such a measure might constitute discrimination, and there were difficulties with train compartment design and manpower deployment, etc. In this connection, will the Government inform this Council:

(1) of the number of reported cases of sex crimes received by the Railway Police District in each of the past five years, with a breakdown by sex and age of the victims and by sex and age of the perpetrators;

(2) given that in reply to my question on 22 May 2013, the authorities

indicated that MTRCL would consider installing closed circuit television ("CCTV") system in train compartments that were not equipped with such system, whether the authorities know if all train


compartments have currently been installed with CCTV system; if so, of the details; if not, the reasons for that, and MTRCL's timetable for installing such system in all train compartments;

(3) whether it knows if MTRCL has made reference to the experience of

places, such as Japan and Taiwan, in providing women's compartments; if MTRCL has made reference, of the details; if not, the reasons for that; and

(4) whether the authorities reviewed in the past three years the

effectiveness of MTRCL's efforts in combating sex crimes; if they did, of the details; if not, the reasons for that?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, the Railway District of the Hong Kong Police Force ("the Police") and the MTR Corporation Limited ("MTRCL") are responsible for the security of the MTR network. Over the years, both parties have been working closely together to provide safe and reliable railway service to passengers. They from time to time review the effectiveness of the measures to prevent and curb crimes (including indecent assault) within the MTR premises to ensure safety of passengers. My reply, after consultation with the Security Bureau, to the various parts of the question raised by Dr CHIANG Lai-wan is as follows:

(1) According to the Police, the number of reported cases of sex crimes received by the Railway Police District in each of the past five years, with a breakdown by sex and age of the victims and by sex and age of the arrested persons is at the Annex.

(2) In compliance with the requirements under the Personal Data

(Privacy) Ordinance, the main purpose for MTRCL to install closed circuit television ("CCTV") system in stations and train compartments is to meet the daily operational needs of the railway service, such as monitoring passenger flow, providing prompt assistance to passengers and handling emergency situation. The


1159

installation of CCTV system in train compartments enables the train captains to immediately understand the situation in the train compartments through the CCTV system and provide prompt assistance, when passengers activate the in-train intercom where necessary. It also helps prevent and combat crime. In any event, passengers should report to the Police as soon as possible or contact MTR staff to timely notify the Police for follow-up, if they witness any unlawful acts.

According to MTRCL, the CCTV system is installed on all trains

currently running on the West Rail Line, Ma On Shan Line and Disneyland Resort Line. It is also installed on some of the East Rail Line and Kwun Tong Line trains and Light Rail Vehicles ("LRVs"). MTRCL awarded a contract in July 2015 to purchase 93 trains to fully replace the first generation trains currently running on the Kwun Tong Line, Tsuen Wan Line, Island Line and Tseung Kwan O Line. These new trains will be equipped with the CCTV system and are expected to be put into service gradually starting from late 2018. In addition, the trains purchased by MTRCL for new railway projects will also be equipped with the CCTV system, including the ones for the South Island Line (East) and those which will gradually replace the existing trains of the East Rail Line starting from 2018 to tie in with the commissioning of the "North-South Corridor" of the Shatin to Central Link. Moreover, the 40 LRVs (30 of which will replace the existing Phase II LRVs), with procurement confirmed by MTRCL in July this year, will also be equipped with the CCTV system. The first batch of the new LRVs is expected to be put into service in 2019.

As for trains without the CCTV system, MTRCL will consider

installing the CCTV system during retrofitting works for the trains in future.

(3) MTRCL has considered some overseas experiences, but reckons that

it is not appropriate to introduce female-only compartments in the MTR network due to the reasons below:


(i) handling more than 8 100 train trips per day, MTR provides one of the most frequent services amongst the railway networks in the world. During peak hours, crowds usually appear on the platforms, particularly the ones of interchange stations, and train service is maintained at a frequency of around two minutes per train. Any kind of exclusive compartments would have impact on the control of passenger flow (for example, passengers will need to wait for trains at designated positions on the platforms);

(ii) as most MTR trains are of an open design, the introduction of

female-only compartments would reduce the flexibility of passenger movement between train compartments; and

(iii) when deciding whether to introduce female-only

compartments, one should also consider whether there is a need to introduce male-only compartments to ensure both sexes are treated equally, so as to comply with the Sex Discrimination Ordinance.

Different operating modes will be adopted by railway systems of

different cities according to different operating environments and factors (including the space of stations and train compartments, and passenger throughput). In fact, female-only compartments are not common in railway systems around the world. Currently only a few jurisdictions in the world offer them. Taking the experience of Taiwan as an example, according to the report of the local media, there are practical enforcement difficulties when providing female-only compartments, as it is difficult for staff to stop male passengers from entering female-only compartments.

(4) To prevent crime of indecent assaults in the railway premises,

MTRCL has put up posters at stations to step up the promotion of anti-crime messages on indecent assaults. Passengers are encouraged not to remain silent but report incidents or crimes of indecent assaults immediately to the Police or station staff. The MTR station staff are properly trained to assist the Police in combating crimes. In addition, MTRCL and the Railway Police District hold regular anti-crime meetings to share information about


1161

the latest crime trend and intelligence, and to deliberate on specific strategies to combat crimes. MTRCL also organizes publicity activities in conjunction with the Police (including regular anti-crime publicity activities organized annually) so as to raise passengers' anti-crime awareness. The figures shown in the Annex also reveal that the number of reported sex crimes received by the Railway Police District is general on a steady trend, or even sees a decrease between 2013 and 2015.

Annex

Number of reported cases of sex crimes received by the Railway Police District,

with a breakdown by sex and age of the victims and by sex and age of the arrested persons

Indecent assault cases

Year Number of Cases Victims' Sex Arrested Persons' Sex

Female (Age) Male (Age) Male (Age) 2011 167 2 to 51 12 to 18 15 to 73 2012 197 4 to 58 11 to 17 13 to 73 2013 195 9 to 50 13 to 25 13 to 74 2014 146 12 to 68 12 to 16 16 to 69 2015 123 12 to 54 18 to 21 10 to 77

Under-skirt photo-taking cases

Year Number of Cases Victims' Sex Arrested Persons' Sex Female (Age) Male (Age)

2011 78 8 to 43 18 to 52 2012 101 13 to 40 13 to 56 2013 110 13 to 48 12 to 63 2014 105 14 to 54 14 to 65 2015 96 12 to 50 12 to 61


GOVERNMENT BILL First Reading of Government Bill PRESIDENT (in Cantonese): Government Bill: First Reading. PRIVATE COLUMBARIA BILL CLERK (in Cantonese): Private Columbaria Bill. Bill read the First time and ordered to be set down for Second Reading pursuant to Rule 53(3) of the Rules of Procedure. Second Reading of Government Bill PRESIDENT (in Cantonese): Government Bill: Second Reading. PRIVATE COLUMBARIA BILL SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, I move the Second Reading of the Private Columbaria Bill ("the Bill"). The Government submitted the Bill to the Legislative Council as early as June 2014, seeking to regulate private columbaria through a licensing scheme with a view to achieving the following policy objectives:

(1) ensuring compliance with the relevant statutory and government requirements;

(2) enhancing protection of consumer interests; and (3) ensuring the sustainable operation and development of the industry.

(THE PRESIDENT'S DEPUTY, MS STARRY LEE, took the Chair)


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The Bills Committee of the previous term of the Legislative Council held 35 meetings (including meetings held for the purpose of receiving views from deputations) over a two-year period and reached a consensus with the Government on 547 Committee Stage Amendments ("CSAs") in total after comprehensive, extensive and in-depth deliberations. Having the Bill enacted with incorporation of all CSAs before mid-July 2016 represented a cross-party consensus in the previous term of the Legislative Council. However, the Second Reading debate of the Bill did not resume as some Members staged a filibuster on the Medical Registration (Amendment) Bill 2016, which was placed on the Council agenda before the Bill. I gave an undertaking to the public that I would again introduce the Bill as soon as possible after the start of the current term of the Legislative Council. The Bill tabled before the Legislative Council today is modelled on the previous version of the Bill and includes all proposed CSAs which were endorsed by the Bills Committee of the previous term of the Legislative Council. No substantive changes have been made to the present Bill except for a few minor technical details and stylistic polishing. There are many new Members in the current term of the Legislative Council, so perhaps I shall spend some time on explaining to Members the background and salient features of the Bill. With regard to the background, the number of private columbaria has substantially increased in the last decade to not only satisfy the demand for niches but also offer more options to consumers. Nonetheless, most of the operators failed to comply with the existing requirements on planning, land or buildings/fire safety. Many members of the public (especially the residents living near such columbaria) are greatly dissatisfied with the traffic impact and environmental nuisances caused by such non-compliant private columbaria. On the other hand, consumers also demand better protection. In this connection, the Food and Health Bureau conducted two rounds of public consultation in 2010 and 2011 respectively. The results indicated that the public generally supported the implementation of a regulatory regime encompassing an appropriate scope and intensity of regulation. The public agreed that we should avoid displacing a large number of interred ashes from the relevant private columbaria as it will cause disturbance and distress to society.


Having considered all the viewpoints, we believe a pragmatic and sensitive approach should be adopted to handle private columbaria which were in operation before the announcement time of the previous Bill. The regulatory regime must comply with the principles of necessity, reasonableness and proportionality, including:

(1) helping to meet society's demand for niches; (2) paying regard to the feelings of the descendants and their wish to

avoid disturbing the ashes of the deceased interred in private columbaria;

(3) minimizing the nuisance caused by such private columbaria to their

neighbouring community as far as practicable; and (4) facilitating the sustainable and healthy development of the industry

long term.

These principles are embedded in the overall design of the Bill. Let me now give a brief account on the salient features of the Bill.

(1) Compliance with statutory and government requirements Under the Bill, only private columbaria that have been issued with a

licence may sell or let out new niches. An applicant must meet stringent eligibility criteria to apply for a licence, including:

(i) to prove that the columbarium meets the requirements on

planning, land and buildings as prescribed in the Bill; (ii) to prove that the columbarium premises are held directly from

the Government under a lease; (iii) to submit a management plan in respect of the columbarium

for approval; and (iv) to submit, where applicable, a written legal advice confirming

that there is no provision in the relevant deed of mutual covenant which states that any use of the premises as a


1165

columbarium or any commercial use of the premises is prohibited, or only private residential use of the premises is permitted.

(2) Arrangements for exempting pre-cut-off columbaria from certain

provisions of the new regime As set out in the Bill, the cut-off time for exempting columbaria

from certain provisions of the new regime is 8:00 am on 18 June 2014 (that is, the announcement time of the earlier Bill). Private columbaria which have commenced operation before the cut-off time ("pre-cut-off columbaria") are required to apply for a licence if they wish to continue to sell or let out new niches after the passage of the Bill.

For a pre-cut-off columbarium which is a dated columbarium and

does not intend to sell or let out new niches, its operator can apply for an exemption to continue its operation. The requirements concerning the eligibility of applying for an exemption include having commenced operation before 1 January 1990, having ceased the selling or letting out of new niches after the cut-off time, and so on.

The Bills Committee of the previous term of the Legislative Council

and the community generally accepted the need for making grandfathering arrangements for pre-cut-off columbaria that do not meet all the statutory and Government requirements, having regard to the following factors: (i) interred ashes in as many as 300 000-odd niches may need to

be displaced and handled if we do not adopt a sensitive approach to handling the issue, causing a huge cost to society; and

(ii) the arrangements for exempting columbaria from certain

provisions of the new regime are subject to stringent regulation.


An operator of a pre-cut-off columbarium seeking a licence or an exemption may apply for a temporary suspension of liability ("TSOL") if he needs time to work towards meeting various applicable statutory and government requirements so that the columbarium can continue its operation even though a licence or an exemption is yet to be granted (during the validity period of the TSOL, however, the columbarium concerned cannot sell or let out niches while the irregularity must not deteriorate), and all necessary steps must be taken in a reasonable and expeditious manner to fulfil the requirements for grant of a licence and an exemption. The validity period of an TSOL will be set at no more than three years for the first time and may be extended if warranted. An TSOL may not be extended more than once unless exceptional circumstances exist.

Upon the passage of the Bill, the Government will set up a statutory

Private Columbaria Licensing Board ("the Licensing Board") to determine applications for various specified instruments (that is, licence, exemption or TSOL). The Licensing Board may impose conditions where necessary in approving applications for specified instruments to require the holder of a specified instrument to take measures and steps to reduce the environmental nuisance caused by the operation of his columbarium to the residents nearby. The penalty for operating a columbarium without a specified instrument is rather heavy. The offence is liable on summary conviction to a maximum fine of $2 million and to imprisonment for three years; and on conviction on indictment to a maximum fine of $5 million and to imprisonment for seven years.

(3) Protection of the rights and interests of consumers With regard to the protection for consumers, the Bill provides that a

person who sells or lets out new niches is required to make a written agreement with consumers ("agreement for sale of interment rights") which sets out the information and provisions as prescribed in the Bill. If the relevant requirements are not fulfilled, consumers may cancel the agreement for sale of interment rights concerned and request a refund. For instance, the agreement must contain information about the ownership, tenancy, encumbrances and restrictions on use and disposition of the columbarium premises


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concerned. A purchaser can also authorize his representative to enforce the agreement under the relevant agreement for sale of an interment right so that his rights and interests can also be protected after his death. An operator of a columbarium or his agent is also excluded from appointment as the authorized representative under an agreement for sale of an interment right to claim the return of ashes and relevant items so as to avoid conflicts of interests. Furthermore, if a licensee transfers the columbarium to another person, the transferee is liable for all debts and obligations in relation to each agreement for sale of an interment right entered into before the transfer. In other words, a purchaser can mandate the transferee to enforce the relevant agreement.

(4) Proper disposal of ashes An operator of a columbarium is responsible for properly handling

niches which are sold or let out, irrespective of whether ashes were kept inside them or not. If a columbarium ceases operation for various reasons or continues operation without a specified instrument after the grace period, the operator is responsible for properly disposing the interred ashes having regard to the respect for, and the dignity of, the deceased concerned. Any person who improperly handles ashes interred in his columbarium and/or abandons a columbarium shall be guilty of an offence. The offence is liable on summary conviction to a maximum fine of $2 million and to imprisonment for three years; and on conviction on indictment to a maximum fine of $5 million and to imprisonment for seven years.

Deputy President, later on I will talk about the main concerns raised by members of the previous Bills Committee and the Government's response. During the scrutiny of the Bill by the Bills Committee of the previous term of the Legislative Council, some members expressed concerns over certain issues and wished the Government could give responses in the resumption of the Second Reading debate. As the Second Reading debate on the Bill could not be resumed in the previous term of the Legislative Council, I would like to take the opportunity today to give a brief overview of those concerns and the Government's responses.


(1) Arrangements concerning religious ash pagodas

For a pre-cut-off columbarium that is a Chinese temple, CSAs have been incorporated into the Bill to provide that if the columbarium concerned has obtained an exemption and complied with the various requirements and conditions prescribed in the Bill and imposed by the Secretary for Home Affairs, ashes of religious practitioners can be, without imposing any fees, charges or other sums, interred in its religious ash pagoda. The Bills Committee of the previous term of the Legislative Council agreed with the regulatory framework of the aforementioned approach but wished the Government could submit a more specific proposal with regard to the actual operation of the relevant mechanism (including the arrangements for lodging appeals). I will briefly introduce the ideas of the Home Affairs Bureau.

(i) All pre-cut-off columbaria which are, as specified by the

Secretary for Home Affairs by notice in the Gazette, permitted to inter ashes of religious practitioners into religious ash pagodas during the validity period of their exemptions must be Chinese temples specified in the Chinese Temples Ordinance, that is, the columbarium must be a genuine religious institution as well as a charitable institution exempt from tax under the Inland Revenue Ordinance. The Home Affairs Bureau will confirm the identity of the religious institution by making reference to the relevant documents (including the objectives of establishment and constitution of the institution) and conducting site inspections. The Home Affairs Bureau will also specify the number of set of ashes which can be interred in each specified columbarium of a Chinese temple in the light of the actual situations (including the scale of temples and religious ash pagodas, the number and age of religious practitioners who reside and serve in the temples, the interment of ashes in religious ash pagodas in the past, and so on). Yet, on the whole, the number cannot exceed the cap of 1 000 sets stipulated in the Bill.

(ii) Moreover, to ensure that ashes interred in a religious ash

pagoda belong to religious practitioners who resided and served in the temple before their death, the temple concerned


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must keep the information of the deceased to which the ashes belong (including the name of religious practitioners, the period of time of serving in the temple, the date of death, and so on). The temple is also required to keep the relevant documents or articles to prove that persons listed in the register are genuine religious practitioners. Staff of the Home Affairs Bureau will be deployed to conduct site inspections and examine the relevant records and materials. If any irregularity is found, the authorities will follow up the issue seriously. The Secretary for Home Affairs will, depending on the situation, consider removing the columbarium of the non-compliant temple from the relevant register by notice in the Gazette. The authorities will continue to consult the representatives of the relevant religious institutions so as to formulate detailed arrangements for implementation.

(iii) To handle potential objections to the decisions made by the

Secretary for Home Affairs in exercise of the powers conferred by the Bill (including Gazette notices, the maximum number of sets of ashes of religious practitioners that can be interred in religious ash pagodas in columbaria of certain temples, prosecution against non-compliance, and so on), the Home Affairs Bureau will consider setting up a committee independent of the Bureau, which will be comprised of members from the religious sector and other sectors, to offer advice to the Secretary for Home Affairs in respect of such cases of objection.

(2) Arrangements concerning the payment of land premium by private

columbaria Many members of the previous Bills Committee were concerned

about this issue. Some members of the Bills Committee were concerned that private columbaria may have to pay a huge amount of land premium when applying for regularization in respect of non-compliance with the land-related requirements while some private columbaria may even be closed down for failing to pay the land premium.


For pre-cut-off columbaria confirmed to be eligible for exemption status in all other respects, the Director of Lands may, upon receiving the application for regularization of land use, consider administratively regularizing the breach of lease conditions or occupation of unleased land for the proposed exempted area in respect of the interment rights sold before the cut-off time by way of a waiver or a short term tenancy. The Director may also consider waiving the relevant waiver fees, short term tenancy rentals and administrative fees before and during the exemption period, depending on the background and specific situation of each application.

The Licensing Board can, after consulting the Director of Lands,

impose restrictions on the relevant private columbaria to prevent abuse of the arrangements. Moreover, we have taken on board the suggestions made by the Bills Committee of the previous term of the Legislative Council to empower the Licensing Board to impose conditions on a specified instrument restricting the imposition of any additional fees, charges or other sums by an operator beyond the amounts, or not in accordance with the adjustment mechanism, specified or otherwise contained in any agreement for sale of an interment right.

(3) Requirements specified by the Licensing Board Some provisions of the Bill stipulate that the concerned parties must

act according to the requirements specified by the Licensing Board or the Director of Food and Environmental Hygiene and failure to do so constitutes a criminal offence. Examples include: (i) if there is a material change in the information provided for

the application for a specified instrument, the holder of a specified instrument must notify the Licensing Board of such a change within the time specified in the Bill;

(ii) a person holding a licence in respect of a columbarium must

enter the particulars of each of the agreement for sale of an interment right into a register within a period of time as specified by the Licensing Board;


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(iii) an ash handler is required to, on the expiry of the claim period for returning ashes, deliver unclaimed ashes in the columbarium to the Director of Food and Environmental Hygiene in a manner specified by the Director of Food and Environmental Hygiene; and

(iv) records kept by an ash handler must contain, among other

things, information required by the Licensing Board. To help ash handlers clearly understand whether they have fulfilled the requirements for proper disposal of ashes prescribed in the Bill, I can make an undertaking here that the Administration will follow up the publication of guidelines or codes of practice regarding proper disposal of ashes so as to provide reference for operators and other relevant parties. Deputy President, I believe Members all understand that the enactment of the Bill is not a panacea which provides complete and specific solutions to all sorts of problems that existed before the passage of the Bill. It cannot resolve all problems left over from the past once and for all, nor can it offer perfect solutions to the challenging situations that may eventually come about. Nonetheless, a broad consensus has been reached in society on the early passage of the Bill. Upon enactment of the Bill, we can establish a regulatory framework that enables the Government to resolve the problems found in various aspects of private columbaria in a gradual and systematic manner as well as enhancing the protection for the interests of consumers. The provisions of the Bill are very complicated, and the aspects and scope covered deep and extensive. Perhaps we will only have a clearer and concrete understanding of numerous problems and possible situations after the Bill is implemented. In this connection, we will closely monitor the implementation of the Private Columbaria Ordinance ("the Ordinance"). As I have promised to the Bills Committee of the previous term of the Legislative Council, we will conduct a review of the Ordinance around three years after implementation and introduce Amendment Bill when necessary. In fact, we may need to introduce the Bill to the Legislative Council at an earlier date if there is an urgent need. Deputy President, we have to make a start after all to solve such a long-standing problem. Although we will not underestimate the difficulty of solving the problems left over from history, we will continue to join hands with the Legislative Council and various sectors of society to face any past and future challenges. Thank you, Deputy President.


DEPUTY PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Private Columbaria Bill be read the Second time. In accordance with the Rules of Procedure, the debate is now adjourned and the Bill is referred to the House Committee. MEMBERS' MOTIONS DEPUTY PRESIDENT (in Cantonese): Members' motions. Proposed resolution under the Interpretation and General Clauses Ordinance to extend the period for amending the Inland Revenue Ordinance (Amendment of Schedule 17E) Notice 2016, which was laid on the Table of this Council on 2 November 2016. I now call upon Mr Kenneth LEUNG to speak and move the motion. PROPOSED RESOLUTION UNDER SECTION 34(4) OF THE INTERPRETATION AND GENERAL CLAUSES ORDINANCE MR KENNETH LEUNG: Deputy President, in my capacity as Chairman of the Subcommittee on Inland Revenue Ordinance (Amendment of Schedule 17E) Notice 2016, I move that the motion under my name, as printed on the Agenda, be passed. At a House Committee meeting held on 4 November 2016, Members decided to form a subcommittee to scrutinize the Amendment Notice. The Subcommittee held a meeting on 15 November 2016 with the Administration to examine the Amendment Notice. To allow sufficient time for the Subcommittee to report its deliberations to the House Committee, I call upon Members to support the motion on extending the period for scrutinizing the subsidiary legislation to 11 January 2017. With these remarks, Deputy President, I urge Members to support the motion. Thank you.


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Mr Kenneth LEUNG moved the following motion:

"RESOLVED that in relation to the Inland Revenue Ordinance (Amendment of Schedule 17E) Notice 2016, published in the Gazette as Legal Notice No. 165 of 2016, and laid on the table of the Legislative Council on 2 November 2016, the period for amending subsidiary legislation referred to in section 34(2) of the Interpretation and General Clauses Ordinance (Cap. 1) be extended under section 34(4) of that Ordinance to the meeting of 11 January 2017."

DEPUTY PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr Kenneth LEUNG be passed. DEPUTY PRESIDENT (in Cantonese): Does any Member wish to speak? (No Member indicated a wish to speak) DEPUTY PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr Kenneth LEUNG be passed. Will those in favour please raise their hands? (Members raised their hands) DEPUTY PRESIDENT (in Cantonese): Those against please raise their hands. (No hands raised) DEPUTY PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the motion passed.


DEPUTY PRESIDENT (in Cantonese): Debates on motions with no legislative effect. The motion debate on "Vigorously promoting healthy market competition to counteract the market dominance of Link REIT". Members who wish to speak in the motion debate will please press the "Request to speak" button. I now call upon Ms YUNG Hoi-yan to speak and move the motion. VIGOROUSLY PROMOTING HEALTHY MARKET COMPETITION TO COUNTERACT THE MARKET DOMINANCE OF LINK REIT MS YUNG HOI-YAN (in Cantonese): Deputy President, I move that the motion, as printed on the Agenda, be passed. Deputy President, the business practice of Link Real Estate Investment Trust ("Link REIT") has caused great dissatisfaction among various sectors of the community. Quite a number of people have criticized Link REIT of managing its markets and shopping arcades purely on a commercial basis, including significantly raising rentals of commercial premises in markets, stifling the room of survival of small traders; divesting car parks and replacing monthly parking spaces with floating parking spaces, and contracting out management services. Without a doubt, it seeks to make every possible gain only in pursuit of maximum returns, so as to fulfil its responsibilities to shareholders. However, it has neglected the daily necessities and affordability of grass-roots people, thereby aggravating the burden on their livelihood. It has totally forgotten its due social responsibility as an enterprise. As the Member who proposes the first motion, I wish to voice in this Council the views heard and the issues seen by me personally during the election period, and express my concerns. Deputy President, the New People's Party has all along been concerned about and actively following up on the Link REIT issue. The New People's Party and I consider that while the Link REIT issue ostensibly involves municipal and livelihood issues, the provision and management of municipal services are under the direct impact of district administration. Hence, public dissatisfaction with Link REIT is actually related to problems with district administration. The Government needs to tackle them as a whole.


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Today, I have proposed the motion on "Vigorously promoting healthy market competition to counteract the market dominance of Link REIT" in a bid to seek Members' support for urging the Competition Commission ("the Commission") to commence a study on the operation of Link REIT and the provision of individual municipal services, and even a comprehensive investigation into whether Link REIT has violated the Competition Ordinance. Meanwhile, it is hoped that the Government will address squarely the problem of residents' daily lives being affected by an inadequacy of district facilities and services and limited choices of goods and retail shops in various districts. Through the introduction of short-term measures, including setting up temporary bazaars, residents will be provided with choices other than those markets and shopping arcades of Link REIT. Also, it should introduce district-based pilot schemes for building public markets in districts in need, and engage social enterprises in the operation. In the long run, it should conduct studies on building new municipal services complexes in various districts, and improve and enhance the facilities of existing municipal services buildings, so as to provide residents with more comprehensive community facilities which will better suit their needs. It is also hoped that the Government will comprehensively review the existing district administration models to enhance administrative efficiency and people's standard of living. Deputy President, Link REIT has a unique background and mission, serving more than 700 000 public housing households. In the eyes of the majority public, Link REIT is not an ordinary commercial organization. The current Link REIT issue is mainly attributed to problems in government policies. The Hong Kong Housing Authority ("HA") divested a large number of its retail and car parking facilities to The Link Real Estate Investment Trust ("The Link REIT"), currently known as Link REIT, under highly controversial conditions at that time in 2005. But the assignment deeds are not sufficiently stringent. The assignment deeds between HA and The Link REIT contain Restrictive Covenants. Generally speaking, the commercial and car parking facilities shall not be disposed of except as a whole. However, if HA no longer holds any proprietary interest in the relevant estate or court, the restriction that the shopping centre shall not be disposed of except as a whole will no longer be effective. If HA has disposed of any residential units in the relevant estate or court, the restriction that the car parking facilities shall not be disposed of except as a whole will no longer be effective either. In other words, Link REIT is allowed to dispose of the properties as a whole, while car parking facilities can be disposed of "in parts". Basically, it is not an effective means to commit Link REIT to


taking up and discharging its social responsibilities. In the absence of competition due to the monopolization of commercial premises in markets under Link REIT in quite a number of public housing estates, the significant rent increases imposed by Link REIT have aroused grave concern. Take Hau Tak Market in Tseung Kwan O as an example. More than half a year ago, over 10 shops closed down one after another. It is learnt that quite a number of traders were unable to continue their business mainly because of the significant rent increases up to 30% levied by Link REIT, and people in the districts had no choice but to fork out more for their food. Moreover, the outsourcing of management of markets and shopping arcades by Link REIT has created a number of problems. This February, traders of Cheung Fat Market in Tsing Yi decided to launch a week-long strike to protest against outsourcing of the market to contractor Uni-China by Link REIT. And when Uni-China took over the market in March, all traders who had participated in the strike were not offered a renewal of tenancy. Basically there is nothing wrong for a contractor to adopt a vertical integration mode of business operation to achieve more cost-effective operation of commercial premises in its markets. But quite a number of people have criticized the duplication of role between Link REIT and contractors. It has turned a blind eye to unlicensed commercial operation on premises under contractors, and condoned them to drive away small traders by such tactics as raising rentals and manipulating market retail prices. I must stress here that the "outsourcing of management" is not tantamount to the "outsourcing of responsibilities". Link REIT cannot evade its responsibilities in this regard. I hope Link REIT will step up monitoring of contractors and protect the legitimate rights and interests of members of the public. Subsequent to its listing, Link REIT has sold its assets on many occasions, involving a number of shopping arcades and car parks. According to a resident, the price of a parking space divested is as high as $900,000. It is believed that the divestment of car parking facilities has brought substantial benefits to Link REIT. However, I wish to ask Link REIT whether it has taken into account the right and interests as well as the needs of residents and small traders while selling its assets? This April, Link REIT sold Wan Tau Tong Shopping Centre in Tai Po. Soon after the takeover, the new landlord issued a lawyer's letter to six small shops in the shopping centre and required them to move out half a year later. It is reported that in the tenancy agreements signed between tenants of Wan Tau Tong Shopping Centre with Link REIT and the new landlord, one of the


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terms provides that in case the landlord decides to sell, redevelop or renovate the property, etc. it is entitled to terminate the tenancies by serving tenants an advance notice of no less than six months. Seeing such inequitable contract terms, no wonder Secretary for Security LAI Tung-kwok also came forward to put down his signature in support of the small traders of Wan Tau Tong Shopping Centre so as to seek justice for them. Deputy President, in recent years, quite a number of traders have closed down for they can hardly cope with the significant rent increases imposed by Link REIT. According to the figures released by the Government and Link REIT in the middle of this year, the average rentals of private retail premises on Hong Kong Island, in Kowloon and the New Territories have seen a significant drop, among which Kowloon has witnessed the biggest drop at 30%. But the rentals of Link REIT properties have been rising rather than declining, with some of them having even increased by more than 10%. There are queries about whether the monopolization of the supply of commercial premises in markets by Link REIT has allowed it to raise rentals significantly against the market trend. Hence, quite a number of members of the public and I hope that the Commission can conduct a study on how Link REIT operates its shops, especially those in markets, explore ways to boost competition and make relevant recommendations to Link REIT, so that members of the public may be offered better prices, products of higher quality and wider choices. When necessary, it should launch direct investigations and studies to see if Link REIT has violated the "Second Conduct Rule" as stated in section 21 of the Competition Ordinance, that businesses with a substantial degree of market power are prohibited from abusing that power to harm competition. In response to public discontent with Link REIT and community facilities, in April and May this year, I together with Legislative Council Members from the New People's Party and District Council ("DC") members from the Civil Force met with the management of Link REIT and Chief Secretary for Administration Carrie LAM respectively, and submitted proposals to the Chief Secretary, hoping that the Government would expeditiously take forward the planning and construction of new municipal services complexes. Earlier on, I also mentioned that the core of the Link REIT issue involves deep-rooted problems in district administration. Prior to the reunification of Hong Kong, the Urban Council and the Regional Council were respectively in charge of the management of such municipal services as food hygiene, street


cleansing, cultural and recreational facilities and cooked food centres in various districts. Subsequent to their dissolution, the model of district administration models has undergone changes. The responsibility of managing the relevant district services has been transferred to the Home Affairs Department and DCs. DCs are only a consultative framework with no real power. We have to rely on those public officers who have been staying in the "ivory tower" persistently to draw up planning for community facilities. I wonder how they can practically understand district needs? And can they hear the demands of members of the public? The motion today has clearly pointed out that the Link REIT issue is a part of district administration, but to our disappointment, the Secretary for Home Affairs does not attend the meeting and respond to the motion and our speeches today. I express regrets at this. The previous models in which municipal services were provided by the two Municipal Councils manifested the spirit of "district autonomy". Their policies could certainly better answer public opinions and sentiments. In fact, there have been criticisms in society of the lack of flexibility and inefficiency in the existing model of district administration, rendering it unable to respond to different aspirations in various communities practically and effectively. For this reason, the Government has to consider whether a review of the existing district administration model is necessary. For example, in respect of the planning and management of new municipal services complexes, it may enhance the participation of DC members, so as to ensure that the planning and provision of various services will better serve the needs of people in the districts. Deputy President, perfecting community planning, providing good municipal services and enhancing people's quality of life are the basic responsibilities of the Government. Nevertheless, there is an obvious gap between the planning standards currently adopted by the Government in determining the provision of district municipal and cultural and leisure services and the actual situation and needs of residents in quite a number of districts. Tai Wai is one good example. In recent years, the New People's Party and the Civil Force have repeatedly conveyed to the Government that the district facilities in the area are decrepit and insufficient. And with the continuous population growth in the area, the existing facilities are no longer sufficient to meet the needs of Tai Wai residents. Markets, libraries, child care services, nurseries, elderly services centres and parking spaces are all inadequate, thereby causing much inconvenience to the daily life of residents. I hope the Government can respond to the aspirations of residents and build a municipal services complex in Tai Wai.


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I asked a relevant oral question at the Legislative Council meeting last Wednesday. But regrettably, the Secretary for Development stated clearly in his reply that "the Government currently has no plan to build a new community services complex in Tai Wai". We and many living in Tai Wai are deeply disappointed. Some residents have even directly requested me to convey to the Secretary the message that "Residents of Tai Wai are angry". I hope the Government can heed our advice, seriously considering and expeditiously implementing the construction of municipal services complexes in Tai Wai or various districts. Deputy President, Link REIT was conferred two awards by The International Council of Shopping Centers, including the ICSC Foundation "Albert SUSSMAN International Community Support Award" for its "Link Together Initiatives", and the Silver Award in the "Renovations and Expansions Category of The ICSC Asia Pacific Shopping Center Awards" for Tin Shing Market. How sarcastic it is to those members of the public affected. To give the matter its fair deal, after taking over the management of some of the markets and shopping arcades of HA, Link REIT has revitalized them to a certain extent. For example, air-conditioning systems have been installed in quite a number of markets, and the environment has become cleaner and tidier than before. But at the same time, the business practice of Link REIT has given rise to other problems, including significant rent increases, the replacement of monthly parking spaces with floating parking spaces and the outsourcing of management, which have led to widespread controversies and criticisms. Chief Secretary Carrie LAM has once described Link REIT as one of the "Three Mountains" to tackle. I hope Link REIT can seriously examine whether it should change its current profit-oriented mode of operation, care more about the needs of residents, and adhere to achieving its vision of "serving and enhancing the lives of those around us". Deputy President, I so submit. Ms YUNG Hoi-yan moved the following motion: (Translation)

"That The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ('Link REIT')) was established in 2005 due to unique historical factors and environment and entrusted with the social responsibility of serving hundreds of thousands of public housing households; the Hong Kong Housing Authority divested a large number


of its retail and car parking facilities to Link REIT in 2005 under highly controversial conditions, enabling it to arbitrarily renovate shopping arcades and significantly raise shop rentals as well as divest car parks and introduce monthly floating parking spaces, etc. in pursuit of return maximization; however, Link REIT has ignored the affordability and living necessities of grass-roots people, thereby aggravating the burden on their livelihood; while it is the basic responsibility of the Government to provide the public with community facilities, with the estimated market value of Link REIT exceeding $120 billion, if the Government proposes buying back shares of Link REIT, its share prices will inevitably be pushed up, putting in effect taxpayers' money into the pockets of Link REIT and its shareholders; in order to respond to public aspirations on counteracting the market dominance of Link REIT and improving community facilities, this Council urges the Government to:

(1) request the Competition Commission to expeditiously investigate

whether Link REIT has violated the requirements of the Competition Ordinance, and to submit an investigation report to the Legislative Council;

(2) set up temporary bazaars at suitable locations in various districts to

provide residents with choices other than those markets and shopping arcades under Link REIT;

(3) introduce district-based pilot schemes for building public markets

in districts where community facilities are inadequate, and invite social enterprises to operate under an approach that is innovative and can satisfy the needs of communities, thereby providing grass-roots people with more choices; in the long run, the Government should conduct studies on building new municipal services complexes in various districts and improve the facilities of existing municipal services buildings, so as to provide residents with community facilities such as parking spaces, cultural and recreational facilities and nurseries, etc.; and

(4) comprehensively review the existing district administration models

to enhance administrative efficiency, and ensure that community facilities can satisfy the needs of residents to improve their standard of living."


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DEPUTY PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Ms YUNG Hoi-yan be passed. DEPUTY PRESIDENT (in Cantonese): Five Members will move amendments to this motion. This Council will now proceed to a joint debate on the motion and the five amendments. I will call upon Members who will move the amendments to speak in the following order: Mr SHIU Ka-fai, Mr Andrew WAN, Mr Wilson OR, Dr Fernando CHEUNG and Dr KWOK Ka-ki; but they may not move the amendments at this stage. MR SHIU KA-FAI (in Cantonese): Deputy President, I have submitted my amendment which, I believe, has been before Honourable colleagues for their perusal. First of all, I wish to thank Ms YUNG Hoi-yan for her concern about this matter. I support her motion, but I would like to propose amendments to individual parts. I would like to share a view with Honourable colleagues. Why do people live in society as groups rather than in isolation? The main reason is that when people live together, they can help each other in various aspects such as security and trade. More importantly, when some people are at inconvenience or in danger, other people can lend a helping hand. This is the main reason for group life in society. It is also the reason why there is public housing in Hong Kong. Some people may be more capable or lucky, while some who may not be lucky enough or have poor luck really need other people's support. For this reason, we need particular measures to help them in respect of health care, education as well as housing in Hong Kong. Public housing is a very good example of support for low-income people. As we can see, apart from the public housing the Hong Kong Government actually built some shopping arcades at the same time. As far as I understand it, in 2002 and 2003, the Hong Kong economy was rather poor. At that time the difficulty faced by the Hong Kong Housing Authority ("HA") was its income falling short of expenditure. How could it meet future expenditures? Furthermore, the shopping arcades were so dilapidated that no one was willing to rent them, which was another problem. On this premise, HA wished to sell the shopping arcades and car parks and adopt a commercial mode of operation.


I know that a number of Legislative Council Members supported the passage of the relevant motion at that time. However, from the perspective of social responsibility, I consider that apart from providing public housing to those people in need, how can we not concurrently look after their daily life, such as matters relating to shopping arcades? I think I need not elaborate too much on the present problem. We can read from the news every day what problems the old tenants in these shopping arcades are facing. They are frequently forced to move out or bear rent hikes. Many residents in public housing need to buy foodstuffs for meals, but I have heard that the foodstuffs in the Tin Shui Wai market are the most expensive in Hong Kong. Why is that the case? Hong Kong is a society which upholds free economy, but as I have said at the beginning of my speech, there are people who need our particular care. To cater for these people's special needs, I believe a society upholding free economy must allocate resources to helping them. I believe many of those who voted in favour of the motion are reflecting on whether they voted rightly that day, or they had expected Link Real Estate Investment Trust ("Link REIT") (formerly known as The Link Real Estate Investment Trust) would operate its business as a social service. I believe this might not be what they had thought initially. Nevertheless, I also understand that since Link REIT took over these shopping arcades, it has certainly helped and improved the arcades in such aspects as renovation, hygiene and diversification. However, given such exorbitant rents, the shop operators are forced to move out. For those who really often need to do shopping there―as the saying goes, "After all, the wool comes off the sheep's back"―given the prevailing inflation in Hong Kong, we know what a hard life they are leading. Why did I talk so much about all that? The reason is that today's motion is about what solutions we now have. As a matter of fact, Link REIT already owns a lot of public markets in Hong Kong, accounting for almost 30%. Should we ask the local residents to travel to other places to buy foodstuffs? If so, they will have to pay the transport costs. However, can we request Link REIT to reduce the rents? I would like to tell Members a story about Wan Tau Tong Estate. I once visited and chatted with the shop operators there. The owner of a stationery shop said that having run the shop for a long period, he wished to continue to serve the customers, but the increase in rent was way too large. What could I do? I tried to contact Link REIT and Mr LAM of Prosperous Glory Investment (Hong Kong) Limited. I tried to contact them through my friend but got no reply. I then rang them up direct in my capacity as a Legislative Council Member, hoping that I could act as a mediator, but they never


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replied. If I call a government department, I will receive its reply promptly, but regarding private companies, as I have learnt from my past experience as a District Council member, they are doing me a favour if they reply, and they might as well simply refuse. Deputy President, now it really seems we are at our wits' end, having no ideas about what to do. Some people suggest buying back all the shares of Link REIT, but now the market value of Link REIT is $120 billion or $130 billion. Those who speculate in shares will know that once people got wind of an acquisition or a merger, the share price will definitely be pushed up by two or three times. Back then, the shares were sold for some $20 billion. Is buying them back at $300 billion or $400 billion now in public interest? I believe many Hong Kong people may not agree. A veteran member of my Party often tells me that whenever there is such a controversy, very often it is a matter of demand and supply because now the supply is small while the demand is great in Hong Kong. We should focus on this direction to undermine Link REIT's dominance and try to strike a balance. In my opinion, some measures can be taken in the short, medium and long terms. An example of short-term measures is organizing Sunday or holiday bazaars so that people can have more choices. Yet I have reservations about permanent bazaars. I believe my colleague, Mr Tommy CHEUNG, will explain it in detail later. Besides, as I can see, in most of the markets in Hong Kong, nine stalls out of ten are vacant. Revitalizing the markets to attract more shop operators to move in, I believe, is another solution. Regarding medium-term measures, as far as I know, HA has not fully utilized the non-residential land lots. In fact, public markets can be constructed there. I hope HA will implement such construction as soon as possible. Moreover, Mr Vincent FANG, Honorary Chairman of my Party, has mentioned earlier that given the present shortage in the supply of shop premises, he hopes HA or the Hong Kong Housing Society will consider relocating its tenants like the NGOs or kindergartens which are currently renting shop units on the ground floor to the first floor, thereby vacating the space for retail outlets or shops selling daily necessities, with a view to keeping Link REIT in check and undermining its dominance. I believe this is an option worthy of study. As regards long-term measures, the development of new towns is certainly a major direction. I have particularly mentioned South Lantau in my amendment. Some Honourable colleagues of different political parties and


groupings have rung me up to say that they can hardly support the development of South Lantau because it may involve environmental issues. Here I would like to point out that this is not my own idea. On 6 February 2013, Vincent FANG mentioned this matter during the debate on the motion on "Developing a new North Lantau". He considered that South Lantau should be developed together. During those seven years when Donald TSANG served as the Chief Executive, we did not see any ideas from him on the future land problems, and consequently, now we do not have much land available for residential developments. Hence, I think it may not be a bad thing if we develop South Lantau and make early plans. What is more, many roads and bridges under the proposal of "Hong Kong 2030+" launched by the Government are developed in this direction. In my opinion, allocating more land for the future implementation of "Hong Kong 2030+" or development of ancillary facilities for the population can be beneficial. Certainly, many people will query how the seahorses can continue to swim freely then, or what will happen to those farms being cultivated by the elderly. I can only tell them that 300 000 people are waiting for allocation of public housing while 190 000 people are living in "sub-divided units". I hope we can weigh which is more important, seahorses swimming freely or people waiting for allocation of public housing. I so submit. Thank you, Deputy President. MR ANDREW WAN (in Cantonese): Deputy President, Link Real Estate Investment Trust ("Link REIT") was called The Link Real Estate Investment Trust ("The Link REIT") when it was listed. Back then, when the Hong Kong Housing Authority ("HA") divested its public housing assets to The Link REIT, that is, Link REIT today, it intended that Link REIT be positioned as a real estate fund geared towards rental income. But what we see today is a completely different picture, for Link REIT is selling shopping malls and markets of public rental housing estates to speculators for speculation and further divestment. When HA divested properties to Link REIT initially, the community described the transaction as "selling pork meat in bundle with bones", for many markets and shopping malls running on deficits due to poor management were sold in a bundle. At that time, some of the properties sold to Link REIT were making profits while some were not. However, after Link REIT had taken over of them, it increased shop rental and adopted various administrative tactics,


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forcing many small shop operators to move out. In recent years, Link REIT even closed certain markets on the excuse of renovation. To date, many markets remain closed. Secretary, we do not know what Link REIT will do to these markets eventually? Moreover, we note that Link REIT has been selling certain shopping arcades and car parking facilities to speculators in succession, one after another. I recall that the previous sale aroused considerable doubts among the public, for the parking spaces divested were resold separately to individual speculators. Banners were posted on the streets, stating that the sale arrangement smacked of violating the lease, for the parties concerned failed to state clearly the sale restrictions, such as parking lots were only for use of residents living in the estate. More scenarios of this kind will surface. Since Link REIT took charge, its practices have aroused great controversies. I think Members would still remember a recent case where Link REIT increased car park rentals on the one hand and changed certain permanent parking spaces to floating spaces on the other. To put it simply, it is providing poorer services while raising the rentals. Such a practice is more than controversial, it is an outright unscrupulous business practice, which unfair to consumers. It is evident in another scenario that Link REIT's practice is getting worse, for it is selling shopping arcades and markets with low profitability to a third party for investment. This approach will cause damage on various fronts. The party taking the offer may be late to catch on, and they may only know after the deal that they are subject to many restrictions. Had not the deal been called to a halt in the course, the divestment of car parks or relevant properties may even involve a fourth party or a fifth party. If this happens, we worry that we will have to handle greater social controversy and technical difficulties by then. Perhaps many people may say that Link REIT's practices are just business practices that should give no cause for criticisms. At issue is that such practices, in most cases, be it the divestment of car parks, the closure of markets and shopping arcades or the introduction of floating parking lots, have affected the interests of residents of public housing estates and Home Ownership Scheme ("HOS") courts in the vicinity of these assets, so this is a matter of public interest. On the other hand, it is evident that HA has not honoured the promise it made at the time it divested the assets to Link REIT.


I would like to recap some information in the past and some history. In section 4(1) of the Housing Ordinance (Cap. 283) ("HO"), the responsibility of HA is stated unequivocally, that is, in addition to the provision of housing, HA should also provide amenities ancillary to these housing flats. In other words, it is an inevitable obligation of HA to ensure access to such facilities of residents in the housing, which is reasonable. Back then, Ms LO Siu-lan petitioned for a judicial review on the issue to stop the listing of The Link REIT. Although she eventually lost her case, the Court consciously and sincerely expressed its understanding of the incident, stating that it was the inevitable obligation of HA to provide these facilities to residents of public housing estates and HOS courts. The Court also admitted that car parking facilities, markets and shopping arcades were the "amenities ancillary" to such housing as stipulated in section 4(1) of HO. Though HA may sell its assets lawfully, it is obliged to ensure that the assets sold will continue to satisfy the requirement. Moreover, in March 2006, the incumbent Secretary for Housing, Planning and Lands pointed out in a reply to a question raised at the Legislative Council that in designing the divestment vehicle, HA had taken into account the availability of suitable mechanisms to restrict Link REIT from arbitrarily selling its assets or changing their use. This was the reply given by the Government to the Legislative Council and the public back then. Regarding the specific content of the agreement between HA and Link REIT on such properties and the contract imposing such restrictions on properties sold, the public have no way to know so far. Following this line of logic, upon the purchases of these facilities from Link REIT, the third party should fulfil these duties of providing such services for which HA was responsible prior to the disposal of the property. In other words, these duties must be fulfilled no matter the assets were sold to Link REIT or sold by Link REIT to other parties. Regrettably, this is not the case in reality. Such a situation is found in housing estates in different districts. Take Tuen Mun as an example. Some time ago, certain speculators had purchased a car park facility, and they put up advertisements for the sale of individual parking spaces right after the purchase. Why did the sale of parking spaces eventually fall through? For the community groups approached us and a number of colleagues and I participated in providing


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assistance. We checked the original lease conditions as well as the deed of mutual covenant of public housing estates, and we went through them to try to look for hidden meanings, for we did not know the actual content of the cooperation between HA and Link REIT. After checking the deed of mutual covenant, we found that the original intent was stated clearly therein, that is, shopping arcades and car parking facilities were only for use of residents of HOS courts. To those speculators, we crashed their deal. How can we stop the deal? It is not because we have any secret means to do so. In retrospect, I would say that the restriction on divesting properties of Link REIT included in the lease conditions is the "lifesaver", and apart from this, residents can do nothing. In fact, some of the housing estates have been spared the ill fate entirely because of this factor. Certainly, the public may do the company searches I mentioned earlier to understand the situation, or to put it bluntly, to find the "lifesaver", so that they can be spared the suffering. In my view, unless there are secrets to be covered up in the deal between the Government and Link REIT, I urge the Government to publicize the content of the agreement signed with Link REIT back then, so that the public will know the content of the conditions, such that any further unlawful divestment or attempt to carry out unlawful divestment may be prevented. In fact, the public should not be made to bear this burden of playing the "gatekeeper", for the Government is duty-bound to do so. As I said earlier, the situation involves significant public interest, and the Government cannot merely provide housing. According to HO (Cap. 283), the Government is obliged to fulfil its duties, and it should not shirk its responsibility on the excuse that the properties have been sold to Link REIT. I trust this is not the original intent of the Government but it is regrettably happening now. Deputy President, I have put forth two major requests in my amendment. First, I urge the Government to stop Link REIT from divesting car parking facilities and the relevant properties, and I have stated the reasons for this earlier. Another request is restoration of the planning standard for public markets in the Hong Kong Planning Standards and Guidelines which was revoked in 2009, that is, the standard of providing one public market stall for every 55 to 65 households or approximately 40 to 45 stalls per 10 000 persons.


Since its revocation of the standard, the Government has simply thrown its duties out of its mind. Take the hardest hit districts Tin Shui Wai and Tung Chung as examples. For Tin Shui Wai, its population is close to 300 000 now. For Tung Chung, the planning of the Government will increase its population from 120 000 to 280 000. Even if we use the current population size and the standard of 200 to 300 stalls in a market as the basis for calculation, Tin Shui Wai is still short of four to five public markets and Tung Chung is at least short of two public markets, and these markets should be provided by the Government. However, no public market is provided in either of these two districts. In some measure, the Government is spurring Link REIT to practice hegemony and monopolization. More often than not, residents have to travel to other districts to buy food. We all know that it is not only a matter of cost, for apart from the monetary cost, residents have to play Olympic players by carrying bags of food and groceries in both hands to squeeze into buses heading home. They have to go through such hassle every day. Can you imagine their plight? I think it is the duty of the Government to provide public services, and the standard stipulated in the Hong Kong Planning Standards and Guidelines is a promise made by the Government in the past. Regrettably, the Government has not only failed to fulfil its obligation but has pre-emptively shirked its responsibility by revoking the standard set. I think this is an extremely poor practice. In future, whenever the Government considers any planning restrictions difficult to implement or that inconvenience will be caused in the course of implementation, the Government may revoke the restriction of its own accord. In that event, there will be no more planning in Hong Kong (The buzzer sounded) … Therefore, Deputy President … DEPUTY PRESIDENT (in Cantonese): Your speaking time is up. MR ANDREW WAN (in Cantonese): … with these remarks, I urge the Government to act decisively. MR WILSON OR (in Cantonese): Deputy President, the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") supports promoting competition to counteract the market dominance of Link Real Estate Investment Trust ("Link REIT"). It is believed this is the most practical or so-called "down


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to earth" approach. However, past experience in discussing issues related to Link REIT entails an inevitable review of the establishment of The Link Real Estate Investment Trust ("The Link REIT") (present-day Link REIT) in each related discussion, just as stated in the preamble of the original motion. From 2002 to 2003, under the twin attacks of the Asian financial turmoil and SARS, the economy was in a slump. The Hong Kong Housing Authority ("HA"), in response to the "Nine Measures of Michael SUEN" advocated by the then Secretary for Housing, Planning and Lands Michael SUEN, announced the cessation of the sale of Home Ownership Scheme flats and public housing flats under the Tenants Purchase Scheme, causing HA to be bogged down finance-wise. It was expected that the $22 billion cash balance would run out within the next three years or so and be replaced by a deficit of $5.5 billion. Against such a background, HA passed a decision in July 2003 to divest its commercial facilities, in the hope of gathering funds to concentrate its effort on maintaining the target of public housing allocation within three years through retiring from commercial operation and improving the efficiency of commercial facilities. This was the main reason for The Link REIT's listing in 2005. DAB thinks that, as the original motion mentions the history of The Link REIT's listing, it should clarify the reason for the asset sale so as to make the contents of discussion complete. Deputy President, at the time mainstream public opinion was in favour of The Link REIT's listing, and the public also had expectations of it keeping its promises of improving shopping arcades, operation of markets and shopping environment. Sadly, since its listing, the Link Management Limited has shut its eyes to the promises it gave to shop operators, residents and society; instead it has only been focusing on gains, arousing public discontent. For example, the then Chief Executive Officer of The Link REIT, Victor SO, said back then The Link REIT had a mission to cut expenditures and raise revenues, while raising revenues did not mean increasing rents, so the prime task was to improve the business environment of shopping arcades. As for rents, it was important to analyse the affordability of various trades and industries, the environment provided by shopping arcades and the market atmosphere at large before discussing reasonable rental levels with shop operators. What was the result? The result was after The Link REIT was listed, rental increases have become the main means to raise revenues and substantial rental increases after renovation of shopping arcades have even become the norm.


Another example illustrating a broken promise is also about Victor SO's comments on the leasing policy. In an open remark to the media, he said he would respect HA's practice of maintaining a notice period of at least three months for tenancy renewal and promise to give priority to existing shop operators. Moreover, The Link REIT would follow the rules established by HA and not change the 70% to 30% ratio of individual tenants to major tenants. Consequently, The Link REIT once again broke its words and significantly altered the combination of tenants to favour primarily major tenants and chain stores. Refusals to renew original tenants' lease have become rampant and almost never-ending. However, in some bigger shopping arcades under Link REIT, the proportion of small shop operators in the total number of existing tenants perhaps is not even up to 30%, not to say 70% as promised or 60% as currently suggested by Link REIT. Deputy President, I must stress here that DAB lent its support to the listing of The Link REIT on basis of the actual circumstances back then. But we have never approved of it going back on its promises and oppose its business practice of profit maximization. We are enraged by Link REIT breaking its promises made at the time of listing, evading its corporate social responsibility, disregarding the livelihood of small shop operators, sustaining rental increases and even refusing to renew existing leases, forcing old shops in public housing estates to close down. In the past we have put the people's views and dissatisfaction of residents and shop operators into actions, e.g. organizing resident demonstrations and petitions against shops and Link REIT, holding press conferences and making various requests and proposals to the Transport and Housing Bureau, Secretaries of Departments and the Chief Executive, in order to curb the market dominance of Link REIT. Nevertheless, the listing of Link REIT has become a reality―"milk that is already spilt". To break the monopolization of Link REIT, increase choices of shops for the people and expand business spaces for small shop operators, buying back Link REIT is definitely neither a good nor feasible option. Therefore, DAB agrees with the direction proposed by the original motion, that it is necessary to find a solution outside of buying back. In May this year, DAB arranged for a meeting with the Chief Secretary for Administration and made four proposals face to face for counteracting the monopolization of Link REIT. They include:


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First, we have requested the Government to urge the newly-established Competition Commission to initiate an investigation into the business and modus operandi of Link REIT so as to examine the possibility of any violation of the Competition Ordinance. According to our observation, Link REIT and its contractors of markets dominate stall allocation and rents on the one hand, and directly engage in business operation in markets on the other. It has already aroused suspicion on the surface that Link REIT and its contractors are using their market influence to obstruct, restrain and distort competition in markets in certain districts. Second, we have requested the Government to increase the supply of shops and stalls in districts where Link REIT has a monopoly, through building more public markets and shopping arcades for local communities or setting up bazaars/fairs after consulting the local residents. In this connection, we have also further collected local views and conducted consultation in the communities, thus having identified locations in Tin Shui Wai, Ma On Shan, Tseung Kwan O, East Kowloon, Eastern District and Tung Chung for building public markets and bazaars. We have sent our specific proposals to the authorities. Hopefully the Secretary can give us a positive response in his speech later today. Third, we believe it is difficult to complete the construction of public markets in a short period of time. Therefore we have proposed a temporary plan as a transitional measure, that is, before the authorities can offer other shopping options, to provide residents in public housing estates with shuttle bus services to transport them to and from nearby public markets for their convenient shopping. Lastly, I think the most ridiculous point is, after Link REIT divested its properties, the new owners have concocted all sorts of pretexts to levy higher rents on social welfare organizations, as well as divesting individual parking spaces. For example, the new investor of Kwong Tin Shopping Centre, after acquisition of the property, demanded tenants which are social welfare organizations to pay management fees equivalent to 80% of rents. It is utterly ludicrous. We have also requested the authorities to issue letters to new owners, reminding them that they must observe limitations set out in the land lease conditions. Deputy President, I think the authorities should be more resolute in dealing with this problem. The aforementioned limitations of lease conditions should include renting out parking spaces only to residents and occupants designated in the land lease or their true visitors. At the same time, the new owners must comply with the Restrictive Covenant appended to the sale contracts


signed between HA and The Link REIT to continue letting shop premises to non-profitable social welfare and education organizations nominated by government departments at concessionary rents. In case of any breach of the land lease or covenant, the authorities must strictly enforce the law to protect the rights of residents and social welfare and education organizations. Deputy President, we believe that to counteract the market dominance of Link REIT the most effective approach is to introduce competition which in turn provides real choices to residents and small and medium enterprises, and the most direct and effective way is to build public markets and shopping arcades. However, given the actual constraint of land supply, not all districts can offer suitable lots to build markets and shopping arcades. Therefore, we hold that the authorities can consider strategically buying back individual shopping arcades or markets if there are suitable ones under Link REIT in some districts, in order to reverse the existing pattern of shop supply in various districts. Based on this strategic consideration, we will support the relevant amendments. As for Mr SHIU Ka-fai's amendment, we agree with the main points but not the proposed major development in South Lantau, especially development projects in new towns which cover sizable areas, so we cannot support his amendment. Deputy President, I so submit. Thank you. DR FERNANDO CHEUNG (in Cantonese): Deputy President, when markets become real estate projects, what will our society become? They are supposed to be shopping malls, car parks or markets ancillary to public housing estates. They are public facilities and public spaces. They are facilities provided to the people in public interest. Why do they have to be sold to investors for no reason at all? Link Real Estate Investment Trust ("Link REIT"), as its name suggests, is a real estate investment trust. Its purpose cannot be clearer, that is, to make profit and nothing else. It aims to maximize its profit by real estate investment. Those investors at the back whom Link REIT represents have bought this fund purely because if this fund can make sound investments, they will make the biggest profit. Obviously, Link REIT has taken advantages at the expense of Hongkongers.


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They are all very good facilities. Of course, these facilities will bring a flow of people for they are located in densely-populated areas. They are popular places frequented by people and better still, there is a high consumption power because very often, these facilities are found not only adjacent to public housing estates but there may probably be a lot of private residential developments in the vicinity. This explains why there is consumption power in this community and nearby areas. These "predators", therefore, set eye on these opportunities and we were so stupid as to surrender these facilities to them. We could have spared ourselves such exploitation and we could have rented out these public spaces to small business operators at comparatively inexpensive rental for them to carry on small businesses and sell goods at prices within the means and affordability of the local residents. This is how a community can be forged, and the whole design was quite good originally. However, I have no idea why the SAR Government and the many Members and political parties in this Chamber supported the proposal back then, and it is now too late to regret. They know only too well that Link REIT has made an all-out effort to turn these assets into high-yield investments. This fortune-making formula is simple. Knowing that the consumption power in these places has not yet been fully exploited, Link REIT wasted no time in renovating and redeveloping the facilities as soon as it took over them, asking the small shop tenants to leave. Then it brought in chain stores with the means to make investments and signed with them tenancy agreements for a longer period or larger shop areas. The entire facility thus seemed to have been beautified and become more attractive, making everyone happy but alas, a price has to be paid, because when the large companies have taken over these places, certainly they can afford higher rentals but the prices will rise in tandem. Behind the surge of prices are these investment companies intending to increase the rental value. What is the advantage of raising the rental value? When the overall asset value is increased, the stock price will go up and the company will reap a profit. As pointed out by LEUNG Chun-ying in South China Morning Post recently, the remuneration of the senior management of Link REIT is linked with the rate of rental increase. The higher the rental, the more the senior management is remunerated. How can this be reasonable? Therefore, they simply could not care less. It does not matter to them even if the small shop tenants are forced to leave and the shops are left vacant on no leases. They are most keen at seeing an increase in rental. When the rental is increased, so is the


asset value and stock price, and their remuneration will be increased too. As a result, the public are made to pay the price. The worst is that it is the poor people who are made to pay it. They do not have a choice, and among these people there are the elderly and the disadvantaged who have a mobility problem and cannot travel to places away from their home for shopping. Today, even the pro-establishment camp has all come forth to state that this is far too unacceptable. Perhaps you people have regrets now, but only too late. But here, I have to pay tribute to Auntie LO and others who fought hard against Link REIT back in those years. It is indeed too late for you people to say in this Chamber today what should be done to rein in Link REIT and stop its evil deeds. That said, you have to do something even though it is too late. You must not act like LEUNG Chun-ying who knows only to use "verbal coercion", stating expressly that he is not interested in a buy-back and then sitting on the problem. Worse still, Link REIT has even divested the facilities or outsourced them to other companies. After the facilities were outsourced or sold, the new owners or subcontractors could act even more like scoundrels. They did not only increase the rental but even occupied the shops for business operation themselves. While they are the subcontractors, they do business as tenants at the same time by, say, operating the meat stall, fish stall, and so on, to compete with the other tenants. They occupied stalls which are higher in value and can generate higher profits, doing so at the expense of the other small shop tenants. This has certainly aroused seething public discontents and plunged the people into grave miseries. Despite these situations, the Housing Department ("HD") has nevertheless kept on doing the same thing. Secretary Dr KO is in the Chamber now. We have repeatedly called on HD to refrain from outsourcing the markets of new public housing estates as it did in the past in outsourcing them to Link REIT. Actually the markets have been outsourced to no more than just several companies and as reported in HK01, these companies include Wang On Group Limited, Uni-China (Market) Management Limited, Well Sighted Limited, and so on. All of them are engaged in operating these businesses exclusively. They all have a fortune-making formula and then the small shop tenants are made to bear the brunt.


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Our Complaints Division has also received complaints recently from small shop tenants in facilities outsourced by HD, and the situation is exactly the same. It is definitely necessary to carry out an investigation in the context of fair competition but actually an investigation will not be useful at all. What we have to do is to introduce competition in nearby areas or gradually buy back the facilities. To introduce competition, we can set up bazaars. Now that some policies under Secretary Dr KO are said to be using a "bottom-up" approach but how can this be put into practice in reality? At present, in order to set up bazaars, it is necessary to approach three or five or seven departments to apply for a licence from each of them. Even though there are some improvements in the situation now, it is still necessary to seek the approval of the District Council concerned first and then the applicant has to identify the location by himself. I hope that the Secretary can make public where there are places for setting up temporary or even permanent bazaars in existing public spaces and public housing estates, or whether there are other occasions where temporary bazaars can be set up, such as when large-scale events are held. Such information is precisely lacking now. The Government has only told the public to scout around the streets and when a certain place is found to be potentially suitable, one has to find out the departments responsible for it and then apply for a licence from each of such departments. This is just impossible. If bazaars are proposed to be used as a strategy to compete with Link REIT which is so enormous in scale, or in order to check Link REIT, the Government will need to have in place a policy and a system but there is none now, and a one-stop approach is lacking. Moreover, transparency is far from satisfactory. The Government should most basically explain to the public the after-sale arrangements in the contract concluded between Link REIT and HD and the Housing Authority back then. Besides, concerning the after-sale arrangements, for instance, car parks are not supposed to be offered for sale in whole but some of them can now be sold in parts, so what were the overall arrangements made back then? It is necessary for the Government to give the public an opportunity to find out all the details. Therefore, whether in respect of transparency, accountability or the responsibility for making the wrong decision back then, I think the Government has to remedy the mistake and immediately make public the information and draw up a comprehensive policy to enable bazaars to operate successfully in Hong Kong. Thank you.


DR KWOK KA-KI (in Cantonese): Deputy President, it is interesting that both Dr Fernando CHEUNG and I presumably witnessed in 2005 the endorsement given to The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ("Link REIT")), thanks to the effort made by the pro-establishment camp in defending the Government. The debate today is even more interesting, for Members of the pro-establishment camp have not only taken the lead in delivering speeches, but also criticized Link REIT repeatedly. In my opinion, they are seeking redemption by means of this debate because they not only supported every government policy back then, but they also considered everything done by the Government correct, thus enabling Link REIT to be listed. Recently, the old lady, LO Siu-lan, who is still in good health, was interviewed by the media. She said that she could actually predict at that time what we are seeing today. Although she was just an old lady living in a public housing rental flat, yet having received little education she was able to tell that Link REIT would raise rentals today in order to get rid of small shop operators and then usher in their desired major enterprises, impose price increases and raise parking space rentals. Were government officials unable to see or just pretend they did not see anything? Today, a number of Members have mentioned many ridiculous acts of Link REIT, including raising rentals and engaging in vertical monopolization. For instance, Uni-China Group Holdings Ltd., one of the market contractors, has 268 business names and 75 trade names, whereas Bright Lamp Industries Limited has 66 business names. Needless for me to elaborate because it is known to all. But the point is: Can the Government do something when it sees these chaotic phenomena? Is it impossible for the Government to do anything, other than Carrie LAM and "689" LEUNG Chun-ying making so many pretences here with, for instance, Carrie LAM describing Link REIT as one of the "three big mountains" and "689" LEUNG Chun-ying occasionally making casual references in his blog to the plights of the operators? Certainly not. The Housing Department ("HD") is still handing all new public housing estates to a single contractor, such as Uni-China Group Holdings Ltd., the King of markets or Wang On Group Limited. All tenders for Link REIT and HD projects are awarded to them. Although the Government has been making excuses, claiming it cannot do anything, it can actually change its policies today, granting the will on its part.


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I lived in a public housing estate when I was a child. At that time, the prices of goods offered in the shops in public housing estates were still affordable to the general public, small shop operators and low-income earners. What is the current situation? The current rental of the newly completed market in Kai Ching Estate is $400 per square foot. When I made enquiries with a fish stall operator lately, I was told that the monthly rental of the fish stall was more than $90,000. Moreover, the monthly rentals of stalls selling tofu and pork were more than $30,000 and from $50,000 to $70,000 respectively. How many pieces of tofu must be sold to meet the monthly rental of $30,000? How many tails of fish must be sold to meet the monthly rental of $$90,000? Where does the money come from? It grows from trees? Or from the ground? Certainly not. The money is paid by all of the public housing estate residents. The Government is aware of it, too. Some people might say that the Government is to be blamed for the creation of this monster, Link REIT, and nothing can be done now to change it, despite the fact that the Government could still be requested to buy back Link REIT a couple of years ago when it was called The Link REIT. Of course, the Government cannot do so now because Link REIT is now acquiring shopping arcades on the Mainland, buying shopping arcades and engaging in transactions outside Hong Kong, and clinching "big meals", with its CEO earning $20 million per annum. The money comes not from you and me, nor government officials; it comes from the lowest-income earners because public housing estates are home to the largest number of low-income earners and single-parent households. It is their hard-earned money. It is precisely thanks to the policies implemented by the Government at that time that these major consortia, hedge funds and impeccably dressed executives who regularly patronize high-class restaurants can reap their desired benefits by such means. Therefore, my amendment is very simple for it points out what the Government can do. Instead of making all sorts of pretence here by claiming the number of mountains before us, the Government might as well require that all the markets under HD shall not be awarded direct or outsourced, or the Government shall effect proper management of them. In fact, the shopping arcades and markets currently managed by the Government are not too bad. They are managed quite well probably because the Government has become smarter due to competition. Hence, their ratings are not too low, or at least not much worse than those managed by Link REIT. So, why should these policies be maintained? Why should small businesses and small traders be eliminated? Why should the Government continue to aid and abet the wrongdoers by allowing


them to impose increases? All the money made by contractors of the markets under HD and rentals collected by them is hard-earned money, and so the unscrupulous and shameless Government is to blame. Secondly, in our heated debates here, we have urged the Government time and again to resume the construction of markets for management by the Food and Environmental Hygiene Department ("FEHD"). However, our calls have been rejected by the Government on the grounds that not only were the old markets poorly run, but they also had a high vacancy rate and poor management. As a result, the loss currently stands at $160 million. Citing "poorly run" as an excuse, the perfunctory Government has maintained its policy of harming the lowest-income households. It is simply nonsensical for the Government to abandon some planning standards, including the provision of one stall for every 55 households, and turn a blind eye to all these standards adopted prior to 2009. If the Government is capable of doing a good job of its own management, why can it not properly manage the markets and cooked food markets under FEHD? Many examples of success can now be found. For instance, there is a heavy flow of people in the market and cooked food market in Sheung Wan Civic Centre, and there is simply no need for its management to be outsourced. Actually, the Government is not eager to make progress and so it resorts to all sorts of excuses, saying it cannot identify any solution. Despite the calls by people living in the poorest districts, including Yuen Long, Tin Shui Wai and Tung Chung, for the Government to build relevant facilities because of the lack of choices, the Government remains unwilling to do so. Lastly, although Link REIT has continued to sell its markets and shopping arcades, the Government can still seek redemption. Not only should the pro-Government camp seek redemption now for supporting the Government back in 2005, the Government should also do the same. Likewise, the Government may do the public justice by buying back the shopping arcades and markets put on sale by Link REIT. Given that these shopping arcades and markets are put on sale by Link REIT, there should not be any problems. It is not the case that the Government has never bought private property on the market, for it has once bought the Hong Kong Exchanges and Clearing Limited for $160 or so a share. Moreover, the Government will not incur any loss, even if it buys back the items now. Moreover, it can at least change the behaviour of price cheating by selling parking spaces to profiteers or turning a market into a shopping arcade, and so on. The Government must not complain to us that it is penniless, for it hoards more than $2,000 million in the coffers.


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The Government owes public housing residents a lot. After the conclusion of the debate today, I hope the Government can stop pretending that it is willing to help but unable to do so, though it understands our requests very well for the following reasons: Firstly, it will not change the outsourcing system; secondly, it will never build any more markets for management by FEHD and, thirdly, it has no capital to buy back the items. Should that be the case, the Government is simply speaking nonsense here. During the past decade or so, the Government has fattened not only hedge funds, but also funds and executives. All the money they earn comes from the people in the lowest stratum of society, who hold the least bargaining power and must apply for and live in public housing flats. Moreover, they are suffering the most. If the Government really adopts a "people-based" approach that attaches importance to people's livelihood, just as "689" LEUNG Chun-ying and many Bureau Directors often claim, I believe the Government can somehow find some solutions in the amendment proposed by me today, even if the aforesaid situations cannot be improved once and for all. I so submit. SECRETARY FOR FOOD AND HEALTH (in Cantonese): Deputy President, first of all, I would like to thank Ms YUNG Hoi-yan and the five Members for proposing this motion and the amendments respectively today. This motion involves the policy areas of a number of Policy Bureaux. The issues relating to the competition law fall within the purview of the Commerce and Economic Development Bureau; those relating to public markets and bazaars fall within the purview of the Food and Health Bureau; those relating to district administration come under the Home Affairs Bureau; and the property management of the Hong Kong Housing Authority ("HA") is within the purview of the Transport and Housing Bureau. After communication and consultation with the relevant Policy Bureaux on the subjects, I will first give a collective response to some of the topics mentioned in the motion within the purview of the Commerce and Economic Development Bureau, the Food and Health Bureau and the Home Affairs Bureau. As for the remaining topics under the policy area of the Transport and Housing Bureau, I will leave it to the Secretary for Transport and Housing to give a response.


First, I would like to respond to the part concerning the Competition Ordinance ("CO"). The main objective of CO is to promote competition by prohibiting anti-competitive conduct. CO stipulates three "Competition Rules", namely the First Conduct Rule, the Second Conduct Rule and the Merger Rule. The Competition Commission ("the Commission") is an independent statutory body established under the Competition Ordinance, and it receives reports of potential contraventions of CO from the public and relevant sectors. According to CO, the Commission must have reasonable cause to suspect that a contravention of a Competition Rule has taken place, is taking place or is about to take place, to commence an investigation. The Commission will make an independent decision on whether or not to process a specific case based on the considerations stated in the Guideline on Investigations. For the purpose of effective investigation and protection of the interests of parties involved, the Commission, in general, will not comment openly on whether or not it will process or investigate certain cases, and it will not publish its reports upon the completion of an investigation. The second area is on new public markets. It is the established policy of the Government to endeavour to secure access to purchase of fresh provisions, thus enabling the public to have reasonable options. Apart from public markets under the management of the Food and Environmental Hygiene Department ("FEHD") and the Housing Authority ("HA") respectively, many people may purchase fresh provisions in other private markets, supermarkets or various types of retail outlets. The public's choice of channel for purchasing fresh provisions may change according to various factors, such as the socio-economic condition, habits and purchasing power. I understand full well that some people may consider the current prices of goods at markets managed by Link REIT relatively high. As a business operator, Link REIT is naturally concerned about profit, and as a listed company, it will give regard to the interest of its shareholders. However, personally, I absolutely agree that a business operator should also give regard to corporate social responsibility. In other words, its decisions should not be based solely on business considerations to the neglect of the needs of various stakeholders in society. On this premise, I understand fully the aspirations of residents in the districts concerned, particularly the grass roots.


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The Food and Health Bureau is responsible for policies of public markets. We have heard the constant request from grass roots for the Government to build new public markets. The Government understands on the one hand that public markets under HA and FEHD can complement one another, yet private markets run by Link REIT and private operators carry the factor of uncertainty on the other. The Government considers that, if the situation allows, public market facilities should be reinforced appropriately, and this includes the building of new public markets and enhancement of existing market facilities. In the next decade, the Tung Chung New Town Extension and Hung Shui Kiu New Development Area will be two new development areas of a considerable scale. The Government is now identifying suitable locations in these two areas respectively for the building of new public markets. We hope to place the two new public markets in strategic locations, so that they can be developed into cross-district leading markets, not only serving Tung Chung New Town Extension and Hung Shui Kiu New Development Area but be extended to cover the entire Tung Chung area and Tin Shui Wai district as a whole. As for the development of bazaars, I understand that many in the community have voiced the aspiration for the setting up of more bazaars with local characteristics. As I have pointed out repeatedly in policies announced on various occasions in the Legislative Council, the Government is positive about specific proposals for the setting up of bazaars, and we consider the district-driven approach desirable. Provided that the proposals are compliant with the requirements concerning food safety and environmental hygiene, do not cause obstruction to public access, and that the organizations concerned can identify suitable locations for bazaars, which are supported by the community and District Councils ("DCs"), the Government will render assistance. It is not the case as some Members claimed that the advocator making the application has to approach individual departments one after another. Since November 2015, the Government has received proposals for running bazaars from organizations in succession, including running bazaars in Tin Shui Wai, North District, Tung Chung and Shum Shui Po. Some time ago, we contacted the DCs concerned to follow up these proposals by laying them on the platform of DCs for discussion. We have also maintained close liaison all along with District Offices and DCs concerned to follow up these proposals. One of the proposals for setting up a bazaar in Shum Shui Po gained the consent of the DC and was successfully staged. We also note that a working group has been


set up by the Islands DC and a number of meetings have been held to discuss the proposal for setting up bazaars. As for the North DC, it has discussed the proposal for setting up bazaars in the district. For Yuen Long District, advocators of bazaars are communicating with the parties concerned about identifying suitable sites. And now, I will talk about the district administration model mentioned by certain Members. According to the Home Affairs Bureau, district administration is a significant link in the administration by the SAR Government. The Home Affairs Department ("HAD") reviews the model of district administration from time to time, striving to ensure that services and facilities provided at the district level can promptly respond to the needs of the districts and encourage active participation of the public in district affairs. DCs are significant partners of the Government in district administration. The Government consults DCs on various subjects like the supply and demand, usage and management of district facilities, and so on, with a view to heeding the views at the district level to provide district facilities meeting the needs of the people. The role of HAD is to facilitate communication between members of the community and Link REIT, enabling Link REIT to understand the views of the general public on its asset management approaches, so that Link REIT can further enhance its quality of service to better cater for the daily needs of the people. In June this year, the Chairman and a number of members of the management of Link REIT met with the Chairmen and Vice Chairmen of 18 DCs and took this opportunity to enhance the communication between locals and Link REIT. The Chairmen and Vice Chairmen made proactive efforts to express their views on various aspects to Link REIT. After the meeting, HAD consolidated the details of the views expressed by the Chairmen and Vice Chairmen and addressed them in writing to Link REIT for a response, and the subsequent written responses given by Link REIT have been conveyed to the 18 DCs for reference. Deputy President, with these remarks, I have given a concise response to some of the topics mentioned in the motion. The Secretary for Transport and Housing will respond to other issues within his purview.


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After listening to the remarks to be made by Members later on, I will make a supplement and response as appropriate. Thank you, Deputy President. SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, Secretary Dr KO Wing-man has just talked about the Government's policy and approach to public markets and bazaars as well as their mode of operation. In this opening remarks of the motion debate, I would like to focus on the operation of Link Real Estate Investment Trust ("Link REIT"), which is a matter of concern to many Members. In 2005, the Housing Authority ("HA") divested some of its commercial and car parking facilities to Link REIT (then called "The Link REIT") mainly for the purpose of enabling it to focus on its function as a provider of subsidized public housing; and use the proceeds from the divestment to improve its financial position. Meanwhile, it was hoped that the operating efficiency could be enhanced through a private organization operating on commercial principles. Link REIT has been a private organization since its listing in 2005. The Government and HA do not hold any fund unit of Link REIT. Its business model and daily operation are also totally independent of the Government and HA. As a private company, same as any other private owner, Link REIT is subject to relevant ordinances, such as Town Planning Ordinance and Buildings Ordinance, and the lease conditions. The Assignment Deeds between HA and Link REIT contain certain Restrictive Covenants. Land use of the relevant lots is generally stipulated in the lease conditions. Any change of land use must be agreed by other owners of the lots and approved by the Lands Department. The Deeds between HA and Link REIT stipulate that, if HA owns all the residential units in the housing estate concerned, Link REIT can only sell its car parking facilities as a whole and cannot divest the parking spaces; and that if HA still holds any interests in land in the housing estate, individual shop spaces also cannot be divested. The Covenants also stipulate that a certain amount of specific shop premises must be rented to non-profit-making organizations nominated by designated government departments and bodies at concessionary rent (fixed by HA or in some cases half of the market rental) to operate social welfare and educational facilities. Just now Members wished to know the contents of the Restrictive Covenants. In fact, they are clearly set out in the Assignment Deeds of individual commercial and car parking facilities. The Assignment Deeds are


accessible to the public at the Land Registry. The information is clear and publicly available. The Government has clearly explained the function of Restrictive Covenants on various occasions in the past, for instance, during committee discussions of the Legislative Council or Members' questioning sessions. On the premise of upholding the rule of law and respecting property rights, the Government cannot intervene in the owner's right of lawful use of its property, as long as it complies with the statutory requirements, Government Lease conditions and other restrictions. Likewise, as long as Link REIT does not violate the aforementioned Deeds with HA, HA will not intervene in its daily operation and business decisions, including its rent determination, trade mix and business strategy. On the contrary, if Link REIT and the subsequent owners violate any regulations, lease conditions or the Covenants with HA, relevant government departments and HA are bound to―I stress they are bound to―pursue responsibility and take action. The Government has publicly stated on different occasions in that past that the aforementioned requirements are applicable not only to Link REIT but to all owners. It has also reminded Link REIT to clearly explain these restrictions to buyers during the transaction process. When speaking on his amendment just now, Mr Andrew WAN mentioned whether HA's divestment of commercial facilities will lead to its inability to meet the requirements of the Housing Ordinance on providing necessary services to residents of its housing estates. In fact, this issue has undergone extensive discussion in the last term. Indeed, section 4 of the Housing Ordinance vested HA with a wide range of functions. HA needs to constantly review how it should perform its duties, strike a balance among various considerations as resource constraints, cost-effectiveness and social expectations, and work through prioritization. In fact, the Court of Final Appeal ("CFA") ruled in July 2005 that HA's plan to divest its retail and car parking facilities was in line with the objectives of HA stipulated in section 4(1) of the Housing Ordinance. Section 4(1) requires HA to secure the provision of housing and (I quote) "such amenities ancillary thereto as the Authority thinks fit" (end of quote) to relevant persons. HA must provide retail and car parking facilities, but that does not mean it must be the director


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provider of such facilities. Where such facilities are available, even if they are provided by a third party and not by HA, HA has fulfilled its obligation of securing the provision of such facilities. In making the ruling, CFA was aware that HA's divestment of retail and car parking facilities is bound by the lease conditions. Anyone (including Link REIT or new buyer of the facilities) who wishes to change the land use indicated in the land lease must obtain consent from other owners (including HA and owners of other residential units) and approval of the Lands Department. CFA also noted that, according to the Covenants between HA and Link REIT, Link REIT and the subsequent owners must continue to rent out specific units to non-profit-making organizations at concessionary rent for social service or educational use. It was suggested in Members' amendments that the Government requests Link REIT to stop divesting shopping centres and car parks and cancel the monthly floating parking spaces arrangement. Insofar as these suggestions are concerned, we must consider the aforementioned principles based on legal and property rights protection. In respect of car parking facilities, the land lease generally stipulates as a condition the number of parking spaces that must be provided and the types of vehicles allowed. Individual land leases also specify that some of the parking spaces must be provided to residents or visitors of neighbouring housing estates or courts. In addition, the Agreement Deeds added Restrictive Covenants on individual commercial and car parking facilities. Subject to the said requirements and Covenants, the Government and HA cannot and will not intervene in the owner's business decisions, including its car park and rental arrangements. However, owners who wish to divest the shopping centres and car parks has a responsibility to show that they are capable of fulfilling all the conditions and requirements in the lease. Deputy President, some Members may think that the Covenants entered into by HA and The Link REIT 10 years ago were inadequate. However, we must understand from a comprehensive perspective the objective of HA in divesting the facilities, the legislation and the land leases then, as well as such factors as regulation on private property and commercial operation and change in people's needs of living. The Government and HA must not breach the spirit of contract and make excessive intervention.


There is still this view in society that the Government should buy back Link REIT. On this subject, I made clear the Government's position during a motion debate on 21 November 2012 in the last term. On that occasion, I also gave a detailed analysis of why a buy-back of The Link (now called Link REIT) fund units by the Government or HA would be not feasible, not in public interest and not in line with the principle of prudent financial management. On the one hand, given the investor protection under the Code on Real Estate Investment Trust of the Securities and Futures Commission, as well as rules regulating fund management companies and trustees, even if the Government becomes its fund units holder, it will be difficult to change Link REIT's mode of operation. On the other hand, regardless of the Government buying Link REIT fund units or its commercial facilities and car parks, the unit price will most likely be pushed up, where institutional investors will readily pocket the profit, reaping benefits at the expense of public coffers. Given the limited public resources, I think society should consider seriously and rationally whether it is wise and justified to spend such a substantial amount of public money on buying back Link REIT fund units or commercial facilities? Whether a third party will stand to benefit from it? Would it be more appropriate to expend the Government's limited financial resources on increasing public housing supply and other facilities and services that are beneficial to the people's living? Having said that, I would also like to point out that Link REIT's business and assets came from HA's divestment of part of its public housing commercial and car parking facilities in the past. Because of this history, society and public housing residents hold expectations for Link REIT to not forget its main service target and that its business practice should not give people an impression of it reaping the maximum gain. Recently, the top echelons of the Government, including the Chief Executive, Chief Secretary for Administration and myself, have met with Link REIT's current and former chairmen and Chief Executive Officer. We reminded them of Link REIT's unique corporate social responsibility and appealed to them to adopt and maintain good practices in their operation, strengthen communication with the community and understand the needs of local residents.


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Deputy President, I so submit. As for other issues, I will make another response together with the Secretary for Food and Health after listening to the views made by Members in the motion debate. Thank you, Deputy President. MR MICHAEL TIEN (in Cantonese): Deputy President, four years ago when I discussed the motion on buying back the shares of The Link Real Estate Investment Trust ("The Link"), I stated that to buy back The Link was a terribly wrong method to rectify a wrong decision, for the result would be two wrongs. In other words, I subscribe the remarks made by the Secretary just now. Today, I am still standing firm on opposing the payment of a sky-high price of $160 billion―equivalent to 20% of the fiscal reserves―by the public coffers to buy back The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ("Link REIT"). Although the dominance of Link REIT is a serious illness, relying on the Government to buy it back is akin to handing it over to civil servants for management and looking for a teacher to treat its illness. A teacher is good at teaching, not treating illnesses. It is administering wrong medicine to an irrelevant illness. Excuse me, Secretary Dr KO Wing-man. Deputy President, I would like to cite markets as an example to illustrate my view, though it will not please the majority of Members. Nonetheless, I have rich experience in this, and I think I can set another record of "one vote in favour", with only one supportive vote cast by me. Deputy President, although you know what I mean very well, I must get this off my chest. Let me start with the problems faced by the management of public markets over the years. What exactly are the purpose and objective of the provision of markets? There is no consensus in society in this regard. In my opinion, the key is "shoppers". A market with shoppers is a good one that serves society. It does not necessarily have to assist shop operators or anyone else. Market stall operators should decide whether or not to open for business not depending on their mood or the weather. Neither should they roll down their shutters for eight days in a row. The longer the stall operators close for business, the fewer the shoppers; the fewer the shoppers, the less incentive there is to improve the environment. The fact that the installation of air conditioning has yet to be completed simply results in a never-ending vicious circle.


This will be the outcome if markets are managed by the Government because it is bullied by everyone. Even if the stall operators refuse to open for business, there is no way for the Government to kick them out. Neither dare the Government do so because they will stage demonstrations and protests. So, what can be done? Undeniably, the markets managed by Link REIT, which are brightly lit, dry and spacious, are different from the stereotyped traditional markets. Who will disagree with me? Even the presentation and lighting of vegetables are carefully considered. Did the Food and Environmental Hygiene Department ("FEHD") take care of all this? FEHD has simply done nothing to address or deal with these issues. The only problem with Link REIT is that its markets, which are situated in grass-roots areas, are profit-oriented and fail to meet the needs of these areas. The quickest way to lower the prices of goods is to introduce competition. If the Government is to break the monopolization of Link REIT in such areas as Tin Shui Wai, Tung Chung, and so on, it should build public markets expeditiously. In this respect, the Government can afford no delay in building public markets, for the sooner the better. Nevertheless, should we backtrack and demand the Government to take up the management of these new markets, Members will still criticize the Government five years later for poor management. Should those markets be put on sale again by then? Today, there are many people criticizing the Government for its poor management of many of the existing markets. Whether or not the Government is most effective in managing public markets is evident to all. FEHD, which is mainly responsible for the management of markets, is currently managing 101 markets at a loss of $200 million to $300 million per annum. Although this illness has been treated for years, the Government has only got two prescriptions. One is consultancy reports―the Secretary is well versed in the compilation of such reports, which is akin to giving consultations but refusing to perform surgeries―while the other one is improvement works. Deputy President, what do improvement works mean? It means treating serious illnesses with antibiotics. Since the Government is too well-behaved, too cautious and too conservative, the majority of markets under its management have yet to revive. Should we continue to demand the Government to operate and manage newly built public markets?


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This is why I would like to point out today that the Government can actually draw on the experience of Link REIT. Deputy President, politics is not necessarily rightist or leftist. Many people are now looking for "a third way". So, why must markets be managed by Link REIT, FEDH or the Housing Department? I have been proposing the setting up of a statutory body similar to the Ocean Park to take over the management of public markets across the territory, perform major operations on market management, and invite management talents with market sensitivity to join its board of directors, so as to select the best shop operators with discerning eyes. The best shop operators are those who are most capable of attracting shoppers and generating the highest business turnover, not those who pay the highest rents. Given this indicator, whether or not shop operators can have their tenancy agreements renewed will depend on their past business turnover, which is regarded as the factor determining their retention. Deputy President, imagine there are four stalls selling pork, but the business turnover of one of them is only half of that of the other three. The reason must be higher prices, poor quality or laziness of the shop operator. Upon the expiry of the tenancy agreement, the operator in question will be kicked out and unable to stay. Can the Government manage to do so? It can definitely not. Therefore, it must make a statutory body to act on its behalf. In order to maintain their competitive edge and make a living, the stall operators will naturally be determined to select quality goods and come up with ways to boost sales by pursuing a smaller profit margin. Members should hear that I was talking about boosting sales by seeking a smaller profit margin, not regulating prices. The prices should be determined by shop operators themselves because they know they will be unable to have their tenancy agreements renewed if their business turnover is poor. Members might ask: How can the statutory body ascertain that the turnover of the stall operators is not faked? Central payment may be adopted in the markets whereby customers will be given a label when purchasing goods at different stalls. They can then make payments at a central cashier before returning to the stalls to collect their purchased goods. Doing so can ensure that the turnover is absolute clear. In fact, this method has been adopted in many shopping arcades, especially those on the Mainland.


Furthermore, in order to maintain the vitality of stall operators in carrying on businesses, short-term tenancy agreements not longer than two years should be signed, with a review being conducted preferably every two years. This may prevent stall operators from fabricating their turnover and carrying on their business half-heartedly. Moreover, replacement can take place expeditiously. Having come to this point, Members may ask this question: Will that statutory body adopt a commercial mindset, thereby turning itself into a replica of Link REIT or another vampire? This explains why it must discharge the social responsibility agreed by everyone and refrain from making profit the first and foremost consideration. It may, for instance, set the stall rentals at 90% of the market rate, so that the tenants need not pass the pressure of rental payments onto the people. I note that my speaking time is almost up. Basically, I only wish to reiterate that, in the long term, market management needs to find a third way to make up for the blind spots of Link REIT and the Government and operate with commercial wisdom. I so submit. DR CHENG CHUNG-TAI (in Cantonese): Deputy President, the motion today is a classic presentation of "a thief calling another thief'" as a cover-up. The day after tomorrow, 25 November, marks the 11th anniversary of the listing of The Link Real Estate Investment Trust ("The Link REIT")―now known as Link Real Estate Investment Trust ("Link REIT"). Back then, when The Link REIT was listed, the community as a whole rallied nearly all public opinions to condemn a number of renowned commentators and several members of the public, discrediting them as "people preventing others from making a fortune". Now that 11 years have passed, we can see clearly that Link REIT is one of the public hazards in Hong Kong today, and residents of public housing estates, who account for one third of the population of Hong Kong, have profound experience of this. The 7 million citizens of Hong Kong have to pay a heavy price for the ignorance of politicos from the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") and the Democratic Party of society and the economy back then. To date, we still have no idea where we are heading.


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By nature, the listing of The Link REIT turned public monopoly into private monopolization. However, the public opinions back then confounded right and wrong, saying that private management would introduce competition into the market, enhance the quality of services and increase the choices and shopping opportunities for consumers and residents of public housing. Subsequently, The Link REIT strove to maximize its profit in full swing, putting the interests of company shareholders before public interests. Such practices have not only deprived local residents of choices but have also forced small shops and neighbourhood stalls with over 20 years of history to move out, which are replaced by chain stores of large consortia. All of these should be attributed to the Government's decision of turning public monopoly into private monopolization. Despite the circumstances, The Link REIT has never reviewed its operation and the Government has simply outsourced the responsibilities borne by the public sector then to the private sector and turned a blind eye to all the problems. Last year, The Link REIT was renamed as Link REIT, attempting to whitewash its barbaric and blood-sucking acts against the general public. Take Yat Tung Market in Tung Chung Estate as an example. Link REIT has placed the model of an aeroplane in the market, which has attracted many visitors. However, these visitors just go there for sight-seeing rather than shopping, and they have disturbed the daily life of the residents there. As for small shops that started operation after the opening of the market, they are now groaning about the difficult business. Recently, Link REIT sponsored a television programme filmed by the sole television station in Hong Kong, titled "Bazaar Carnivals". Link REIT is using political propaganda and self-deceiving methods to try to tell Hongkongers that many people like to shop at markets. In fact, such practices can hardly remove the deep grievance the public harbour against Link REIT. We will not forget its wicked deeds. Nonetheless, the pro-establishment camp and the Government always carry this point on their lips, namely claiming that with the enactment of the Competition Ordinance in Hong Kong, Link REIT's practices are kept in check for any violation of the Ordinance, and practices of subcontracting and one-stop service operation seeking to monopolize the market will be stamped out. However, we all know full well that the Ordinance is merely a toothless tiger.


As a result, against this background, management problems concerning Link REIT surfaced in succession from the beginning of this year. All these problems are triggered by its subcontracting and one-stop service operation approach, and the situation is deteriorating. Take Leung King Market in Tuen Mum as an example. Early this year, it was discovered that estate caretakers expelling hawkers there were suspected to be triad members. It is even more ridiculous to find that in the recent reorganization of the mutual aid committee of Leung King Estate, Tuen Mun, the suspected triad estate caretakers who beat the hawkers were employed by local residents. This outrageous phenomenon did not only occur in Leung King Estate, for traders in Tsing Yi's Cheung Fat Estate Market also went on strike early this year. Yet, Link REIT had outsourced the market to another company, and all original small shop operators in the market had been refused a lease renewal. At that time, certain colleagues from the post-establishment camp agreed perfunctorily that they would help small shop operators to fight for their interest, but it turned out that small shop operators had suffered heavy losses. All of these are problems left over from history, and the pro-establishment camp and the democratic camp should be held accountable. (THE PRESIDENT resumed the Chair) As for the motion today, the Government, the pro-establishment camp and the Democratic Party seem to be speaking the same line and holding the same position. But I have to point out that the motion today is an attempt of diversion, making the responsibility of the Government that of society. For instance, the wording of the motion states that Link REIT "was established in 2005 due to unique historical factors and environment and entrusted with the social responsibility of serving hundreds of thousands of public housing households". Such a presentation seeks to make the responsibility of the Government that of society, a diversion of the focus of the public. Public housing in Hong Kong and people's livelihood are responsibilities of the Government. Back then, the SAR Government decided to stop the construction of Home Ownership Scheme ("HOS") flats as a remedy to salvage the flagging property market, causing the Hong Kong Housing Authority to run into a financial crisis. As a result, it had to cash out by divesting its assets.


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Today, it is almost an overall consensus of Members from the opposition camp that Link REIT is fraught with problems. LEUNG Chun-ying has also criticized Link REIT's senior echelon for betraying their social responsibility by linking their bonus level to increase in rental income―this is a classic example of a thief calling another a thief. Had the Government been sincere in looking after the livelihood of Hongkongers, it should have bought back Link REIT. Yet the nature of the SAR Government is to feed its greed and neglect people's livelihood. I think colleagues from the pro-establishment camp and those who voted for the listing of The Link REIT and the Government are accomplices in the sale of assets of Hong Kong, and their hands are stained with the blood of the people sucked by Link REIT. Hence, today, I will not take part in the voting on the motion which is a hypocritical gesture of a thief calling another a thief. With the exception of the voting on the amendments of Dr Fernando CHEUNG and Dr KWOK Ka-ki, I will not take part in any of the meaningless votings of this kind (The buzzer sounded) … Thank you, President. PRESIDENT (in Cantonese): Please stop. MR KENNETH LAU (in Cantonese): President, the Hong Kong Housing Authority ("HA") studied the divestment of its assets and facilities to resolve its financial difficulties back then. In 2004 the Government set up The Link Real Estate Investment Trust ("The Link") and divested to it 180 assets of HA, including shopping malls, markets and car parks. There were strong reactions in society back then and a judicial review was filed against the listing plan. The Link, against many obstacles, was officially listed on 25 November 2005 finally. However, over the past 11 years, The Link has been criticized for its approach of management and modus operandi. Whether it be The Link in the past or Link Real Estate Investment Trust ("Link REIT") as renamed now, public dissatisfaction towards it has added up to be as thick as a telephone directory. Some people have even described it as a hegemony seeking to maximize profit. In order to reap profits, Link REIT has, among others, frenetically increased rentals, brought in chain stores and driven away small shop tenants, thus stifling the local characteristics. According to the annual reports of Link


REIT, the shop rental in the shopping malls of Link REIT increased from $22.7 per square foot in 2005-2006 to $45.4 per square foot in 2015. Link REIT has since 2014 thrice sold its assets one after another. The new owners have concocted various pretexts to increase various fees and charges, which is de facto a rent hike. Early this year, for example, we saw a rental increase of as much as 68% at Chung On Market in Ma On Shan, and the small shop tenants had to pay an entry fee of several tens of thousand dollars in order to operate in the market. How can this be affordable to people carrying on small businesses? As for Kwong Tin Shopping Centre in Lam Tin, the new owner increased the management fee by over 80% for non-profit-making organizations and the car park also abolished the concessionary parking fee equivalent to a 60% discount for people with disabilities. It shows that even the social resources obtained not easily by the disadvantaged have been exploited. President, in the past, residents living in public housing could rent a small shop to carry on a business of selling snacks or stationery to feed the whole family but this is no longer an option for such tenants now. They have to travel to a large-scale bookstore to buy even a pen, not to mention becoming a business proprietor. At present, Link REIT owns 86 markets in Hong Kong, accounting for about 40% of the total number of public markets in the territory. In February this year, the outsourcing of Cheung Fat Estate Market in Tsing Yi caused an uproar as the stall operators launched a strike. Faced with such high-handed repression, the small shop tenants and residents do not have any say at all. President, there is nothing wrong with Link REIT renovating the shopping arcades, hoping that more people can be attracted by the upgraded arcades. But has it considered the actual situation? Is it detached from reality in doing so? Many shopping malls of public housing estates are geographically isolated from other parts of the territory and serve to meet the needs of the grass-roots people in their living. It is impossible to attract patronage by people from other districts however fabulous they would become after renovation and at the end of the day, the small shop tenants would be forced to leave due to the exorbitant rental whereas the large chain stores would refuse to move in because of the minimal profit margin, thus leaving the shops in these arcades and market stalls mostly vacant. Has Link REIT honoured its promises made to society back then, such as operating to benefit the people, building a good relationship with shop tenants and upgrading the quality of services?


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Today, Ms YUNG Hoi-yan's original motion proposed the setting up of bazaars by the Government and this, I very much support. In fact, bazaars have long existed in Hong Kong, such as those at Tai Po Market, Luen Wo Hui and Shek Wu Hui. As the transport facilities were less developed in the past, residents of remote villages could shop for groceries and the basic necessities for living in these bazaars and they would also put up for sale in the bazaars agricultural produces grown by themselves. These trade activities gave impetus to the economic take-off in the districts. However, as society advanced and with the traffic and transport systems being greatly improved and their accessibility enhanced, bazaars have accomplished their historical task. Regrettably, given the dominance by Link REIT nowadays, the residents are forced to pay expensive prices for food and goods and so, there is indeed a need to revive bazaars, thereby increasing competition in the market. The authorities can even consider setting up thematic bazaars, such as Hakka bazaars, or those selling hand-made products and home-grown vegetables, so that villagers in the New Territories and even farmers in urban districts can put up for sale their home-grown agricultural produces, village food and traditional handicrafts. The middle class or the grass roots can then shop at these bazaars, thus promoting universal participation and ensuring that this traditional culture would not disappear unnoticeably. I believe the setting up of bazaars can provide an additional choice to the residents, and it is also just a most humble wish of public housing tenants. As for the amendments put forward by Dr Fernando CHEUNG and Dr KWOK Ka-ki proposing that the Government should buy back Link REIT, I am opposed to them. The market value of Link REIT is worth nearly $120 billion now and realistically, it is inappropriate to buy it back and worse still, this might cause volatility in stock prices, prompting the speculators to seize the opportunity to engage in speculation. President, it gives no cause for criticism for Link REIT, being a listed company, to operate with the aim of profit maximization, but the problem is that the shopping malls, markets, and car parks under Link REIT are mostly located in public housing estates and they are indeed community facilities for the grass roots. Apart from making business consideration, seeking economic benefits and fulfilling its responsibility to the shareholders, should Link REIT not take up more social responsibilities and turn back, rather than continuously reaping profit by hook or by crook and hence arousing seething public anger?


As for the SAR Government which gave birth to Link REIT, it is at its wits' end in dealing with the problems. It is also clueless as to how it can exercise checks on the business practices of Link REIT and it has even sit idly by while seeing Link REIT increase the rental against the market trend and deviating from the operational philosophies and principles vowed by it upon its listing. Had the Government known these consequences today, alas, it should not have done what it did back then. President, I so submit. MR LAU KWOK-FAN (in Cantonese): President, as pointed out by many Honourable colleagues, subsequent to the listing of The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ("Link REIT")) in November 2005, its business practice has persistently deviated from its original purpose of improving the management of shopping arcades and markets, or resolving through listing the operational or financial problems facing the Hong Kong Housing Authority ("HA") at that time. After deviating from its original purpose, however, Link REIT has gradually experienced a morbid change and turned into a "thief" in no time. Given its dominance and through its repeated attempts to increase rents and even refusals to renew tenancy agreements, Link REIT has over the past 11 years stolen the collective memories of each and every public housing estate, the human touch developed among kaifongs and shop operators over the years, and the right of the grass roots to choose inexpensive spending. Instead, only supermarkets, restaurants, fast-food shops and boutiques operated by groups can now be found. Although the existing shopping arcades may look magnificent, they are cold and devoid of characteristics. Now, we can only find stereotyped or homogeneous shopping arcades, and the prices of goods therein are relatively high, too. Ironically, I received a couple of years ago a booklet entitled "我們的尋味時光(The Tastes)" sent by Link REIT. With nostalgia as its theme, the booklet introduces the delicacy of some of the long-established shops in the shopping arcades under Link REIT. However, these long-established shops are just the minority which have already turned into enterprises capable of affording exorbitant rents. With our most-cherished collective memories stolen, the only thing we can do is to go down memory lane. The business practice of Link REIT emphasizes purely profit. We find it distressing to see that it is devoid of corporate conscience.


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As mentioned by Mr Wilson OR in his amendment, HA decided to divest and list its shopping arcades and car parks years ago. In the light of the objective circumstances, the listing of Link REIT was supported by society, including quite many parties and groupings in this Council and the majority public. Nevertheless, the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") will definitely not find The Link Real Estate Investment Trust, now known as Link REIT, contravening its undertaking acceptable. What is more, DAB opposes its business practice of maximizing profit. Now, all that is history and the circumstances are different, it is most important to look forward now and examine how best to counteract the market dominance of Link REIT, so as to restore healthy competition in the market. Hence, I support the proposals put forward by Ms YUNG Hoi-yan and Mr Wilson OR. During its meeting with the Chief Secretary for Administration in May this year, DAB requested that the newly set up Competition Commission conduct an in-depth inquiry into whether the business practice and modus operandi of Link REIT had contravened the Competition Ordinance. I hope the Secretary will give a response in relation to the progress of the request in his reply later on. Just now, I heard many colleagues express their hope of buying back some of the shares of Link REIT or the entire Link REIT, which is actually a very simple idea. Just as Mr Kenneth LAU pointed out just now, if we make an explicit request here for the Government to buy it back, I believe Link REIT, which is commercially operated with "maximizing its profit" as its long-standing principle, will definitely keep pushing up its share prices, or even trigger fluctuations in the market. Given the current fiscal conditions of the Government, I believe a great controversy will arise should an enormous sum of money be spent. In order to counteract the market dominance of Link REIT, I would suggest that the Government make reference to the proposals put forward in the original motion, rather than spending an enormous sum of money on buying back a controlling stake in Link REIT, in setting up temporary markets or bazaars at suitable locations near the shopping arcades and markets under Link REIT, or even providing markets in future public housing developments in order to introduce competition and provide the public with more choices of spending.


Even Secretary Dr KO Wing-man pointed out just now that the North District Council ("DC") had recently proposed the setting up of bazaars or even night markets in the North District in the hope of providing the public with more choices, though Mr Kenneth LAU stated just now that there are Shek Wu Hui and Luen Wo Hui in the North District already. Honestly, pure assistance by the DC or the community is not enough. Given the remarks made by Secretary Dr KO Wing-man just now, I hope that after the North DC has come up with a direction in looking into the development of bazaars, the Secretary can join his colleagues in the Government to study the provision of additional support by, for instance, providing additional assistance in venues, legislation or even resources, to enable the setting up of bazaars, night markets, and so on, in the North District. Although I mentioned the setting up of markets or bazaars just now, if there is a lack of space for the construction of these facilities in some districts which are subject to regional monopolization, I hope the Government can consider strategic buyouts of some projects currently put on sale by Link REIT. Furthermore, quite a lot of idle spaces can still be found within the confines of many public housing estates. I hope Secretary Prof Anthony CHEUNG can give a response later regarding whether or not consideration will be given to changing the purposes of these spaces and turning them into outlets for selling dried items or retail. This proposal is worth consideration. Lastly, I hope the Government can, through introducing more competition, prompt Link REIT to reduce rents and thus provide the public with more choices. President, I so submit. MS CLAUDIA MO (in Cantonese): President, Link REIT is a big freak in Hong Kong. The making of this freak is attributable to the Hong Kong Government and even those Members who supported the Government to create this mess in the Legislative Council without any thinking at that time. Now Link REIT is a listed company. A listed company certainly needs to make money rather than operating as a charitable fund. Not only does it have to take care of the majority shareholders, it is also obligated to look after the minority shareholders. It is a commercial operation. At the same time, however, it serves the public housing estates. Originally, the space in public housing estates is public property, but now it has been make a mess. Some people propose buying it back, but after racking my brain, I really cannot think of


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how we can do so. Suppose you sold your flat for $2 million in the past and now you regret about it. But now the market price is almost $15 million. If you can buy it back, are you willing to do so? We are talking about public money. Back then, the selling price was $20 billion. Now Link REIT is already worth some $100 billion. Now the question is, even if the Government considers buying back Link REIT, how can it buy it back? By hostile takeover? It is absolutely unimaginable. Now we keep on discussing it, but there is no "if" in history. As such, let us develop other markets and stop patronizing Link REIT or make its market share shrink. This issue is indeed lamentable. However, before I go on with my speech, I need to mention one of the amendments. That amendment states the need to expedite the development of new towns, including South Lantau, which originally is worth discussion. Yet it bothers me that when the Member talked about Link REIT then onto the development of South Lantau, he trawled in the seahorses, adding that environmentalists would definitely oppose any development there. Then he made a remark which I have jotted down (I quote): "Now which is more important, seahorses swimming freely or people waiting for allocation of public housing?" I consider such remarks unnecessary. Development can of course be an absolute justification, but should we always speak in such a manner before all else without thinking when loud and clear voices of opposition have yet to be heard? If such an argument stands, then any animals or wildlife hindering the civilized development of the self-righteous human beings are unnecessary lives standing in the way. We have to kill them all. Should it be put this way? It is utterly disgusting to the ear. Back to Link REIT. Now Link REIT's operation is indeed de facto monopolization. Its business is utterly a monopoly because there is no competition. In public housing estates, while we promote the so-called "fair competition", there are many such phrases like "bundling of services". We must use its cleaning service and others. Everything is what it claims as "one-stop services" which we must use. Furthermore, there is the so-called "predatory pricing", which is simply an outright robbery. Usually when we refer to "predatory pricing", the set price is so low that other people are unable to compete. The price is so low that everyone will patronize it. However, now its


price is the highest because it does not need to worry about having no business. This is "abuse of market power", the most terrible scenario against fair competition which we are talking about now. The so-called "power" also refers to its dominance which has already been established. Of course, speaking of Link REIT, divestment of properties, introducing floating parking spaces and outrageous increases in rent are among the topics of discussion. Tenants are even forced to move out. Even though a small business or stationery shop has operated for 40 years, so what? Feeling nostalgic, we shed our tears, and journalists go there to take some photos. Then no one will remember it the following week. Never mind. Now it is doing business. If the small shop operators have gone, let it be. It will only be criticized for a while. Of course, I am not saying that Link REIT is a 100% "monster" that is totally unbearable. I have seen markets in public housing estates which really became tidier and cleaner than before after renovation and decoration. The hygiene condition has improved, and things such as the smell problem have seen improvement. We cannot say that it has done nothing. Yet the problem is, we often say that "the defects cannot obscure the virtues", but now we have to say it the other way round. The virtues can hardly obscure the defects. Now it has turned many shopping arcades basically identical. Many young people take exception to it very much, saying that they hate globalization. Actually, globalization will happen no matter what. It is a trend in history. However, globalization also means standardization. Now all our shopping arcades have become identical. Examples are those large shopping arcades from Admiralty to Festive Walk. If someone falls asleep and is suddenly taken to any one of the shopping arcades, he will really be unable to tell in which one he is when he opens his eyes. Now every shopping arcade is the same. There are just those several chain stores, supermarkets and drug stores. Even for herbal tea shops, there are only those several brands. It has become a norm. This is unacceptable. The Competition Commission certainly needs to monitor Link REIT because now it is a private enterprise rather than a statutory organization. Its abuse of market power is rather obvious. We certainly need to provide more other choices of markets for public housing residents, but after all, are we going to allow Link REIT, this freak, to keep growing? Will the Government please give greater thoughts to all this. Thank you.


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MR POON SIU-PING (in Cantonese): President, in June this year, at the meeting of announcing performance results, Link Real Estate Investment Trust ("Link REIT") undertook to conduct a comprehensive review of and put on hold the mechanism of divesting its properties and outsourcing the management of its properties. At one moment, this offered a glimmer of hope to the public. Regrettably, in just a few months, this hope was dashed again. Last month, Link REIT announced that the review of the wet market outsourcing mechanism was completed, and it concluded that the mechanism was operating effectively with no major problem. At the same time, Link REIT announced the sale of five of its shopping arcades in public housing estates. If Members are not forgetful, they should remember the poor track record of management of Link REIT. After Cheung Fat Market in Tsing Yi was outsourced to the contractor Uni-China, all small shop operators were forced to move out. As for Kwong Tin Shopping Centre in Lam Tin, after it was sold by Link REIT, the buyer increased the management fees charged on non-profit-making tenants and cancelled the concession for persons with disabilities at car parking facilities divested. Yet, to Link REIT, all these are not problems but extra blessings to its revenue of close to HK$ 9 billion. The reality speaks volumes about the fact that it is wishful thinking to expect a listed company merely concerned about interests of its shareholders to fulfil its social responsibility voluntarily. This theory of "big market, small government" in a free market has become obsolete for a long time, and Link REIT is a case in point. The Government must examine whether the current approach of heavy reliance on private companies and outsourced management companies in the provision of community facilities to residents of public housing is appropriate. Shopping arcades and wet markets in public housing estates serve specific functions in the community. They do not only serve as a platform for the more than 2 million public housing residents to buy fresh provisions, daily necessities and other services, but also offer opportunities for the grass roots to earn their own living. Hong Kong-style cafes, stalls and neighbourhood stationery shops were shops commonly found in public housing estates in the past, which should not be glibly concluded as the so-called "localist" and "nostalgia" sentiments. The public may be upset by the closures of these shops, for these shopping arcades in the community, which enable the grass roots to gain mutual benefit and render mutual support, were ruined completely by Link REIT when it forcefully introduced large consortia into these shopping arcades. This is the significant


cause of their emotions. This also explains why promotion programmes on "Old Hong Kong" launched by chain stores of large enterprises are usually all show but no substance. These programmes will end up as futile attempts, for they lack the very essence embodied by small neighbourhood shops. Regarding the queries of the public on Link REIT's operation practices, the reply most commonly provided by government officials is the excuse that the Government should not intervene in the operation of commercial organizations. However, I have to point out that the existing policy adopted by the Government is one of collaboration with the market, stifling the room of survival of small shop operators jointly. Since the Food and Environmental Hygiene Department ("FEHD") took over the public markets used to be managed by the two former Municipal Councils in 2000, the management of markets became fossilized, lacking proper maintenance and repairs, and their letting rate was low. Besides, FEHD refused to shoulder the responsibility of constructing new markets, and no new public market has been built since 2008. As such, today, in the four new towns, namely Tin Shui Wan, Tung Chung, Tsueng Kwan O and Fanling, no wet market managed by the FEHD is found district-wide, and residents can only rely on markets run by Link REIT and supermarkets in buying daily provisions. There are now 21 wet markets under the management of the Hong Kong Housing Authority ("HA"). Five of these markets are operating under the model adopted by Link REIT, which is outsourcing the management of the market as a whole to a contractor. In other words, the residents concerned are also suffering from the harm caused by Link REIT-style management in their daily life. Regrettably, in the reply to a Member's question in March this year, the Secretary for Transport and Housing still stressed that such an approach of management was effective and the existing approach would be applied to the newly completed wet markets in the future. The Government should be held accountable for Link REIT's dominance. Although the Government claims that it cannot intervene in the operation of commercial organizations, it can change the competition environment by means of policies, creating room for the survival of small shop operators. The key lies in whether or not the Government is willing to do so. In the motion debate today, the original motion requests the Competition Commission to investigate whether Link REIT has violated the Competition Ordinance. This may be one way to give the grass roots opportunities to rebuild their community and to restore the neighbour-oriented approach of operation in shopping arcades. In


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this connection, I urge that the Government must examine the feasibility of resuming the construction of public facilities like wet markets and bazaars and review the management model of outsourcing wet markets adopted by HA. President, I so submit. MR JEREMY TAM (in Cantonese): President, I have done some homework for this motion debate, I found an author named "Link REIT", and this is their annual report. The title of this book―let me take it as a book's title―is "We link people to a brighter future". I will spend the next seven minutes on how Link Real Estate Investment Trust ("Link REIT") has linked people to a brighter future. In fact, many shopping malls of Link REIT are shopping arcades of public rental housing estates, providing goods to meet the basic needs of the residents, but it is part of its policy to continuously sell the less profitable assets, causing people's lives to become miserable. Many shopping arcades acquired by Link REIT are renovated and while renovation originally gives no cause for criticism, in Lok Fu Place, for instance, the rental has nevertheless doubled after renovation. Truly it has linked people to a brighter future. Another example is Tin Ma Court Commercial Centre. Link REIT might think that it was not too profitable and so, it was sold to Vantage International (Holdings) Limited in June this year. After the new owner took over, the shopping mall has been plagued with problems. The cleaners were nowhere to be found; there was only one caretaker; the toilets in the arcades gave off a strong foul smell, and even the turtles pool built since the start of occupation of Tin Ma Court has dried up and no one knows the whereabouts of the turtles―all this is how they have linked people to a brighter future. A survey conducted by a concern group found that between May and July, vacancy was serious in the shopping arcades and markets of 12 public housing estates under Link REIT, and among 53 market stalls, as many as 37 were vacant. Therefore, it is far from true in reality that Link REIT has been effective in its management. Last year, a rental increase was forced on the market stalls of Chung On Estate, Lung Hang Estate, Cheung Fat Estate and Tin Shing Court, and the stall operators were forced to leave, resulting in a strike by the stall operators. Indeed, they have again linked people to a brighter future. What is most ridiculous is that after Kwong Tin Shopping Centre was sold to the new investor,


while the agreement signed with the Hong Kong Housing Society forbids any arbitrary increase of rental on social welfare organizations, the new owner, albeit not raising the rental, nevertheless increased the management fee by as much as 80%. Again, this shows how it has linked people to a brighter future. Many small shops with a human touch that used to be found everywhere are gone. Rather, it is now chain stores that are seen everywhere. Let me go on to talk about car parks. In May this year, the average rental increase was announced to be 8.2%, and the number of monthly floating parking spaces has been increased in 50 car parks. This is actually not a problem, for floating parking spaces offer the merit of allowing parking by more vehicles in a car park, which is a way to put space to good use. But the problem is that the monthly rental is not reduced in tandem with the change of fixed parking spaces to floating ones. It was found that at least 46 of 155 car parks have increased the number of monthly floating parking spaces and in 77 car parks, all the parking spaces have even been changed to floating ones. Tenants of monthly parking spaces have to compete for the same spaces with drivers paying at hourly rates. As a result, drivers who live in the housing estate have to find a parking space everytime he wishes to park his vehicle, and the older car owners may not remember where his vehicle was parked the day before. This very act of Link REIT has again linked people to a brighter future. Moreover, I also wish to talk about the substantial reduction of motorcycle parking spaces by Link REIT. Hiu Lai Court originally had 68 motorcycle parking spaces and the number has now been substantially reduced to 27. Why did Link REIT do it? Because it wanted to redesignate the motorcycle parking spaces as parking spaces for private vechicles in order to make more profit. But eventually it fell through. Why? Because it was later found that there were not as many people as expected who needed to rent parking spaces for private vechicles and so, it would be better to rent the parking spaces to motorcycles and collect rental from them. What a way to link people to a brighter future. Now there are only 31 379 motorcycle parking spaces in Hong Kong, including those in all shopping malls as well as roadside motorcycle parking spaces commonly referred to as herringbones. But how many motorcycles are there in Hong Kong? It is 47 687, which means that close to 35% of the motorcycles do not have a legal parking space. Whether it be private parking spaces for which rental is charged or free roadside ones, 35% of motorcycles do


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not have a legal parking space, and the owners have to think about ways by themselves to park their motorcycles. However, Link REIT has been using these methods to achieve profit maximization. Lastly, according to the newly announced details on tenders for shopping arcades, all five shopping arcades are in the New Territories, including Tsuen Wan, Kwai Chung, Tai Wai, Shatin and Tsing Yi. The tender closing date is 15 December this year. We consider that the Government should buy back these shops. Then how much does it cost to buy them back? It actually costs about $2.7 billion only. Judging from our commitment of over $80 billion to the development of the Express Rail Link and what is more, the cost overrun incurred, and that of over $100 billion for developing the third runway at the airport, or a cost overrun of as much as $20 billion that may likely be incurred by the development of the Shatin to Central Link, do we really not have the means to buy back these facilities? I must clearly point out that indeed, the current market value of Link REIT is about $130 billion. But after deducting its business in China and business of commercial development, its value is actually about $110 billion. We certainly do not expect a full buy-back in one go, for this would lead to enormous problems and huge volatilities in the market. But every time when Link REIT puts up its assets for sale, should we actively take part in bidding for them? There is actually a return after such a buyout. In order to truly link people to a brighter future, what we should count on is not Link REIT, but the Hong Kong Government buying back the people's livelihood. I so submit. MR HO KAI-MING (in Cantonese): President, Link Real Estate Investment Trust ("Link REIT") has been spreading its wings in the commercial world in recent years. It has not only frequently renovated its shopping arcades and markets, but also repeatedly divested its shopping arcades and parking spaces to make profits. Society denounces Link REIT as an "unscrupulous vampire". I think we all know well if Link REIT is unscrupulous or not. Yet Link REIT's neglect of social responsibility is definitely an undisputed fact. Since the predecessor of Link REIT, The Link Real Estate Investment Trust ("The Link REIT"), was listed in the stock market in 2005, shopping arcades in public


housing estates have seen yearly rental increases, big corporations moving in and small shop operators being kicked out. The Link REIT would rather let some shop premises remain vacant than reducing rents. Some markets underwent lavish renovation to become supermarkets. And the fleece comes off the sheep's back. After the renovation of shopping arcades and markets in public housing estates, rental increases are of course passed onto consumers. The grass-roots people have no choice but to be ripped off. I wish to point out that in the past 11 years, the Government has turned a blind eye to the blatant acts of Link REIT. What is the consequence? It is that Link REIT can intensify its advances to the neglect of the interests of society and sell assets for profits, thereby completely separating local residents from important facilities closely connected to their lives. For example, Hing Tin Commercial Centre in Lam Tin, which is my District Council constituency, was sold by Link REIT together with the car park to a private investor in the first half of this year, who then immediately renovated the car park and divested all 300 individual parking spaces, cashing in $210 million, equivalent to the purchase price of the entire commercial centre plus car park, meaning the speculator literally bought Hing Tin Commercial Centre for free. After Hing Tin Commercial Centre changed hands, no renovation has been undertaken and it remains mostly empty. It should be noted that Hing Tin Commercial Centre is adjacent to other estates, meaning it should not be lacking consumers. But after taking over the Centre, Link REIT imposed substantial rental increases, forcing many shop operators to move out. Moreover, without any renovation for years and under the poor management of The Link REIT (predecessor of Link REIT), it has gradually become a "dead" arcade. The greatest irony was the original function of Hing Tin Commercial Centre is to serve residents in the vicinity. It is difficult to accept that not only has the commercial centre failed such a function, it has also become a tool of speculation for speculators. Also located in Lam Tin, Kwong Tin Shopping Centre is near my constituency and subject to way worse conditions. Same as Hing Tin Commercial Centre, Kwong Tin Shopping Centre was divested by Link REIT for profits, after which five non-profit-making organizations (including kindergartens and non-governmental organizations ("NGOs")) that have rented premises at less


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than the prevailing rates were requested by the new owner to pay a huge sum of management fees upon tenancy renewal, meaning a de facto 80% increase in rents. People with good sense can tell that it indeed means eviction. Fortunately the Government held its ground and supported those NGOs and schools, which were saved in the end. Yet small shop operators without the Government's support would already have been driven away. In the past, small shop operators were driven away, depriving members of the public of inexpensive consumption choices and affecting their livelihood. Today, shopping arcades in housing estates have degenerated into speculation tools, almost stripping social welfare organizations, which used to be able to maintain a foothold in those arcades, of their dwelling places there. What are the reasons for the situation today? Link REIT's neglect of social responsibility is of course a crucial factor. But I must point out that were it not for the short-sightedness of the Government which insisted on privatizing important social facilities and public assets such as shopping arcades, markets and car parks in housing estates, as well as its indifference towards the livelihood problems caused by Link REIT over the years, the situation would not have gone so out of hand today. Therefore, I believe the Government absolutely needs to take more proactive actions to deal with Link REIT's dominance. Similar to dealing with problems in markets, there is definitely room for better efforts. In fact, since the Food and Health Bureau conducted a policy review in 2007 and made amendments to the Hong Kong Planning Standards and Guidelines in April 2009, no new public market has been built. Residents in areas without public markets are left with the only choice of shopping at markets under Link REIT's monopolization. Without any choice, they have to do shopping no matter how high the prices are. This situation exactly encourages Link REIT's monopolization of markets. As a result, the Government's cessation of building public markets is accessory to Link REIT doing whatever it pleases today. For this reason, we hold that to prevent Link REIT's dominance from creating bigger livelihood problems, the Government must drum up greater resolve and take an active approach. The Hong Kong Federation of Trade Unions has been standing unswervingly against Link REIT's listing. We have been making proposals to the Government that it ought to do a better job of planning markets, resume the construction of public markets and even promote the establishment of holiday bazaars and farmers' markets. The Government should consider buying back


assets divested by Link REIT to save these important social facilities from becoming tools of speculation. In fact, we have earlier presented our proposals to Secretary Prof Anthony CHEUNG. We hope that the Secretary can dedicate more efforts to studying how best resources of the Government can be used to set up a fund to buy back some assets already sold or are about to be sold. If these assets are sold due to their lack of profitability, it exactly shows their importance to people's living. Of course, we understand that the assets value of Link REIT has increased with the favourable development. If the Government buys it back now, its price may even be further jacked up. But as the saying goes: no livelihood issue is too trivial, if the Treasury has the means and a buy-back is feasible, why does the Government not consider doing so? We can imagine that since land supply in Hong Kong is limited not every district can afford building a market under the Food and Environmental Hygiene Department. In particular, some public housing estates already come with a full set of planning, completely without any extra space to house one more market. Therefore, in some districts, a buy-back of assets is the best option. I hope the authorities can weigh the pros and cons and give our proposals some serious consideration so as to practically deal with the problem of Link REIT. I so submit. Thank you, President. DR YIU CHUNG-YIM (in Cantonese): President, I consider it necessary to terminate all the resale of relevant assets and properties under Link Real Estate Investment Trust ("Link REIT") immediately. At present, as shown by a number of incidents, the divestment of properties by Link REIT has brought considerable uncertainty to the community. I have studied the relevant assignment deeds, land leases and deeds of mutual covenant of the commercial premises sold by the Hong Kong Housing Authority ("HA"), and also offered professional advice to the episode "Just a covenant (一紙之諾)" of Radio Television Hong Kong programme "Hong Kong Connection" broadcast on 10 July 2016. As far as we understand it, currently, the commercial premises and car parks of public housing estates are not solely owned by Link REIT. In fact, in respect of the form of ownership, it shares the ownership with HA in the form of undivided shares. They jointly signed a number of legal documents during


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divestment, and were bound by the deeds of mutual covenant and sub-deeds of mutual covenant. In some of the deeds of mutual covenant and sub-deeds of mutual covenant, we have found some special covenants. Are these covenants still binding on the new buyers after further divestment? Earlier on, we heard the Secretary just briefly state that the relevant covenants are still binding on the new buyers. But in fact, incidents have shown that it is full of questions. Section 41(3) of the Conveyancing and Property Ordinance (Cap. 219) prescribes relevant provisions on the terms stipulating whether the Restrictive Covenants concerned are binding on the new buyers. As the full text is lengthy, I will just briefly read out a few key sentences. The provision states that "a covenant shall run with the land and, in addition to being enforceable between the parties, shall be enforceable against…by the covenantee and his successors". In fact, there are a number of court rulings in relation to section 41(3) of the Conveyancing and Property Ordinance in Hong Kong. The general conclusion is that whether the Restrictive Covenants concerned are binding on the new buyers depends on whether the requirement of "run with the land" as provided in section 41(3) is met. In court rulings, the requirement of "run with the land" will normally be taken as the legal basis for determination of whether the covenant is still binding on the new buyers. In other words, it does not necessarily imply that all covenants, such as the one signed between HA and Link REIT, must naturally be binding on the new buyers of assets divested by Link REIT. In fact, such a question or uncertainty must be adjudicated by court, and whether every covenant will naturally be binding on the new buyers can only be determined through legal proceedings. In fact, in the episode of "Hong Kong Connection" filmed on 10 July this year, the sale of the car park in Siu On Court was mentioned. The media had carefully checked the relevant legal documents, including the land lease, deed of mutual covenant and the relevant assignment deed. It was found that back then, HA had actually required in the covenant that the owner shall bear almost 40% of the maintenance costs of public facilities of the Court in respect of the shopping arcade and car park of the Court. Under such circumstances, the responsibilities as stipulated in the covenant would have to be borne by the new buyer. At that time, a large-scale maintenance project to be undertaken by the court entailed a maintenance cost of about $10 million. Under the covenant, a maintenance expense of about $4 million shall be borne by the new buyer. At that time, the new buyer refused to pay and considered that the relevant covenant was not binding on the new buyer. Eventually, while the resale of the parking spaces


was not completed, we can see from the incident that questions have been raised as to whether the relevant covenant is still legally binding after divestment, and whether it is binding on the new buyer who has never entered into any covenant. Hence, in order to avoid additional uncertainty unnecessarily, I recommend that further divestment activities of any part of assets to the private sector by Link REIT should be terminated immediately. Thank you, President. MR TOMMY CHEUNG (in Cantonese): President, as Members all know, I hold a strong view about Link Real Estate Investment Trust ("Link REIT") (formerly known as The Link Real Estate Investment Trust ("The Link"). Back then, when the Hong Kong Housing Authority ("HA") took a vote to decide whether or not to sell its retail and car parking facilities and enable the listing of The Link, being an HA member, I voted against it and requested Michael SUEN, the then Secretary for Housing, Planning and Lands, to put it on record. Among all the real estate developers, why was The Link particularly loathsome in the Legislative Council, especially when matters relating to shopping arcades were involved? Apart from the fact that HA was really a good landlord―during the outbreak of SARS, I succeeded in making HA waive 50% of the rents for eateries and 30% of the rents of market stalls. No other owner in Hong Kong could do that―a particular misdeed of The Link was that when they came to the Legislative Council, they made all kinds of promises to Members, but after the retirement of their Chief Executive Officer, they acted as though nothing had happened. Hence, in this situation, I have in the Council repeatedly requested HA not to further divest the remaining retail and car parking facilities or facilities which will be completed in the future. I hope the Secretary will remember not to do that in future. I have contacted many shops and eateries operating in the shopping arcades of Link REIT before. Since they could not bear the pressure of increases in rents, they were forced to close down and leave. We could do nothing to help them. We could not save them even though we wished to. Many landlords will increase rents, but Link REIT does not only increase it. Worse still, it will request the shop operators to move from the ground floor to the upper floors or from a large shop premises to a small one. Having to move from one place to another, the shop premises have to be renovated all over again, thus causing many eateries a hard time.


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I understand that we all wish to keep Link REIT in check, each making particular proposals, but we must be mindful of not killing the innocent. I hold a strong view against and objection to some political figures or community groups initiating social actions against the markets of Link REIT and advocating unlicensed hawking outside the markets. Some market traders have relayed to me that the articles offered at these stalls are similar to the goods and services supplied by them and low prices are offered to attract customers, thus leading to vicious competition and dealing a heavy blow to their business. We have got to know that market traders are in a most passive position. After renting the stalls with cold hard cash, they can only operate the business in a practical manner. The pricing of their goods is affected by such factors as rents, prices of the goods supplied, wages and customer flow. It is not solely determined by the people's demand. Hence, the fault does not lie with them, and it is unfair to point an accusing finger at them. Owing to these considerations mentioned just now, I do not oppose setting up any bazaars, but I oppose setting them up near the markets. As a matter of fact, six years ago I moved a motion in this Council, requesting the Government to support the markets for traders running small businesses. At that time some Honourable colleagues sought the Government's support for open-air markets, and I supported it, too. However, at that time we requested the Government to appropriately relax the restrictions on on-street busking and hawking. In particular, we should organize special open-air markets in places with tourism value or features over weekends, so as to help attract tourists, or set up bazaars in the remote areas, like the Morning Bazaar which we know very well. Warmly welcomed by the residents and helpful to the grass roots, this can achieve an all-win situation. The recent advocacy of setting up permanent bazaars to compete for business with nearby markets cannot be mentioned in the same breath at all. Conversely, Members may have noticed that in recent years, many large shopping arcades have organized holiday bazaars for hawking by traders who have self-made products with special characteristics or who wish to try out the business on a small scale first, thus providing the public with alternative choices. The Liberal Party and I welcome this kind of holiday bazaars because we believe that it not only offers opportunities for small business operators to display and sell their own products and develop additional business opportunities, it also helps to boost the visitor flow, which is not something bad for the existing shop


operators. Nevertheless, how to ensure the products displayed and offered will not constitute vicious competition is a question that must be handled by the authorities carefully. After all, we should figure out the root of the problem. To a certain extent, Link REIT's capacity for raising the rents is related to the increase in spending power of public housing residents. As I have learnt from members of the industry, now restaurants doing the best business are mostly located in public housing estates because, given the substantial rise in the income of public housing residents over the past few years, their disposable income is far greater than before. It is a matter of course that they dine out more often. However, the greatest grudge against Link REIT is its driving away of the small and medium enterprises as well as individual operators, and continued introduction of chain stores with financial strength, thus making the market increasingly homogeneous and leaving members of the public with fewer choices. For this reason, the authorities must address the problem squarely. As I have said from time to time, we must work at it from the supply side. Not only does HA have to keep the existing shopping arcades, it should also appropriately develop commercial sites. The most important principle is to impose thresholds or restrictions to ensure that the relevant sites will not be monopolized by real estate developers or large chain stores, so that small or family businesses will find new room for investment and can supply daily necessities to residents at lower prices. As far as I understand it, HA has never fully utilized the approved floor area for non-residential facilities, so there is still great room for development. In the meanwhile, the authorities should construct more public markets in districts with such a need and expedite the renovation of old public markets in line with the trade-mix planning, thereby providing residents with all types of diversified services and commodities. It should even select suitable sites, for example, Fa Yuen Street Market, for building additional car parks, so as to boost the visitor flow. Only in this way will a checking effect be achieved and the market rental value prevented from merely following major consortiums such as Link REIT in a lopsided manner. It can also impose invisible pressure on Link REIT which will not dare bully the small shop operators blatantly. President, I so submit.


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MR KWOK WAI-KEUNG (in Cantonese): President, as the common saying goes, "One should show some moral character after getting rich", and conventional wisdom also says, "Wealth is covetable for a gentleman but he gets it in a proper way.". Modern business management concepts also stress that corporations have to assume social responsibilities to achieve inclusion. However, if we look in retrospection at the past 11 years, we will find that the present Link Real Estate Investment Trust ("Link REIT"), that is, the former The Link Real Estate Investment Trust ("The Link REIT"), is only the synonym for "heartlessness", "rent increases", "eviction", "elimination", and so on, in the minds of Hong Kong people. Link REIT has become one of the vehicles of public discontent in Hong Kong, so it is a living example of how real estate and rental have wrought destruction on society, the economy and the lives of ordinary members of the public. It can be said that Link REIT is a prime illustration of the common saying "fleece people for one's own benefit". President, The Link REIT was listed in 2005 and its business is related to about 10 million sq ft of retail properties and 72 000 parking spaces in Hong Kong. The source of the assets of The Link REIT was mainly the 180 items sold by the Hong Kong Housing Authority ("HA") in 2005 and all of them are the shopping centres, markets and car parks located in public housing estates and Home Ownership Scheme courts. It is obvious that these retail facilities all cater to the needs of the grass roots and they range from places where housewives buy food to prepare meals to stores where kids buy snacks or stationery. They are all managed by Link REIT. As the saying goes, "the fleece comes off the sheep's back", so when the profits of Link REIT soar, this means the rents and prices of goods in these retail facilities for the grass roots are also getting more expensive. If we look at the past performance of Link REIT, we can see that in the past five years, the annual after-tax profit of Link REIT ranged from $960 million to $27.2 billion and its asset value also increased from some $20 billion at its listing to over $100 billion at present. The implication of such a continual rise in asset value is continual rent increases. Over the past five years, the rental reversion rate of Link REIT stood on average at 20% per year and it even reached 25% in two of them. In other words, each time small shop operators renew their leases with Link REIT, the rents are increased by at least 20%. This is very simple: Can the spending of the grass roots or the profits of small business operators increase by 20% every two to three years? Can the wages of wage earners increase by 10% each year? Therefore, the public criticize and loath Link REIT not because it increases rents but because it increases rents time and again and up to the hilt, and the grass roots and small shop operators who do not have a very high standard of living are made targets of such fleecing.


President, what is the most telling of the nature of Link REIT to "fleece people for its own benefit" is its all-out effort to parcel out its shopping centres and car parks for sale. Back then, when The Link REIT was listed, some people were already concerned that it would parcel out its shopping centres. However, at that time, the Government gave the assurance that the land leases and the Housing Ordinance would exercise checks and balances on The Link REIT. However, in recent years, we can see that Link REIT has eventually begun to hive off what it considers to be low-return assets or "stagnant malls" and the buyers who took control of them are all investors. Their aim is just to flip them, so they are even less concerned about residents' needs or social responsibility than Link REIT is. For example, the deeds of such new buyers include forcing the small shop operators in Wan Tau Tong Shopping Centre to vacate and charging the social welfare organizations in Kwong Tin Shopping Centre additional management fees. As regards car parks, these new property owners also split them up one by one. For example, in Tung Hei Court, Shau Ki Wan, 129 parking spaces were the first ones to be put up for sale and now that they have been sold, will the parking spaces be rented only to nearby residents according to the terms in the land lease? How will the management issues involved be dealt with? The new owners do not have any responsibility; Link REIT does not think it has to assume any responsibility, and HA is not in a position to pursue this matter. In the end, this issue of management had to be referred to the Lands Department, the busiest department responsible for managing all land in Hong Kong, for follow-up action. As to the money, it is pocketed by Link REIT and the new owners. Another problem that has arisen after the sale of assets by Link REIT can be seen in the example of Wah Kwai Estate. In 2014, Link REIT sold Wah Kwai Shopping Centre together with its car park at a consideration of some $500 million. After the new property owner had taken over, it immediately forced the small shop operators out of the shopping centre, then closed the shopping centre on the excuse of renovation. Local residents are forced to trudge to Wah Fu Estate or Aberdeen to do their shopping. We once proposed that an elevator be installed on the way from Wah Kwai Estate to Wah Fu Estate but we could not bring even this to fruition because the area sold or the place where an elevator can be installed is under the ownership of Link REIT. However, the new property owners also took it upon themselves to change the manager of the shopping centre and demanded peremptorily that the Housing Department pull out. Although the Court eventually ruled in favour of the


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Housing Department, I believe this gap will eventually be breached. In fact, at present, the parking spaces in the Wah Kwai Shopping Centre, which is now called Noble Square, have all been parcelled out, so will the shops in the shopping centre still cater to local residents and the elderly? Residents have no say whatsoever over this. Given such a situation in the local community and the approach of squeezing everything out in all areas, may I ask how possibly could the grass roots not feel angry? Now, the same thing is again happening to Hing Man Estate in Chai Wan and in the future, even large shopping centres will be put up for sale. In fact, the problem with Link REIT does not lie simply in its monopolistic nature, rather, its conduct has practically caused disruptions to grass-roots communities and created problems for society. For this reason, what we have to do is not just to impose checks and balances, rather, it is necessary to identify an ultimate solution and countermeasure to this. "There is no such thing as love without a reason and hatred without a cause". Eleven years after The Link REIT's establishment, it is now being scorned and spurned by the public but it only has itself to blame. At the same time, the Government's administration and popularity have also suffered. President, if we do not find practical solutions to the problem, such as setting up markets and bazaars in housing estates to counter Link REIT, I believe the lives of the grass roots will continue to remain utterly miserable. For this reason, we must put an end to the monopolization by this consortium as soon as possible. (The buzzer sounded) PRESIDENT (in Cantonese): Please stop speaking. MR KWOK WAI-KEUNG (in Cantonese): Thank you, President. MR LUK CHUNG-HUNG (in Cantonese): President, small shop operators have become like helpless tenant farmers renting land from the landlord, while residents are left with no choice. They are just led by the nose with no say at all. This is the plight suffered by the people under the hegemony of Link Real Estate Investment Trust ("Link REIT"), whether they be residents, consumers or small shop operators.


Today I am speaking in the hope that the Government will squarely face the dominance of and lack of control over Link REIT. We are discontented that the Government has repeatedly stated in the Legislative Council that it cannot buy back Link REIT, claiming that it does not meet the principle of public finance management because the price of a buy-back will be much higher than the then selling price. For this reason, the Government will not give it any consideration. Actually, such a view of the Government has exactly demonstrated that it does not give due regard to public interest. It is also a simplistic, rough and lazy kind of mindset. The Government can buy back Link REIT or recover some establishments in different ways. For example, Link REIT has recently put up for sale some shopping arcades in remote areas which it considers unprofitable. Why does the Government not seize the opportunity to buy them back to help the local residents, especially those in remote and disadvantaged areas? We must try all means possible, including a buy-back, to counteract Link REIT's hegemony and tyrannical policies. Certainly, we also need to carefully consider the financial benefits of buying back Link REIT, rather than buying it back blindly. I hope the Government will cease making misleading statements. Hence, the Hong Kong Federation of Trade Unions ("FTU") considers that as Link REIT has ignored the affordability of the grass roots, seriously affecting the people's livelihood, the Government must take follow-up action. As I said just now, as Link REIT is now selling certain establishments, this is a good opportunity for the Government to buy back these remote establishments to answer the people's aspiration. Moreover, President, I have mentioned in Yuen Long District Council a number of times the need to construct a public market in Tin Shui Wai to provide diversified and affordable choices of shopping and dining in the district. However, the Food and Health Bureau has repeatedly used the audit report as a shield, holding that the construction of a new market will lead to losses. The Government considers that not constructing and not doing anything will not lead to any mistake. This is in fact a rather irresponsible mindset that warrants criticisms. On the contrary, the Development Bureau, in my view, merits some praises. The Bureau has actively responded to FTU's proposals for the new development of the New Territories West, such as Hung Shui Kiu, including the reservation of land in Tung Chung and Hung Shui Kiu for the development of


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markets. Now it is only waiting for the approval of the Food and Health Bureau. I hope the Food and Health Bureau will respond actively and undertake the responsibility with courage. Regarding the question of when there will be the chance of building a public market afresh in the new development area, now there is not the slightest sign of commencement yet. Will the operation and management approach stick in the rut like the past? Certainly not. We need to draw on collective wisdom and operate the new market with a new approach, developing a new clientele and new business opportunities so that both business operators and consumers will have a new choice. Nevertheless, it will take some time to resume the construction of markets. In the meanwhile, members of the public need more choices, and the Government is duty-bound to provide the relevant ancillary facilities. In dealing with matters related to the new development area, it is not difficult for us to find that there are actually some places available in the New Territories that offer pretty good conditions for organizing farmers' markets or bazaars, thereby giving more choices to local residents or residents in the neighbourhood. Earlier on, during the second-stage consultation on the Hung Shui Kiu New Development Area, FTU proposed setting up a farmers' market in the area. We have further made a proposal to the Development Bureau for establishing a rural-city coexistence zone. The purpose is to satisfy the local farmers' wish to continue to engage in farming. Land can also be reserved for setting up bazaars or farmers' markets for sale of goods in the zone so that residents in the neighbourhood will have more choices of outlets for shopping, thus creating local characteristics of vitality. We believe that these proposals have made use of the existing different characteristics and conditions of the local areas, such that more choices of consumption can be provided. There are also other proposals, such as those drawing reference from food trucks and providing mobile vegetable trucks in housing estates or on Government land so that members of the public can buy vegetables conveniently when they are passing by after work. Mobile vegetable trucks are already operating in Mainland China and Taiwan with considerable achievements and popularity. Furthermore, consideration can be given to designating more locations in other public spaces in public housing estates for


commercial purposes, be it for peddling or provision of services, so as to introduce more choices and foster market competition to counteract Link REIT's hegemony. President, wisdom prevails in the community. Facing Link REIT's hegemony, to enable residents to break away from its evil control and release the public from its torture, the Government is duty-bound to protect the people's basic livelihood. It should adopt an open mindset and the views in the community and boldly commit itself to averting the imbalance in the market. Only then can the Government win the people's heart. I so submit. Thank you, President. MR SHIU KA-CHUN (in Cantonese): President, in recent years, an American professor in political philosophy, Michael SANDEL, has written a book, an international best seller titled What Money Can't Buy. The book reminds readers that in society nowadays, it seems all things can be bought by money and everything can be resolved by the free market. Yet at issue is that when interests are always given the highest priority, certain important values in society, such as humanity, relationship and justice, and so on, will be distorted. Do we wish to see a society like this? Now, in the case of Link Real Estate Investment Trust ("Link REIT") in Hong Kong, it is exactly ruining such important values as social justice, protecting the disadvantaged, supporting small shop operators and protecting people's access to daily necessities, and so on. I am a social worker, a Member from the social welfare sector. Members all know that "SW" stands for social welfare. I often joke that, to the Government, businessmen and Link REIT, "SW" does not stand for social welfare but an equivalent of "small and weak", for we are a group vulnerable to their bullying. Today, a number of Members have mentioned the impact of Link REIT on people's livelihood small shop operators, so I will not repeat them here. I wish to add one point, that is, Link REIT is not only inflicting significant harms on the grass roots but also the social welfare sector. In the social welfare sector, as we often point out, Link REIT will offer us certain concessions at the beginning, stating that it will offer concessionary rental to welfare organizations in leasing the units and the rent will be capped. Yet never could we have thought that Link


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REIT would resort to another tactic to increase its income, that is, a drastic increase in management fees, which is not double, but triple or quadruple, to stifle the room of survival of welfare organizations. Let me cite a specific case as an example. It is this case in Lam Tin, and some colleagues might have mentioned the case earlier. An organization, The Boys' and Girls' Clubs Association of Hong Kong, has set up an outreaching social work team there. We all know that this outreaching team serves youth at risk and its tasks are extremely challenging. The outreaching team is taking care of the interest of youth at risk for the community of Hong Kong. Regrettably, since it cannot afford the exorbitant management fees, a constant tall challenge, it may have to move out eventually when they cannot pay the management fees. Do we expect to see a unit serving youth at risk in Lam Tin for the community of Hong Kong forced to move out because it cannot afford the management fees levied by Link REIT? This is an extremely undesirable scenario. This is only one of the many examples. Another example is the cessation of parking concessions for persons with disabilities at certain new shopping arcades under the management of Link REIT where centres for persons with disabilities are located. It is only natural that locations with service centres for persons with disabilities will invite frequent visits of persons with disabilities and parking spaces will be necessary for them, yet Link REIT has discontinued the relevant parking concessions. There are many more such examples, and the list is really inexhaustible. The social welfare sector is tasked to take care of the disadvantaged, but thanks to the management of Link REIT, it becomes the disadvantaged. The social welfare sector is supposed to come forward to speak up for the disadvantaged but it has become the target of bullying. The Chinese name of Link REIT, 領展 , which carries the meaning of leading development, has seemingly painted a bright picture and brings us hopes. But in reality, Link REIT has brought to the community of Hong Kong, grass-roots organizations and the social welfare sector a series of restrictions, hurdles and limitation. Hence, I strongly support the motion proposed by Mr Andrew WAN today. I think it is time we criticized Link REIT. Regarding the questions how the Hong Kong Government should respond to Link REIT and how it should do more, I think the motion can serve the purpose of pressing the Government in some measure.


In the newspapers today, Madam LO Siu-lan was mentioned. The headline runs that we owe her a fair deal, for her prophecy a dozen of years ago has now come true. I really wish to say the following lines to Madam LO Siu-lan in the Legislative Council, "We owe you a fair deal, what you said is right. Back then, our minds were overwhelmed by wealth and our eyes blinded by money, and we failed to see the significant issues pointed out by you. Today, we have to bear the full consequence. Though it is really difficult to resolve these issues now, we still have to exert our level best." I so submit. Thank you, President. MR LEUNG YIU-CHUNG (in Cantonese): President, when the Hong Kong Housing Authority ("HA") made the decision to privatize important public assets such as shopping arcades, car parks, and so on, we in the Neighbourhood and Worker's Services Centre staunchly opposed it. The reason for our opposition was simple. It was because the privatization of public assets closely related to the people's livelihood would benefit only the large consortiums and tycoons, whereas the victims would only be the grass-roots people and small business operators. Public housing estates are supposed to be communities where the grass-roots people can live in peace and work with contentment and residents can meet their basic needs of daily living within the estates. This is why there used to be some planning standards for shopping arcades in public housing estates whereby a certain proportion of the shops was set aside for specified trades and industries, such as banks, pharmacies, plumbing and electrical services or hardware stores according to the demographic needs in the district. Meanwhile, arrangements would be made as far as practicable to provide at least two shops of a similar type to prevent monopolization. However, after the shopping arcades in public housing estates were taken over by Link Real Estate Investment Trust ("Link REIT"), they have ceased to be operated on a "people-oriented" principle. Rather, emphasis is put on the interest of shareholders and priority given to making profit. The principle of the highest bid wins is invariably upheld for everything. Now, Link REIT has arbitrarily renovated the shopping arcades, substantially increased the rental and contracted out the management of markets. Whoever has the means to pay expensive rental can start a business. As a result, the shopping arcades are


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monopolized by identical chain stores, whereas businesses operated with small capital and small shops with traditional or local characteristics are driven away. A media corporation conducted in June this year a sample survey on 10 highest valued shopping arcades under Link REIT and found that of the 1 019 shopping and dining premises, chain stores outrageously accounted for 72% whereas small shops took up a mere 28%. President, the situation of car parks is similar. In recent years, Link REIT has changed the parking spaces in some of its car parks to floating ones, abolishing monthly fixed parking spaces and opening up a large number of parking spaces for rent by users who are not residents of the housing estates. In order to compete with the outsiders for the parking spaces in their own housing estates, simply enough, the residents have to pay higher rentals. Another problem which has often been neglected is that as Link REIT is in possession of many recreational and leisure facilities for non-commercial use in public housing estates, the Housing Department ("HD") has to seek the approval of Link REIT before alterations or repairs can be made to these facilities or their provision increased. Although these facilities are very important to the residents, regrettably, as the facilities do not in any way benefit Link REIT, Link REIT is usually unwilling to cooperate with HD in carrying out alterations or increasing the provision of facilities, thus making the residents suffer. All of these are obviously instances of HA lifting a stone to crush its own feet. President, never do I deny that the management and quality of service will indeed be improved after the privatization of public assets. Having said that, such improvement carries an enormous price payable by the people and what is more, the price is beyond the affordability of the grass-roots people. In fact, what the people most expect is the provision of a wide variety of inexpensive and quality goods or services in their communities which can, in turn, give them more choices. Particularly, they all the more wish that shops with traditional characteristics and features of local culture can be preserved for them to have more choices. Recreational facilities, shopping arcades and car parks in public housing estates should give priority to serving the public, but from what we have seen now, this has completely changed in that priority is given entirely to the so-called shareholders, small shareholders or big shareholders of Link REIT and profit-making is made the objective and guiding principle. This is indeed pathetic.


What is more ridiculous is that while HA sold off public assets at rock-bottom prices back then, Link REIT has outrageously divested its shopping arcades and car parks and resell them at high prices to reap exorbitant profits. These are supposed to be assests which belong to all the people of Hong Kong and they are eventually surrendered by the SAR Government of its own accord and made money-spinners for Link REIT. When public assets are divested and sold one after another, they would fall into the hands of many more different private enterprises, in which case I think it would be even more difficult to exercise monitoring. A few years back members of the community already proposed buying back Link REIT and I think buying it back is the most effective way to counteract the hegemony of Link REIT. The Government should carefully take it into consideration. Of course, given that the current price is shockingly high, should this proposal be further promoted? I think detailed discussion is necessary. President, although the Government is unwilling to buy back Link REIT now, there is still a lot that the Government can and must do to counteract this hegemony of Link REIT and address the pressing needs of the residents. As pointed out in the amendment proposed by Dr Fernando CHEUNG, the Government can set up permanent bazaars in various districts or buy back from Link REIT some of the shopping arcades, markets or car parks. This is what the Government must carefully consider and do. President, Chief Executive LEUNG Chun-ying said when assuming office that studies would be conducted to solve the problem concerning Link REIT but much to our regret, nothing has been achieved over the years. In June this year, he again lambasted Link REIT for neglecting the needs of the people, adding that the Government would identify other options in the best interest of the people. His remarks have kindled great expectations among the public. But it is most regrettable that as his term is expiring soon, we have yet seen any concrete measure adopted by the Government to solve the problem. I have no idea how many more empty words LEUNG Chun-ying will utter but members of the public have been deceived by him over and over again. I think it is now most important to stop Link REIT from further dominating the market and particularly, the Government is duty-bound to expeditiously stop Link REIT from divesting its car parks or shopping arcades, so as to pre-empt the situation where monitoring would become even more difficult in future. President, I so submit.


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DR PIERRE CHAN (in Cantonese): President, it is actually known to everyone that The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ("Link REIT")) has not only made members of the public fork out more for their food and shop operators pay exorbitant rents, but also stifled the room of survival of small shop operators, thus arousing grievances. Even private medical practitioners operating clinics in the shopping arcades under Link REIT, as well as their patients, have become victims. Last month, a questionnaire survey was conducted jointly by the Legislative Council office set up by me and the Hong Kong Doctors Union on the rents of clinics operating in the shopping arcades under Link REIT. More than 75% of the medical practitioners interviewed considered the rents a burden on the operation of their clinics, with 45% and 30% of them considering the burden considerably heavy and very heavy respectively. In addition, the ratios between the rents and the operating costs of clinics were also surveyed. In this regard, 40%, 10% and 7% of the medical practitioners interviewed indicated that the ratios were 30% to 40%, almost 50% and more than half respectively. Basically, most of their income was used to pay rents to Link REIT. As regards rent increases over the past five years, close to 40% and 7% of the interviewees indicated that their rents had risen by nearly 50% to 99% and 100% to 200% respectively. In some cases, the rents have more than tripled. The vast majority of the medical practitioners interviewed have to adjust their charges since exorbitant rents have pushed up the operating costs of their clinics. Simply put, more than 70% of the medical practitioners were greatly dissatisfied with the rental policy of Link REIT; whereas no interviewees gave positive comments. Apart from its rent increases, the management practice of Link REIT has also been criticized. Let me cite some examples. In a clinic operating on a shop premises under Link REIT, a fist-sized piece of concrete weighing five pounds fell from the ceiling and landed exactly on a table placed between the medical practitioner and his patient. Fortunately, no one was hurt. Of course, the medical practitioner negotiated with the property management department of Link REIT after the incident because the building structure was obviously to blame. Since human safety was at stake, the matter should be dealt with by the owner. However, Link REIT resorted to procrastination as long as it could, taking six months before repairs were carried out for the clinic. What is more, Link REIT said that the tenancy agreement stated clearly that it would not be


responsible for any loss of human life, property or financial loss caused by other accidents, thus shirking its responsibility completely. Consequently, the medical practitioner had to dig into his own pocket to pay for the restoration of the ceiling. Moreover, his clinic had to be closed for business temporarily for a couple of days for the repairs to be carried out. Since his tenancy agreement was to expire soon, he proposed that the aforesaid term be relaxed or deleted upon the renewal of the agreement. However, Link REIT indicated to him clearly that there was no room for negotiation, and he could choose not to renew his tenancy agreement if he did not like it. The approach taken by Link REIT was high-handed, just like crashing a crab to its death with a big rock. The medical practitioner was crushed to death as a result of the falling of a big rock. While the people who live near the shopping arcades of the housing estates are mostly public housing residents, some better-off people live in Home Ownership Scheme flats. When they fall ill, they will consult these doctors. Actually, the clinics in the shopping arcades of housing estates can act as a buffer and serve the purpose of diverting patients from public clinics and the Accident and Emergency Departments. Therefore, if the private clinics in housing estates raise their charges, it will only deter low- and middle-income patients from visiting private clinics. Instead, the patients will seek treatment at public clinics, or even the Accident and Emergency Departments. They might even choose not to seek treatment when they fall ill. According to the annual report released by Link REIT, the average monthly rental of shopping arcades under Link REIT had increased by 117% from $23 per square foot in 2006 to $50 per square foot in March 2016. Compared with the cumulative inflation rate of only 38% in the same period, these figures are outrageous. It is futile for us to condemn Link REIT 10 000 times for profit maximization because it was the Government which failed to put in place proper checks and balances after allowing Link REIT to be listed. As a result, Link REIT has become a beast that no one can tame. Next, I would like to express my views on the amendments. Both the original motion and the amendments proposed by several Members mention the provision of choices other than Link REIT by, for instance, providing a variety of permanent, temporary and holiday bazaars. Although I agree with the direction of these amendments, I would like to make an additional point that these bazaars cannot substitute shopping arcades completely. Some trades and industries, such as private clinics and bank branches, require permanent and fixed shop


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premises because they need to purchase some equipment or hardware. Neither are bazaars suitable for the slaughtering of chicken, killing of fish, and so on. This explains why I pointed out just now that temporary and holiday bazaars were not viable options. Therefore, I agree with the proposal put forward by Mr SHIU Ka-fai that the Government should provide additional land and shops for the retail and services industries for the purpose of directly competing with Link REIT and resolving the problems on all fronts. The divestment of five shopping arcades, car parks and markets in housing estates as announced by Link REIT after the expiry of the deadline for proposing amendments to the motion will definitely trigger another surge in fees and charges. Since the prices of salt, sugar and rents will be raised, the Chief Executive must honour its pledge of providing choices other than Link REIT. The fastest way before us is to submit tenders for the buying back of the several existing shopping malls and hand them back to the Hong Kong Housing Authority ("HA") for management. Hence, I will vote in favour of the relevant amendments. The people of Hong Kong have indeed learnt a bitter lesson from Link REIT. Even more frightening is that the lesson will never come to an end. Whether or not the Government will buy back Link REIT fully or partially, I think it is inadvisable for HA to outsource its shopping arcades and markets completely. Neither should HA, as what Link REIT did, adopt a profit-oriented mindset in managing shopping arcades. What is more, the Government should conduct a thorough review of the adverse consequences brought about by excessive marketization and privatization. Instead, it should revert back to the people-oriented mindset and accord priority to people, or else the effort made for and money spent on any buy-back will go down the drain, too. With these remarks, President, I support this motion. MR HOLDEN CHOW (in Cantonese): President, the focus of the original motion proposed by Ms YUNG Hoi-yan today is to discuss how to vigorously promote market competition and counteract the market dominance of Link Real Estate Investment Trust ("Link REIT"). This June, the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB"), led by Mr LEUNG Che-cheung and me, released results of a public survey on the services of Link REIT. Seventy percent of the respondents opined that in the eyes of members of


the public, Link REIT was "obsessed with profit maximization" and "hegemonic". Many of them reflected that Link REIT would drive away small traders and raise rentals every year. As mentioned by Chief Executive LEUNG Chun-ying in an earlier interview given to an English medium, Link REIT certainly had its own unique social responsibility to serve residents in public housing estates. But as we can see now, in the absence of proper supervision, Link REIT has not taken up such a responsibility. It is widely known that one can never say enough about the unscrupulous business practices of Link REIT. In my view, apart from making severe criticisms, there is a greater need to counteract the current market dominance or monopolization of Link REIT by policies and legal means. The original motion today offers an opportunity to us to realistically think about how best to address the existing problems from the perspective of vigorously promoting market competition. In fact, it was reported by the media earlier that subcontractors for markets under Link REIT were suspected of engaging in price-fixing activities with shops associated with or might be manipulated by them, and even undermining other competitors by predatory price cuts. Are these subcontractors and shops under manipulation involved in such acts as market allocation in breach of the Competition Ordinance? More importantly, does Link REIT play a part in it? I think the Competition Commission should expeditiously conduct serious investigations into various suspected non-compliance and misconduct because they will seriously undermine competition and distort the market, and will also encourage Link REIT to monopolize the market. President, in respect of promoting healthy market competition, DAB has actually been advocating the introduction of more competition by increasing the number of public markets in the communities, such as Tung Chung or Tin Shui Wai, thereby giving more choices to members of the public. I have heard Mr Andrew WAN's remarks today. Obviously, he may not be familiar with the situation of Tung Chung. I can tell Members that all along, we have been striving for the construction of a market under the Food and Environmental Hygiene Department. This is what I and my colleagues of DAB Islands Branch have been doing. The construction of a new public housing estate in Tung Chung is about to be completed soon, with new … (Mr CHU Hoi-dick stood up)


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MR CHU HOI-DICK (in Cantonese): President, a quorum is not present with less than one half of Members here. PRESIDENT (in Cantonese): Mr Holden CHOW, please be seated. PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber, but some Members did not return to their seats) PRESIDENT (in Cantonese): Will Members please return to their seats. Mr Holden CHOW, please continue with your speech. MR HOLDEN CHOW (in Cantonese): President, just now, I was talking about promoting healthy market competition. In fact, DAB has long been advocating the construction of public markets in some of the communities, such as Tung Chung and Tin Shui Wai, with a view to promoting competition and giving more choices to members of the public. Earlier on, I heard Mr Andrew WAN mention the situation of Tung Chung, but he may not have a full understanding of it. Maybe I can tell him that actually DAB colleagues have been striving for the construction of a municipal market in Tung Chung. And in future, the construction of a new public housing estate in Tung Chung will be completed. A market to be managed by the Hong Kong Housing Authority is scheduled to commence operation next year. I think that after all, the issue of monopolization can only be practically addressed by the introduction of more choices and competition. President, I also wish to respond to Mr SHIU Ka-fai's amendment here. I have reservations about one of the points he raised in relation to the development of land for the retail industry in South Lantau so as to increase competition. I believe that given the large number of places worthy of conservation in South Lantau, if large-scale developments are to be carried out, the ecology and environment of the district will be affected to a certain extent. For this reason, we have reservations about Mr SHIU's amendment.


As to the last point, which is about the proposal of buying back shares of Link REIT, I also have reservations about it because if Link REIT is told that the Government will buy back its shares now, they will definitely ask for unreasonably high prices, probably resulting in a waste of considerable taxpayers' resources. President, in my opinion, it is imperative for the Government to ensure proper safeguards against monopolization of the market by Link REIT through policies and legal means, and it should be more proactive in introducing competition by constructing more pubic markets, thereby giving more choices to members of the public. This is the approach that should be taken to address the market dominance and monopolization of Link REIT. For these reasons, I support Ms YUNG Hoi-yan's original motion and Mr Wilson OR's amendment. I so submit. MR ALVIN YEUNG (in Cantonese): President, just now Mr Holden CHOW mentioned Tung Chung and talked about how the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") advocated the introduction of competition. I would like to add a simple fact. During the by-election in February this year, Mr Holden CHOW said he would follow up the issue of the only cinema in Tung Chung so that it could be preserved. Regrettably, the cinema closed down in July. This is how Mr Holden CHOW followed it up. He could not even preserve the people's only choice, but now he wags his tongue and speaks on behalf of DAB about the need to introduce competition to fight against Link Real Estate Investment Trust ("Link REIT"). Is that credible? But the fact is DAB played a part in supporting the listing of The Link Real Estate Investment Trust ("The Link REIT") back then. President, a community is one which allows the residents to satisfy their needs of clothing, food and housing. In the 1970s and 1980s, most of the grass roots lived in public housing in Hong Kong. They enjoyed autonomous consumption which was solely attributable to the existence of small shops in the public housing shopping arcades, coupled with the empathetic atmosphere there. Hence, the closure of a small Hong Kong-style café or stationery shop would arouse our sympathy and unwillingness to part with it because the owner was just like our family member. This is something young people who grew up in housing estates must have experienced. Of course, ever since the Hong Kong Housing Authority ("HA") sold the public housing shopping arcades to Link REIT, such sentiments have gone forever.


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President, now the Government has the power, responsibility and ability to monitor MTR and request it to improve its service quality, but it can do nothing to Link REIT. Why? The main reason is that back then, the Government decided to sell The Link REIT, not keeping even one share. Now in retrospect, what is done cannot be undone. The Link REIT became Link REIT. It renovated the shopping arcades, giving them a splendid appearance through decorations. However, after the management of markets was outsourced, what happened eventually? All the small shop operators, facing the bullying contractors and outrageous increases in rents, had no channels to lodge complaints. Worse still, Link REIT further sold its less profitable shopping arcades one after another, in total neglect of the needs of the grass roots in the local districts. This is how Link REIT has maximized its profit while the residents have suffered in fear. The impact of Link REIT's sale of the shopping arcades was immediate. Today most of the Honourable colleagues have also touched on this point. Take my constituency, New Territories East, as an example. Wan Tau Tong Shopping Centre in Tai Po has faced the same situation. After the new owner took over the Centre this year, the lawyer of the new owner immediately issued a lawyer's letter to six small shops, one of which was a stationery shop which had operated in Wan Tau Tong Shopping Centre for 25 years. Since it could not afford the increase in rent, it was unable to stay. Apart from this, since Link REIT took over the cash cow, namely the car parks in public housing estates, the rents have skyrocketed. Not only has it abolished the monthly rental service, it has even rented out the parking spaces to people who are not public housing residents. It actually runs counter to the original intent that the car park service in public housing should serve the residents. President, during the era when the Housing Department ("HD") was in charge, open tenders would be conducted for the stalls in markets or shop units in shopping arcades, stating clearly the types of goods to be offered and the rental value. Regrettably, now the mode of operation of many markets which have been sold lacks transparency. There is no standard for reference, and the contract period will not be specified either. Very often, the tenants have to renew the contract on the condition that they pay exorbitant rents. In the end, the costs will definitely be passed onto the residents. Despite the emergence of so many problems now, Link REIT seldom makes any reflection. Worse still, Link REIT has recently announced that it will sell five of its shopping arcades, one of which is located in Sui Wo Court, Sha Tin. Being the first Home


Ownership Scheme court in Hong Kong, Sui Wo Court is, put it in a more pleasant way, situated on a slope commanding a beautiful view on the natural landscapes. But to put it bluntly, it is actually situated at a secular corner. In particular, most of the residents are elderly people. The difficulties they face are imaginable. The increases in rents and other difficulties to be faced by members of the public after Link REIT has sold the shopping arcade can easily be expected. The residents of Sui Wo Court have told me that apart from worrying about the change in mode of operation of the shopping arcade, they are even more worried that the problems of Link REIT which have existed over the years will continue to worsen, including the manners and arrangements of joint management, especially when the documents signed between HA and The Link REIT back then have never been disclosed. In fact, which areas around the housing estate belong to Link REIT and which areas belong to the Court? So far it remains a big question. As such, how will the households not worry? The biggest problem involves the maintenance of lifts, management of slopes, electricity fees, so on and so forth. Will this series of problems be borne by the owners in the end? This is a question we need to face squarely. President, the problem of Sui Wo Court is only the tip of the iceberg. In fact, we face many more problems similar to that of Sui Wo Court in Hong Kong. The present situation runs counter to the original intent of selling The Link REIT. Back then, when HA sold the public housing shopping arcades, it stated that public housing residents would certainly be benefited the most, but now in retrospect, we have seen protests take place one after another with outcries against unreasonable increases in rents and demands for Link REIT to act conscientiously. What will happen in the end? We will know the answer if we take a closer look now. President, in our view, to genuinely address the problem and achieve improvement, the methods are as follows: first, disclose the agreement signed between HA and The Link REIT back then, so that members of the public can really see where the Government's and Link REIT's responsibilities lie. Second, strengthen the existing outsourcing system managed by HD and the Food and Environmental Hygiene Department because if this part can be handled well, the service quality will automatically be enhanced, thus counteracting the dominance of Link REIT. Third, at present, there may be vacant stalls in many markets in the community. If the Government can rent out and deal with these vacant stalls


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flexibly as in the case of Plover Cove Road Market in Tai Po, it will be able to enhance the conditions of the market overall, and there will be no need to solely rely on Link REIT. Lastly, I hope Secretary Prof Anthony CHEUNG will make the following consideration: every time Link REIT sells one shopping arcade in the future, the Government buys one. Only then will the problem be genuinely resolved. President, we support the introduction of the force of fair competition to fight against Link REIT to end the sole dominance of this predator. We will support the amendments by Dr Fernando CHEUNG, Mr Andrew WAN and Dr KWOK Ka-ki but oppose the other amendments. I hope Secretary Prof Anthony CHEUNG will listen to our views carefully today. I so submit. DR JUNIUS HO (in Cantonese): President, I support the original motion proposed by Ms YUNG Hoi-yan. Although the reasons advanced by Members are not entirely identical, I agree that spilt water cannot be retrieved. Today, we have heard many Members yell and make criticisms, claiming the decision made by the Government back in 2005 to sell government properties is to blame for the situation today. From an objective point of view, however, to sell government properties to The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ('Link REIT')) was a foregone decision. What we can do now is to conduct a review rather than regret. Being a businessman or a company, Link REIT will regard profit-making and return maximization for shareholders as a matter of course. Hong Kong is practising capitalism, not socialism. It should be right for Link REIT, as a listed company, to operate and make profit in its own way with all of its might. Will Members pay its debts should it incur losses? Having said that, the Government seemed to have sold its properties at a very low or dirt-cheap price of $20 billion or so since the market value of these properties has surged to more than $120 billion today. Now, some people seem to be jealous of Link REIT making a fortune, but I think that such a mindset is not to be encouraged. If we calculate an average figure for the 10 000 000 sq ft of properties and 70 000 to 80 000 parking spaces possessed by Link REIT, we will find that each square foot is worth $10,000 only, whereas each parking space is only worth $200,000 to $250,000. These prices are absolutely reasonable. I believe no one would like to see their own asset depreciate.


Likewise, if some people who bought a Tenants Purchase Scheme flat for a few hundred thousand dollars find that it may now be sold for $1.5 million to $1.6 million, will they not feel very pleased? Of course, they will. It is not entirely fair to say that Link REIT has made no contribution at all. I am absolutely not speaking on behalf of anyone; I am purely discussing the matter for its worth. Why is Hong Kong so successful? It is because everyone is working hard to seize the best opportunity to bring their talent into play to achieve profit maximization. Hence, Link REIT ought to be so successful. Nevertheless, I am in favour of the original motion proposed by Ms YUNG Hoi-yan, why? Under such circumstances, we must also consider and balance the residents' needs. At present, prices are very high. What can be done should Link REIT maintain its practice? The residents will find it hard to bear. On the other hand, the Government has learnt from the bitter lesson. It can now maintain property price at $10,000 per square foot and parking spaces at $200,000 each. Certainly, it is an extreme example for a parking space to fetch up to $4 million in the market. Nevertheless, parking spaces sold for $500,000 to $600,000 can be found everywhere. Since the Government has both resources and land, it should identify land everywhere for housing production. Meanwhile, integrated markets and municipal services buildings should be built, too. In my opinion, this should be our solution. The Government must never say that it lacks land or money for investment. Actually, a number of municipal services buildings can already be built by just investing, for instance, $30 billion, for the benefit of the people. This is the real way out. I so submit. Although the reasons advanced are not entirely identical, I support the motion proposed by Ms YUNG Hoi-yan. Thank you. MISS ALICE MAK (in Cantonese): Originally, I wanted to lend Mr Holden CHOW a tube of cream so that he can put some cream on as he was given a slap for no good reason. If we want to talk about Link REIT, let us not talk about the past. We should point our guns outward, that is, to deal with Link REIT or enjoin the Housing Department to perform its duties, rather than accuse one another here. Ultimately, doing so will not help the local residents. Moreover, someone was given a slap for no good reason.


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President, I remember that when I joined the Legislative Council in 2012, the first oral question I asked was precisely about public markets. Over the past four years, I have been following this matter up. Unfortunately, the authorities have turned a blind eye to this matter and the conduct of this monster called Link REIT has gone from bad to worse and the public and small shop operators are subjected to increasing oppression. Since the listing of Link REIT in 2005, it has been carrying out what it calls "asset enhancement". The excuse for carrying out this kind of projects is to create a decent retail environment but the actual and objective outcome is that small shop operators have been driven to a dead end and the public have to bear the high prices of goods. According to the annual reports of Link REIT, in 2006, the average monthly rent of the retail properties under its management was $23 per square foot. By 2016, it has doubled to as much as $50 per square foot. Apart from enduring runaway rents, small shop operators may even find it impossible to continue with their business operation and may be forced out of business at any time. For example, several months ago, we began to follow up the case of Chung Fu Plaza in Tin Shui Wai. Since Link REIT started the renovation works in April, many problems have arisen and residents are affected. The number of entrances, the air conditioning and the lighting are all inadequate and the air is murky. A number of main entrances at the plaza and the market were closed, so business and the daily lives of the public were affected. When we held a meeting with Link REIT, it told us that after the completion of the works, residents would stand to be benefited but we can see many disadvantages before the advantages can be seen. Later on, the shop and market stall operators became concerned about whether or not the market would be resumed after renovation of the plaza, thus forcing stall operators to close down their businesses, but Link REIT did not give them any reply. Eventually, in September, market stall operators received notifications all of a sudden. It turned out that the axe was really falling on them. Not only did Link REIT give their plaza a makeover, it also wants to give their market a makeover and the market stalls will be resumed. In recent years, Link REIT continually renovated the shopping malls under its management and outsourced the management of its markets. Then, it would divest them in return for large sums of money and make profits. All that it cares about is money and nothing but money, so the interests of small shop operators


and the public are totally disregarded. Why can Link REIT act with such impunity? It is necessary to look at the provenance of this monster, that is, the Hong Kong Housing Authority ("HKHA"). In fact, when Ms YUNG Hoi-yan was delivering her speech, I noticed that she asked why the Government would allow The Link to divest its car parks and re-divest its shopping malls when it entered into those leases with The Link back then. According to those conditions, if the car parks are to be divested, HKHA must be in possession of not more than…that is, if it does not own any of the units in a housing estate, the car parks can be divested. If a shopping arcade is to be divested, the requirement is that HKHA does not possess any of the units in a housing estate. Why was it necessary to put in place such arrangements? Why can the car parks be divested so easily, thus leading to the situation we now see, that is, Link REIT sells its assets frequently and after the car parks have been sold, the new developers would parcel them out again and again after taking over, and then sell them? Why did this kind of thing happen back then? I think all parties who are concerned about this matter have to look at who drew up those leases back then. Where did those people who drew up and entered into those leases eventually go to? Did they join Link REIT? That Link REIT can raise rents and change the terms of the leases with impunity can be attributed to its monopolistic position. It is not providing services to residents in public housing estates, rather, it is only working for the interests of its shareholders. This is actually no cause for complaint but the basic needs of the grass roots in public housing estates are sacrificed. In the face of this situation, what did the Government do? All along, the Government has said that it can do nothing because Link REIT is a commercial organization. I remember that our Permanent Secretary once came to the Legislative Council to have discussions with us on many occasions but the Government remained unable to do anything, saying that Link REIT operates on commercial principles. Link REIT does not even have to come to the Legislative Council to meet with us and give explanations. However, is the Housing Department really at its wits' end? In fact, this is not true, rather, it is just unwilling to do anything. We have proposed a number of times that temporary holiday bazaars or temporary markets be organized in public housing estates, or more commercial facilities be placed under the management of the Housing Department. Is this feasible? However, even though we have make such suggestions many times, in the end, in which housing estate have they been put into practice? The answer is none.


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Another point is―since Secretary Dr KO is here, let us also talk about this―today, in spending a lot of time on discussing this issue, Members hope that in addition to promoting competition in public housing estates, the Housing Department can also reintroduce public markets managed by the Food and Environmental Hygiene Department in new towns or new development areas. I know that the Policy Bureau concerned has undertaken to reserve land for the construction of public markets in new development areas, for example, Tung Chung and Hung Shui Kiu. We thank the Policy Bureau concerned for taking on board this proposal put forward by the Federation of Trade Unions. However, we hope all the more that the Government will also continue to identify sites for this purpose in existing communities, for example, Tin Shui Wai and Tseung Kwan O. We know that the identification of sites is not easy but hope that the Secretary will not let any opportunity pass by. More importantly, just now, some Honourable colleagues also mentioned the standards related to the ratio of markets to population in the planning standards and guidelines. At present, after the revision of these standards in 2009, a host of factors has to be considered before a decision can be made on whether or not to build markets but in the end, not a single market has been built. In fact, insofar as the planning standards and guidelines are concerned, they are not within the ambit of the Development Bureau. This is because when the Development Bureau or the Planning Department formulates planning standards and guidelines, it has to consult the relevant government departments. For this reason, Dr KO, your Policy Bureau must ask the Development Bureau or the Planning Department to revise the planning standards and guidelines as soon as possible. In addition, just now, Dr Pierre CHAN―he is not in the Chamber now―also mentioned the problems related to private doctors in housing estates and this is actually very important. Not only doctors are affected but residents in public housing estates are also affected. Why is the ratio of private doctors to the population so low in Tin Shui Wai? Because in Tin Shui Wai, private doctors cannot afford the rent in the shopping malls managed by Link REIT, so they cannot enter the market there and in the end, it is virtually impossible for the public to rely on the private sector, rather, they have to seek treatment in public sector health care institutions. As a result, public sector health care institutions are jam-packed with people.


In view of this, we hope that the Government can summon up its determination and boldness in respect of this issue. I hope Secretary Prof Anthony CHEUNG can tell us at an early date what additional facilities the Housing Department can introduce into public housing estates to help the grass roots (The buzzer sounded) … solve the problems in their daily lives. PRESIDENT (in Cantonese): Miss Alice MAK, please stop speaking. MR CHU HOI-DICK (in Cantonese): Today, we have heard many Honourable colleagues say that the problems with Link Real Estate Investment Trust ("Link REIT") should be attributed to the mistakes made by the Government in the past. Over the past decade, this devil, Link REIT, was allowed to grow. Now, they turn to criticize Link REIT. The details of those problems have been discussed extensively, so I will not make any repetition. The first point I would like to make to colleagues and government officials is that after the divestment of public housing shopping arcades to Link REIT, the Government still spends tremendous sums of money on establishment and manpower costs every day to maintain the monopolization of Link REIT, or the real estate sector in a macroscopic perspective. For instance, now, in every public housing estate with shopping arcades of Link REIT, staff or security guards of the Housing Department ("HD") will ensure that no other business activities are carried out within the estate. This is the manpower costs spent on protecting the hegemony of Link REIT. As for public areas outside the estates, which are under the control of the Lands Department ("LD"), many hawkers may do hawking there, which in a way can offer more choices to citizens in Hong Kong. However, 2 000-odd employees of the Food and Environmental Hygiene Department ("FEHD") are responsible for preventing these activities from taking place. Moreover, there is the issue of monopolization of land. As a number of colleagues mentioned earlier, the refusal to build new markets is a decision made by the Government to ensure Link REIT and other real estate developers may maintain their monopolization, and this explains why the authorities are unwilling to allocate sites for the construction of markets. Secondly, I think, in examining the issues concerning Link REIT, we must make one point clear. In fact, Mr LAU Kwok-fan has mentioned this earlier. He said that the current practices of Link REIT had deviated from its original purpose at its listing. This is a point that warrants clear explanation. Indeed,


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Link REIT is now acting in line with its purpose of listing. When public assets are sold to consortia, the consortia will seek to maximize their profits by all means. All listed companies will think in this way. Requiring them to fulfil CSR, that is, Corporate Social Responsibility, is comparable to milking a bull, they will only regard this as kind of public image building, just like a vase for display. In fact, when the Government made this decision back then, the purpose of listing was set, yet it is only revealed to the public now and makes them angry. People may tell themselves that we have learnt some lessons in the incident, and some colleagues have also talked about learning lessons earlier. What have we learnt? Nowadays, we often say that we miss the small shops in the past, those operating in markets and shopping arcades under the management of HD and before the assets were sold to Link REIT. What do we actually miss? We miss public housing facilities subject to rent control; we miss the system under which small shop operators were protected by the Government, as well as the measures sparing them forced removal; we miss the era when large-scale privatization of public housing facilities had not yet taken place and we miss the era when the Government had not yet contracted out government posts on a large scale. Hence, when we talk about the lessons learnt in the Link REIT incident, we should realize that these lessons are still applicable today. In other words, Hong Kong should impose rental control again, and Hong Kong citizens should oppose the Government's decisions on privatization of public assets and the continual outsourcing of government posts. Thirdly, what can we do? In my view, in the past decade, we have focused too much on blaming the Government or Link REIT in this Chamber but putting too little effort in pondering ways on how Hongkongers should come forward to speak on this subject which affects their daily life. I am an unswerving believer in democracy. In Hong Kong, we often talk about striving for universal suffrage and democracy. Indeed, one of the core issues in the fight for democracy is to strive for the right to control space in the city. We should not allow consortia, real estate developers or even the Government to make arbitrary decisions and enjoy monopolization of land use in this city, which are preventing us from leading a life with dignity. These problems are more than obvious. There are a number of political parties and many colleagues in this Chamber, have we done our level best to make residents of all public housing estates to come forward? If 100 residents from each of the estates in Hong Kong could come forward, hundreds of thousands of residents gathered from the hundred-odd housing estates affected by Link REIT would come forward.


At hearing Mr LUK Chung-hung's earlier call on the Government to pluck up its courage, I hope that the Hong Kong Federation of Trade Unions ("FTU") with a membership of 400 000 will not only focus on mobilizing its members to take part in those "anti-China-insulting" assemblies but also call on grass-roots workers and residents of public housing estates to come forward to fight for and recover a life of dignity. If FTU would mobilize for this cause, I will definitely join them. In my view, the key emphasis of work of the democratic camp is to ensure that justice is done for the public. We should go to these public housing estates to tell the residents that if they are willing to come forward, public housing estates in Hong Kong will be in our control, and we will have say in the use of land in Hong Kong. I so submit. MR HUI CHI-FUNG (in Cantonese): Just now I heard Dr Junius HO say that being a commercial organization and a company, the Link Real Estate Investment Trust ("Link REIT") would of course seek to make the most money and attach great importance to profits under the capitalist system. What is wrong with that? However, I would like to point out that now Link REIT not only maximizes its profits. What tactics and approaches does it adopt to deal with members of the public and small shop operators? The answer is hegemony, exploitation and dirty tactics. Since the takeover by Link REIT, it often drives away small shop operators by increasing the rents. It has even closed markets and shopping arcades for the reason of poor operation, thus reducing the shopping choices of residents in public housing estates and Home Ownership Scheme ("HOS") courts. I have personally handled such cases, including one about a restaurant in Chai Wan. The tenancy agreement of the restaurant still had two more years to go before expiry. The owner was full of ambitions, determined to fly high in the business. So he renovated the restaurant in the hope of doing a great business during the tenancy period. Upon completion of the renovation of the restaurant, he was notified by Link REIT that it would terminate the tenancy with him in accordance with the spirit of the contract and asked him to move out right away in six months. Did it ever think about how the people doing business there could face their own business and go on with it? I have also handled a case in Siu Sai Wan Plaza. If we visit the plaza, we will find that there is no stationery shop. There was once a stationery shop which had operated for more than two decades, meeting the basic needs of


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members of the public and students in their daily life. Now Link REIT will lose no time in driving these shops away or increasing the rents. Even though some small shop operators really wish to stay, they cannot do so. Those who suffer in the end are only members of the public. I have also dealt with a case concerning Wah Kwai Shopping Centre in the Southern District, which was a case of divestment. Link REIT would divest those shopping arcades which it considered or claimed to be unprofitable to third-party investors. What happened to Wah Kwai Shopping Centre after it was divested? The whole shopping centre, together with the market, was closed off immediately for renovation. The bank counters, clinics, supermarket and wet market which had existed were completely gone overnight. The works were not conducted in phases. As such, where could members of the public go to buy foodstuffs? Where could the elderly people go? To the housing estates nearby? Link REIT did not make any consideration from the angle of members of the public at all. Is this what some Members have said earlier, "Business is business"? The crux of the problem is, be it closure of shopping arcades or markets, divestment of car parks or introduction of floating parking spaces, everything affects the interests of all the public housing and HOS residents in Hong Kong. It also involves the question of whether the Hong Kong Housing Authority ("HA") has fulfilled the statutory requirements. This is not simply a commercial issue. Hence, in retrospect, what did the Government pledge to do during the listing of The Link REIT? What does the Housing Ordinance stipulate? Under section 4(1) of the Housing Ordinance, HA has the duty to exercise its public power to provide housing and amenities, that means the most basic facilities in terms of clothing, food, housing and transport in our everyday life. If we live in a housing estate where even the most basic eateries, clinics, banks and stationery shops are unavailable, are we really living in a dead city where there is nothing? Back then, in dealing with Ms LO Siu-lan's judicial review, the Court of Final Appeal pointed out that amenities and usual basic facilities included car parks. Now we do not even have such facilities to meet the most basic needs of living. What solutions do we have? In 2006, the then Secretary for Housing, Planning and Lands said that when HA designed the divestment framework, it had considered that an appropriate mechanism be put in place to prevent The Link REIT from selling the assets and changing their purposes at will. If that is


the case, what are those divestments and sales which we are seeing now? Under what laws, agreements or restrictions does it act? Why does it turn out that it can divest the properties, outsource the management, exploit the people and increase the rents at will? Revisiting the Government's pledge and checking the laws, we know that the terms of the land leases or those of the agreement entered between the Government and The Link REIT back then may be the only straw we can clutch at. For this reason, many members of the public have been checking what ordinances can be invoked to stop them. As such, what a helpless state the petty masses and small shop operators are in! What else can we do now? As mentioned in the amendment proposed by Mr Andrew WAN of the Democratic Party, should the Government not restore the Hong Kong Planning Standards and Guidelines revoked by the Planning Department in 2009? The relevant planning standard for public markets is quite clear, that is, providing one public market stall for every 55 to 65 households, or 40 to 45 stalls for every 10 000 persons. This is exactly what the Government can do. It is a measure which can immediately resolve the plight now faced by members of the public and instantly foster competition to counteract the hegemony of Link REIT. Some people have proposed a buy-back. This certainly costs a lot of money. I think it can be explored, but what should be done right now is to provide more facilities of municipal services buildings, improve the facilities of existing municipal services buildings and provide parking spaces. Actually, the most fundamental approach is to introduce more competition with Link REIT and improve the well-being of the people. We should not let members of the public continue to live under Link REIT's hegemony and exploitation. Mr LEUNG, I so submit. MR LEUNG CHE-CHEUNG (in Cantonese): President, we are here putting our heads together to debate the motion on "Vigorously promoting healthy market competition to counteract the market dominance of Link REIT" proposed by Ms YUNG Hoi-yan today, I hope that we can find a better solution and answer to the problem which Chief Secretary for Administration Carrie LAM described as one of the three mountains. I hope that improvement can be made to the situation where members of the public are oppressed by this mountain of Link Real Estate Investment Trust ("Link REIT").


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President, to me and even to members of the general public, there have been countless occasions on which Link REIT reneged on its promises made before listing and refused to take up social responsibilities required of it. However, the Government's policy and attitude have been greatly disappointing. In the middle of 2015, Link REIT decided to close Tin Yiu Market in Tin Shui Wai, and residents have been forced to go to faraway places to buy foodstuffs. That Link REIT fleeced the grass-roots people to maximize its profit is most enraging. I, together with the local residents, organized a rally to oppose Link REIT, and we came to the Legislative Council to lodge complaints. I also asked an oral question in the Legislative Council, proposed an item for discussion in the Panel on Housing, conducted on-site visits and arranged for meetings with the senior management of Link REIT, with a view to conveying the residents' demands through various channels. However, on that day when I asked a question in the Legislative Council, the Secretary for Transport and Housing did not attend the meeting to reply to my question. Rather, it was the Secretary for Food and Health, Dr KO, who gave a reply. Secretary Dr KO, who was assigned by the Government to give a reply and who is not versed in the affairs of Link REIT, replied that Link REIT had not acted against the terms of covenants and therefore, the Government and the Housing Authority cannot interfere into the day-to-day operation and commercial decisions. In my view, the Government is at its wits' end, not knowing what to do with Link REIT and so, it can only evade its responsibility. Moreover, at the meeting of the Panel on Housing the Secretary refused to join us on a visit to Tin Yiu Market. The Secretariat subsequently informed me that the Bureau would not send anyone to join this visit and asked me if I would still proceed with it. President, Tin Shui Wai is a community with a population of 300 000 and yet, there is not even a single public market. This is also a direct cause of Link REIT becoming domineering and growing into a monopoly in Tin Shui Wai. The median household income of Tin Shui Wai is at the lowest end in the territory but the prices are the highest of all in Hong Kong. Some time ago, by referring to the annual reports of Link REIT, I made a comparison of the net income of Link REIT's shopping arcades in Tin Shui Wai over the past decade and found an increase of 197%, the highest comparing to over a decade ago, whereas the lowest still shows an increase of 91%. These are all shopping arcades in public housing estates, not in tourist or business areas but the rental


received has increased by 200%. How can this be achieved? The answer is to frenetically increase the rental of small shop tenants and solicit more consortiums with the means to afford the rental. The profits made by Link REIT entirely come from the PRH tenants. Apart from going back on its promises made before listing and failing to fulfil social responsibilities required of it, Link REIT has even issued countless "dishonoured cheques". After the closure of Tin Yiu Market, Link REIT said that it would provide the elderly in the district with meal delivery service for free. But as I said the other day, with the number of elderly people accounting for over 10% of the population in the district, such meal delivery service would actually be impossible and this would only end up as a "dishonoured cheque" issued by Link REIT. In fact, Tin Yiu Market has now been closed for the greater part of the year and I have not seen any so-called meal delivery service provided by Link REIT. On the contrary, it is the social welfare groups in the district that have performed this good deed. The Government amended the Hong Kong Planning Standards and Guidelines in 2008 to stipulate that in planning the provision of new public markets, apart from adhering to the original population-based planning standard, the Government would take into consideration other relevant factors, which include community needs, the provision of public and private market facilities nearby, the number of fresh provision retail outlets in the vicinity, and so on. The Government rejected the need to further provide public markets in Tin Shui Wai on the ground that there are already several markets under Link REIT in Tin Shui Wai. It is precisely this policy of the Government which has led to the hegemony of Link REIT. Years ago we began to see a trend of the grass-roots people and the disadvantaged being made to bear the brunt by Link REIT in its modus operandi, but in its planning standards and guidelines the Government has still treated Link REIT as its "teammate" by placing Link REIT in the role of assisting in the provision of social services. I very much hope that the Government will expeditiously change this mentality because in reality, it cannot be clearer that Link REIT is not just a private enterprise geared towards only at making money but the sizable profit made by it comes from the pockets of the grass-roots people. It is imperative for the Government to amend all the planning standards and guidelines for markets, shopping arcades and car parks and proactively request


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the Competition Commission to investigate the mode of operation of Link REIT while setting up more bazaars in the districts, in order to counteract the market dominance of Link REIT. I so submit. MR CHAN HAK-KAN (in Cantonese): President, in July this year, the shopping centre of Wan Tau Tong Estate, Tai Po, which is in my constituency, became the focus of attention in society because six small shops which had been in operation for over a decade or two since the year of intake were forced to leave by the owner and hence faced closure of business. However, this owner is not Link Real Estate Investment Trust ("Link REIT") that we have been criticizing in unison today but the successor of Link REIT and that is, the new owner. It is becusae Link REIT has sold the shopping centre of Wan Tau Tong Estate to this new owner. The small shop tenants had actually signed a contract for a term of two years with Link REIT, and not long ago a small shop tenant even spent some $10,000 or $20,000 buying a brand new split-type air conditioner. President, you may think that some $10,000 or $20,000 may not be a large sum of money to us, but it is an enormous investment to small shop tenants. The new owner made use of the terms of the tenancy agreement to require these small shop tenants to move out before the expiry of the tenancy. The shop tenants were in great distress while residents of the estate were also reluctant to part with these shops for these shops had been in the neighbourhood throughout the years. I, together with YU Chi-wing, District Council member of that district, and representatives of the shop tenants, had met with the new owner on this issue to urge the new owner to reconsider the decision. Today, the motion proposed by Ms YUNG Hoi-yan as well as the remarks made by most Members aim to speak up for the small shop tenants, hoping that small shops can be preserved in the communities. In this connection, I have seen that different political parties and groupings share the same position. Therefore, it is indeed unnecessary for us to attack each other insofar as this issue is concerned. The Legislative Council should stand united to make a solemn protest against Link REIT. I wish to point out in particular that on this incident concerning the shopping centre of Wan Tau Tong Estate, since Link REIT has already sold this shopping centre and it is the new owner who forced the shop tenants to leave, I


think it is useless no matter how we criticize Link REIT here because it can say that it has already sold the shopping centre and whatever happened after the sale has nothing to do with it. As a matter of fact, the shopping centre of Wan Tau Tong Estate is not an isolated incident. What we have seen is a trend. As colleagues also said earlier, the situation now is that more and more shopping arcades are put up for sale by Link REIT. Therefore, what warrants our consideration now is how to counteract these practices of Link REIT because we have to protect the small shop tenants. As things have come to the present state, apart from calling on Link REIT to take up its social responsibilities as some colleagues have suggested, it is most important to identify ways to upgrade the business competitiveness of public housing estates. We all know that a monopolized business surely levies expensive prices. In fact, we have seen that some public housing estates are themselves small communities, and when designing a small community, the Government will provide a small shopping centre for this small community. Therefore, the residents will rely on this shopping centre to meet their basic necessities and most aspects of living and this, to a certain extent, already constitutes some sort of monopolization. I think we should break away from this past concept of designing public housing estates. We should not continue to allow a shopping arcade to monopolize the daily living of the residents in a public housing estate. In this connection, I agree with the proposal in the original motion proposing, that we should not be confined by the existing modes or patterns. We should think about how more spaces can be made available in a public housing estate for the provision of other forms of business activities, rather than being limited to within a shopping arcade only. These spaces that we are talking about do not necessarily have to be very large in size, nor is it necessary to provide fixed stalls. Trials can be done in certain public housing estates as a start. For example, we have seen that morning bazaars are set up in some places and this is a very good proposal. Pilot schemes can be implemented in some estates and further extended to other estates or courts if good results are achieved. Secretary Prof Anthony CHEUNG may consider it difficult to do so and hold that many problems may arise, or as many of the fixed places of these estates already have specified uses and if morning bazaars have to be set up, Secretary Dr KO may caution us about the emergence of a great many problems, such as those concerning hawkers, triads, environmental hygiene, and so on. But should we refrain from taking actions because of minor, trivial problems? How difficult are these problems? Are they more difficult than buying back Link REIT? I


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believe Members have a clear idea about all this. In fact, it takes a sky-high price to buy back Link REIT, and it is not a practical option either. We should solve the problem concerning Link REIT in more practical, less expensive ways, rather than adopting the most expensive, most foolish way right at the beginning. Therefore, I think both Directors of Bureau must take into consideration any proposal which is effective and less expensive than buying back Link REIT. Moreover, I wish to take this opportunity to suggest for consideration another solution to the monopolization by Link REIT. Currently, some new public housing estates are built in the vicinity of old estates, or in the course of redevelopment, shop tenants of the old estates may be given priority in applying for removal into the shop premises in new estates, in order that the old shop tenants can, at a reasonable price, continuously carry on their business to serve the local residents. Although this may not be applicable across the territory, it can be implemented more easily and is worth consideration. (THE PRESIDENT'S DEPUTY, MS STARRY LEE, took the Chair) Deputy President, although we have all along heard voices in the community calling for a buy-back of Link REIT, we have to be pragmatic. Buying back Link REIT at this time is tantamount to subsidizing speculators in the stock market with taxpayers' money. Is this a desirable approach? Therefore, I think we should create a competitive business environment by all means to restrain Link REIT from increasing the prices arbitrarily and this can, in turn, provide the public with an another choice of shopping. As for our proposals, the Government will more often than not say in response that their implementation would be difficult and impossible, but I believe this is a technical problem, not an unsolvable problem. The key lies in the Government and the two Directors of Bureau being genuinely committed to providing an additional choice to the residents and addressing squarely the problem of monopolization by Link REIT. In this connection, I hope that the two Directors of Bureau can give a more positive reply, instead of saying "No" to us right at the outset. Deputy President, I so submit.


MR CHAN KIN-POR (in Cantonese): Deputy President, Link REIT has adopted a commercial mode of operation since its listing, managing the commercial and car parking facilities in a large number of housing estates. Originally, a commercial mode of operation will help to enhance its operational efficiency and improve its services. However, if it only cares about pursuing profits and forgets about its corporate social responsibility, even if it can make huge profits, in the end it will only be branded as "unscrupulous". Eventually, the enterprise itself will have to pay a price. The present business approach of Link REIT which only cares about maximizing profits can no longer keep up with the international business community. In fact, the business sector has generally recognized for decades that an enterprise must undertake its social responsibility. Moreover, the more money it makes, the greater the responsibility. Simply put, the business sector agrees: first, society will only respect commercial organizations which profit in a rightful way, that means making money in a fair manner. Second, commercial organizations should repay society appropriately in order to establish a good brand name. It has long been proven in the international business community that no matter how much money is made, an enterprise which ignores its social responsibility will only be branded as "unscrupulous" and will not gain any respect in society. Sooner or later, it will have to pay the price. Regrettably, Link REIT has chosen this path. Back then, when the Government sold the shopping arcades in public housing estates, one of the important purposes was to introduce professional management to improve and enhance the service standard. As we all remember, at that time most of such shopping arcades had low operational efficiency with a poor environment. Since the takeover by Link REIT, it has indeed provided professional management. Both efficiency and the environment have seen enormous improvement. However, Link REIT has forgotten that its edge actually hinges on the vast support of public housing residents. Yet given the monopolization of the market, Link REIT has eventually developed into a freak which seeks to maximize its profits, completely forgetting its responsibility and disregarding the residents' needs. Hence, I support Ms YUNG Hoi-yan's original motion on vigorously promoting healthy market competition and introducing measures to counteract the dominance of Link REIT. Some people have proposed buying back Link REIT, which I consider impractical and unreasonable. Link REIT's present market value has reached $115.6 billion, more than four times higher than the price when it was listed. If


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the Government wishes to recover the decision-making power, it will have to buy back more than 50% of the shares at a cost of at least $58 billion. Moreover, it has not taken into account that the buy-back will definitely cause an upsurge in the share price. In the end, the Link REIT management will, on the contrary, consider themselves very successful in causing Link REIT's value to substantially appreciate. It will also send a wrong message to the community which indirectly encourages other enterprises to follow suit in order to induce acquisition by the Government. For this reason, instead of a buy-back, we had better use the money to introduce healthy competition, making use of the market power to force Link REIT to return to the right track, and this will certainly be more beneficial to society. As mentioned in the original motion, the Government should build public markets in places where community facilities are inadequate. It should even build large municipal services complexes in various districts. These are long-term solutions, but we also need some interim measures to resolve the plight of the residents currently. The setting up of temporary bazaars is a good suggestion, but according to past experience, the selected sites must be convenient to the residents. If they are too far away, they will be unable to attract residents and fail in the end. Meanwhile, Mr SHIU Ka-fai's amendment has mentioned the re-assignment of spaces on the lower floors, such as ground and podium levels, for retail purposes. I support this proposal. In fact, in the early years, there were a large number of shops on the ground floor in public housing blocks providing the residents with plenty of affordable commodities. It was not until the new public housing estates were built with shopping arcades that such ground floor shops gradually disappeared. As a matter of fact, proper use of the large amount of space currently available on the lower floors in public housing blocks, coupled with appropriate management, can definitely release a lot of retail spaces for lease by small shop operators. Apart from these proposals, I think consideration can be given to converting school premises and other community facilities which are vacant into temporary municipal services complexes. The two lowest floors can be used as wet goods and dry goods markets while the other floors can serve as reading rooms or for leisure and cultural purposes. Not only can it benefit members of the public and small shop operators but also revitalize the vacant buildings, achieving several objectives in one stoke. Apart from setting up temporary


bazaars, I think consideration can at the same time be given to moderately relaxing the hawker policy, appropriately issuing temporary licences to specific persons, such as the unemployed, with a time limit, and allowing hawking only at certain specified locations, thereby helping more disadvantaged people. Now the most severe criticism against Link REIT is that it has driven away small shop operators and caused the commodities in markets to become increasingly expensive. Focused exactly on the present situation, these proposals can make up for Link REIT's inadequacies and instantly bring convenience to the residents. It can also impose on Link REIT pressure of competition and make it reform. Nevertheless, even if these proposals are feasible, ultimately it will require determination on the Government's part to act. Otherwise it will only be empty talk. The Government has always played safe in its work at the district level. Usually it will not carry out any bold reform without full confidence. However, now it is about the well-being of the petty masses. I very much hope that the Government can resolve to implement the relevant proposals boldly. I so submit. MR CHAN HAN-PAN (in Cantonese): Deputy President, in the face of the problems concerning Link Real Estate Investment Trust ("Link REIT"), we should be united on the same front. That Link REIT has broken its promises is a consensus long since reached in the community and the public are angry about it. As for the Members of this Council, we should be united on the same front when we speak today. However, Mr Alvin YEUNG, as a matter of his usual style, took advantage of others in making his remarks. He mentioned the closure of the cinema at Citygate, claiming that Mr Holden CHOW's earlier promise to follow up the case had ended up with the closure of the cinema. Unfortunately, his attempt to piggyback on others this time around has backfired, revealing his skin-deep knowledge of the matter. The closure of the cinema at Citygate was a result of the overhaul of the shopping mall, which will be reopened in 2019. I hope that next time when he tries to piggyback on others, he had better do some more homework. In fact, we often come across these situations. Whenever problems arise, they only resort to criticisms. Yet, the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") follows up issues in a completely different way. They choose to level accusations and criticisms, and


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then hog the limelight to tell the whole world that they have done their part. As for DAB, we give priority to solving problems and working in a pragmatic manner. Hence, the district work of DAB is very practical. It is meaningless for him to turn green with envy. He should identify his own inadequacies through self-reflection and seek improvement rather than attacking others arbitrarily. Moreover, Dr CHENG Chung-tai mentioned what we had done in the strike staged at Cheung Fat Market. DAB hoped to help the tenants to stand up for their rights, yet it also wished to facilitate both sides in entering into dialogue. Hence, during the strike of the tenants, I had arranged an opportunity for dialogue between the tenants and Link REIT. Though the negotiation eventually broke down, we had tried our best wholeheartedly. I had also met with the Director of Food and Environmental Hygiene and made repeated requests to the Food and Environmental Hygiene Department ("FEHD") for expeditious announcement of availability of vacant stalls at public markets, hoping tenants affected could find new stalls in other public markets. In this connection, Dr CHENG Chung-tai pointed an accusing finger at DAB for helping the tenants to go on strike, which eventually led to closures. I hope Dr CHENG will tell us what he has done for the tenants apart from levelling accusations and criticisms. We have had many discussions about the problems of Link REIT in recent years, mainly about it breaking its promise. First, Link REIT has broken the promise it made at the very beginning, that is, to maintain a portfolio of retail properties of a convenient nature, primarily serving the basic consumer needs of residents in the vicinity. However, after listing, Link REIT accorded priority to the interests of shareholders, stifled many small shops with local colours and increased rental constantly, and thus significantly reduced the shopping choices available to the people. Second, Link REIT has promised to make its properties long-term investments. Yet, in reality, Link REIT has failed to take proper care of the properties it took over effortlessly. This problem is particularly obvious for neighbourhood or community shopping arcades serving public housing estates. Link REIT treats small shop tenants to endless increases in rent, and small shop tenants can only choose to close down when they can no longer afford the exorbitant rents. On the other hand, large-scale chain stores refuse to open shops in these shopping arcades as they consider the business there non-profitable. As a result, most of the stalls in those shopping arcades are left


vacant. When Link REIT has caused the death of these shopping arcades, it simply goes for the money instead of keeping the assets, like killing the chicken to get the eggs, and starts selling these shopping arcades. As a result, the residents can go nowhere to do their shopping. Third, Link REIT has promised that car parking facilities are mainly provided for tenants of retail properties, residents in the vicinity and visitors, and these facilities will not be divested in general. Regrettably, Link REIT eventually exploited the exemption clauses in the requirements to break its promise of not divesting car parks. As a result, the ownership of parking spaces becomes fragmented and the management difficult to handle. New owners adopt new operation models which include the cancellation of 60% discount concession used to be provided to persons with disabilities and implementation of measures rendering car park tenants losing their original parking spaces suddenly. In fact, to certain professional drivers, they really do not know what to do when they lose their parking spaces. Hence, Link REIT has aroused a lot of grievances among the public in respect of car parking facilities. Another situation is really infuriating. We had been striving for Link REIT to stop selling its properties and outsourcing its shopping arcades to contractors for some time. Link REIT eventually announced in June that it would temporarily stop the sale of shopping arcades and outsourcing of markets to contractors. When I heard the news, I thought the public had eventually won Link REIT over and Link REIT had finally compromised. Yet, I could not rest assured about that. I then wrote to Link REIT to ask if they had any plan to sell the wet market or shopping arcade in Shek Wai Kok Estate, Tsuen Wan, and they told me in reply that they had no such plan. All of a sudden, in October, Link REIT went back on its words. In other words, they told us on the one hand that they had no plan to sell the properties, but carried out the deal on the other. Hence, Link REIT has no credibility. People with no credibility cannot be trusted. We urge the Government to work harder in counteracting Link REIT's practices. The authorities should pay special attention to increasing shopping arcades and wet markets, a point which has been mentioned by many Honourable colleagues. However, Members may have overlooked the problem with car parking facilities. In recent years, the prices of parking spaces are very high. The prices of spaces in Link REIT car parks keep rising, which may be higher


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than prices of parking spaces in other shopping arcades in the same district. For this reason, I urge the Government to address the issues of car parking facilities in addition to the problems with markets and shopping arcades under Link REIT. With these remarks, Deputy President, I support Ms YUNG Hoi-yan's motion. MR CHAN CHI-CHUEN (in Cantonese): Deputy President, today, many Members have spoken quite a lot on the tragic history of public housing tenants and small shop tenants being oppressed by The Link Real Estate Investment Trust ("The Link"), which is now known as Link Real Estate Investment Trust ("Link REIT"). Instead, I would like to talk about The Link's history of getting rich. The Government sold the shopping arcades of public housing estates to The Link at rock-bottom prices. In two days it will be the 11th anniversary of The Link's listing on 25 November 2005. Eleven years ago, its stock price was $10.3, compared to today's closing price of $52.1. Since 2006, dividend distribution by Link REIT has totalled $24.6 billion, which is even higher than the funds raised upon its listing. Let us take a look at those Directors of Link REIT. Let me take a Non-Executive Director as an example to see how he managed to make handsome gains. I will not name him, a well-known Professor in Economics who retired from directorship in July. He attended only a few meetings annually and from 2009 till his retirement this July, he was given as many as 230 000 shares, most of which were awarded to him for free. The market value of these shares is currently worth over $12 million. Even though he has retired, he can continue to receive dividends amouting to over $300,000 annually if he still holds the shares. From Link REIT's history of getting rich and the stories of how its Directors and the fund companies made a fortune, we can see that all of them have made fat profits. Looking at it from an opposite angle, these profits actually come from public housing tenants and small shop tenants who made up the tragic history that we have been talking about today. According to its annual reports, the rate of annual rental adjustment for shops under Link REIT is over 20% on average. The current average rental is $53 per square foot, which is almost 50% higher than that of $38 in 2012. The average monthly rental of parking spaces in car parks also increased from $1,200 in 2012 to the present level of over $2,000 this year.


Although these rampant rental increases have enabled Link REIT and its shareholders to reap substantial profits, they remain insatiable. Monsters, so to speak, simply eat up as much as is available. They have reaped huge profits from divesting the shopping arcades. For instance, the sale of nine shopping arcades from March to April in 2016 has generated a profit of $3.5 billion, and the consortiums taking over the shopping arcades have oppressed the small shop tenants and even social welfare organizations way more ruthlessly. One of these consortiums is Prosperous Glory Investment (H.K.) Limited which has since 2014 acquired eight shopping arcades and car parks from Link REIT, including the shopping centre of Wan Tau Tong Estate. As mentioned by Members earlier, the acquisition was completed in March this year, and after a short period of five months the company proposed major renovation works and as a result, six shop tenants, including a stationery shop, a scale model shop and a hair salon, all received a notice and had to wind up, close down and be driven away a year earlier than expected. It is reported that in many of the divested shopping arcades, after the small shop tenants were driven away, large-scale chain stores and even shops closely related to the owner were brought in. Shopping arcades of public housing estates have hence degenerated into the playthings of these large corporations and moguls, while the small shop tenants are driven to a dead end. Some owners who acquired shopping arcades of Link REIT have even divested the parking spaces of the car parks. The divestment of parking spaces in a shopping arcade alone can generate a profit exceeding $100 million, but public housing tenants can no longer rent the parking spaces. In fact, as we can see from the prices of the divestment of shopping arcades by Link REIT before, it is not infeasible for the Housing Department ("HD") to buy back some of the shopping arcades. It takes $3.5 billion to buy back nine shopping arcades, and with an extra $1 billion or so HD can buy back several shopping arcades which are monopolizing the market in the districts. I certainly support the proposal made by many Members for the Government identifying land in districts monopolized by Link REIT to provide more public markets and set up bazaars, but the Secretary definitely will not take on board this proposal. Public markets have already been a big headache to the Secretary as there are problems such as poor business, and the Secretary is clueless as to what should be done and worse still, he was even checkmated by the Audit Commission. We consider that the general direction is certainly to provide more choices for the residents, and this can also give a slim chance of survival to the small shop tenants oppressed by Link REIT.


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Deputy President, the motion today is proposed by Ms YUNG Hoi-yan of the New People's Party and this is actually a bit ironic because the New People's Party had a part to play in enabling Link REIT's monopolization of retail markets in public housing estates nowadays. I have looked up the voting records. On 17 December 2008 when the financial tsunami was running its course and there were wailings in despair everywhere, Dr LEUNG Ka-lau, noticing that the stock price of The Link had fallen quite considerably, proposed a motion on buying back The Link. The closing stock price of The Link was $13.7 on that day but I have looked up the voting records and found that at the meeting that day, Mrs Regina IP neither made a speech nor cast a vote and in the end, the motion was, of course, negatived at separate voting because there were not enough supportive votes in the group of functional constituencies. Members must bear in mind that the stock price was $13.7 that day and it is $52.1 today. Members said that as its stock price is too expensive today, buying back Link REIT would favour the shareholders of Link REIT. But they still refused to buy it back when the stock price of The Link was less expensive. Four years down the line, on 21 November 2012, Mr LEUNG Kwok-hung proposed to buy back the shares of The Link. The closing price was $42.2 that day, which was already three times the price in 2008 when Dr LEUNG Ka-lau put forward this proposal. At that time both Mrs Regina IP and Mr Michael TIEN voted against the motion. Today, the stock price has again gone up by nearly one third, and let me say again that the closing price is $52.1 today. When the stock price is expensive, they said that a buy-back would be not worth it. But in the long term, if another once-in-a-decade stock crash occurs, I think the Government should seize the opportunity to buy back the shares of Link REIT when the stock price falls, in order to stop Link REIT from further wreaking havoc in Hong Kong. I hope that by then, particularly Members of the New People's Party can rectify their mistake and will not stop the Government from buying back Link REIT at a reasonable price again on the ground that the stock market is unstable and that stock price may still fall after buying back its shares. I so submit. MR LAM CHEUK-TING (in Cantonese): Deputy President, I grew up in Tuen Mun and the school I went to was also located in On Ting Estate, Tuen Mun. This estate is adjacent to Yau Oi Estate, where many small shops with a human touch could be found. After growing up, I moved out of Tuen Mun.


Occasionally, I would go back there to visit my parents. I found that those shops have changed beyond recognition. Nowadays, shopping arcades are occupied predominantly by chain stores. The prices of goods are so high that they constitute a problem. And I too find them to be very high. In public housing areas, there are many elderly and grass-roots people who cannot bear such high prices at all. However, we can see that sometimes, many customers from other areas will visit these shopping arcades, whereas the number of local customers is on the decrease. Apart from the fact that an increasing number of chain stores and a decreasing number of small shops can be found in these shopping malls, we also find that many of the things that we used to cherish, such as the "dai pai tong" culture, are also on the wane. Why? Because Link REIT's business strategy is growing increasingly ambitious. It is charging ever higher rents and imposing more and more restrictions, thus making it increasingly difficult for small shops with traditional characteristics to operate. This is also one aspect of the local culture in Hong Kong but it is now disappearing. Apart from shopping malls, we can also see that Link REIT is divesting many car parks to other private enterprises, which will further divest them. Sometimes, Link REIT did not divest the car parks but turned the parking spaces in them into floating ones. Many members of the public complained to us that although they had paid monthly rentals for their parking spaces, they found that on rainy and stormy days, no parking spaces were available when they returned to their housing estates because the parking spaces at all levels had been occupied by vehicles paying hourly parking charges. As a result, they could only park their cars in the streets when a typhoon hit. This is most ridiculous. It also underscores Link REIT's culture of "reaping the maximum profit". It hopes that all parking spaces are occupied at all times, so that a constant flow of rental income can be pocketed. Of course, now it is a thorny issue indeed to deal with matters related to Link REIT. The Democratic Party advocates that markets operated by the Food and Environmental Hygiene Department ("FEHD") should be built at suitable locations in various districts. Actually, it is hoped that competition and counterbalance can be introduced into the market. However, for many years, the Government has kept saying that it is very hard to find sites, that this is not feasible, and so on. Does the Government really has great determination and


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sincerity in doing this? We cannot see any. On the contrary, we find that the Government is apparently turning a blind eye to the livelihood problems caused by Link REIT. Buying back the shares of Link REIT is a long-term goal which can hopefully be achieved. However, as Mr CHAN Chi-chuen said just now, the current share price of Link REIT is really quite high. In view of this, can the Government consider doing so when its share price is lower? I wish to say to the Government and the general public that in fact, Link REIT represents quite a painful lesson for the whole community. This issue related to Link REIT has made the whole community increasingly riven. The grass roots feel that their rights are not protected. They find that the shopping malls in their living environment seem to get ever more splendid but their life is getting ever more miserable because the rising prices of goods are becoming increasingly unaffordable to them. We have to learn this lesson. In the past, the Democratic Party supported the listing of The Link REIT. I have also said before that the decision made back then was wrong but we hope that this mistake can be remedied as far as possible. I so submit. Thank you, Deputy President. MR ABRAHAM SHEK: Deputy President, Link Real Estate Investment Trust ("Link REIT") is like a triad society born in the slum area. It derives its profits from the poor. As the saying goes, "You can't have your cake and eat it too"; this is exactly what the whole motion is all about. With the market value of Link REIT surpassing $100 billion, it is clear that the listing of Link REIT was the correct commercial move to unleash the true asset value of markets, shopping malls and car parks that were once managed under the incompetent and bureaucratic leadership of the Housing Authority ("HA"). The benefits derived from the exercise were so manipulated by the then officials and venture capitalists that they went solely to Link REIT at the expense of the needy. However successful Link REIT's exercise had been, the listing came at a price. Many small tenants of Link REIT felt aggrieved at being forced to close their businesses or move because they could not meet the rental increases. Grass roots are


suffering as their livelihood has not been adequately taken care of following Link REIT's new policy, which aims primarily at profit maximization, while the original policy of HA placed more emphasis on protecting their livelihood. The intention was good but they failed to achieve it. This June, Chief Secretary Carrie LAM portrayed Link REIT as one of the "three big mountains" (a metaphor for the "three problems undermining social harmony", with the other two being the MTR Corporation Limited, of which I am an independent board director, and the Mandatory Provident Fund) that Hong Kong needs to rid of. Meanwhile, Chief Executive LEUNG Chun-ying stated that "Link REIT has a particular corporate social responsibility because they serve the needs of public rental housing tenants." Regrettably, both the Chief Executive's and the Chief Secretary's critical remarks failed to pinpoint why Link REIT as a listed company acted wrongly in maximizing its profit for its shareholders―which was stated in its listing documents―rather than pursuing a policy of corporate social responsibility. Like the developers that I represent, the majority of these listed companies does have a corporate social responsibility. For Link REIT, the concept of corporate social responsibility is not in its dictionary―sad and pathetic. Deputy President, I must emphasize that privatization itself was not wrong despite the undesired outcome of Link REIT's listing. The origin of today's problem with Link REIT was the Government's disposal of public assets at a knock-down price, which was a gross blunder. Prior to privatizing HA's assets, the Government had been forewarned, and I was one of those who warned it, that its approach to calculating HA's assets was on a suicidal path. But the Government refused to listen and insisted on selling HA's assets at an extraordinary cheap price and even did not agree to put up a call for tenders. They went in with a single mind to give it to Link REIT. For instance, if I may just quote, the price of a parking space in the New Territories was set at $47,000, compared to the then market price of $200,000; from $200,000 they reduced to $47,000. Likewise, Lok Fu Place was valued at only $3,000 per sq ft, a price that did not even cover the land premium. As a result, only the shareholders of Link REIT benefited at the expense of the needy. In hindsight, should the Government and HA not bear the bulk of the blame for their miscalculations and bad handling of the privatization of HA's assets? Has Link REIT not become a scapegoat for the Government's errors? The Government's actions were to the detriment of public coffers and to people living in HA estates.


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Deputy President, it is no use crying over spilt milk and buying back Link REIT is not a viable option as its market value has already surpassed $100 billion. It would be more constructive for the Government to make use of public money to increase investments in our education, welfare and health care services. It is also irrational to transfer Link REIT's lucrative assets back to the bureaucratic leadership, which has been proven lax and incompetent. As regards the alternative of buying back Link REIT, the Government could consider setting up temporary bazaars and build more public markets to increase competition and hence improve the grass roots' standard of living. This idea of using markets to increase competition are steps in the right direction, but they are easier said than done. For one thing, the Government has again failed to identify adequate land sites even for meeting people's housing needs, much less finding sites to build more public markets near public housing estates. For another, supply does not create its own demand, as we have seen in the failure of the Tin Sau Bazaar, which was introduced by the Government and managed by a non-government organization. After all, running and managing a business is entirely different from doing charity or welfare work. What the private sector is capable of (The buzzer sounded) … achieving may be a mission impossible for the Government … DEPUTY PRESIDENT (in Cantonese): Mr Abraham SHEK, your speaking time is up. MR ABRAHAM SHEK: Thank you. (Mr LEUNG Kwok-hung stood up) DEPUTY PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, do you have a point of order? MR LEUNG KWOK-HUNG (in Cantonese): Yes. Deputy President, why do you not wear a scarf when the weather is cold?


DEPUTY PRESIDENT (in Cantonese): It is not a point of order. MR LEUNG KWOK-HUNG (in Cantonese): My point of order is that Article 75 of the Basic Law stipulates that "the quorum for the meeting of the Legislative Council of the Hong Kong Special Administrative Region shall be not less than one half of all its members". According to my observation, the number of Members who are now present in the Chamber is far less than one half of all Members. Will the Deputy President please take note of it. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber) MS TANYA CHAN (in Cantonese): Deputy President, I have to thank the Honourable "Long Hair" for inviting many Members back here to listen to my speech. Today, we are discussing the motion proposed by Ms YUNG Hoi-yan. If we have to describe the present Link Real Estate Investment Trust ("Link REIT"), I believe to most people, the best description is a pariah. For the residents of Tin Shui Wai who petitioned outside the shareholders' meeting of Link REIT in July and bear expensive food prices on a daily basis as well as the small shop operators who were driven out of business by the new owner after Link REIT had divested the shopping centre in Wan Tau Tong Estate in Tai Po early this year, it is certain that they all hold deep hate of Link REIT. However, the petty masses are not the only group of people who despise Link REIT as it seems that senior officials are also dissatisfied with the performance of Link REIT. It has been reported that in May this year, Chief Executive LEUNG Chun-ying―also known as "689"―indicated on a private occasion that Link REIT did not fulfil its social responsibility. Numerous Honourable colleagues have also mentioned earlier that even Chief Secretary for Administration Carrie LAM had described Link REIT as one of the "three mountains". In fact, Secretary for Security LAI Tung-kwok also disapproved of the way Link REIT


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divested its shopping arcades and drove small shop operators out of business that he joined the signature campaign against such problems. Apart from the shareholders of Link REIT, I wonder who will be happy with the existence of Link REIT. Link REIT launched extensive publicity campaigns since its listing in 2005. Perhaps Members still remember that Link REIT published many advertisements around half a year ago. If Members have paid attention to those advertisements, they may recall that one of the advertisements featured a mother and a daughter who were playing in a shopping mall, and the mother was wearing a huge diamond ring. Another advertisement featured a young couple. Although they were eating takeaways at home, the view from their apartment is magnificent and the interior decoration is most exquisite, too. While ordinary public housing estates only have a view full of buildings, I do not understand why the view from their apartment is so wonderful in the advertisement. Undoubtedly, Link REIT also attempted to discard its negative image by launching many other advertisements. Yet, is it truly an easy task to achieve? Since the listing of Link REIT, in fact, demands were made within and outside the Council with great reluctance urging the Government to spend a substantial amount of public money on buying back all or the majority of the shares of Link REIT, and to gain control over the Board of Directors of Link REIT by making use of the status of the sole shareholder or controlling shareholder. Nonetheless, with the development of Link REIT in the last decade, is the solution of buying back shares actually feasible? It seems that such a proposal is not really practicable because there has been a substantial change in the identity of Link REIT over time. When Link REIT was listed, all of its assets were shopping arcades, markets, shops or car parks and the like which were originally under the Hong Kong Housing Authority. In July 2011, Link REIT acquired Nan Fung Plaza in Tseung Kwan O from Nan Fung Group at a cost of $1.17 billion, marking the start of its acquisition of assets from private companies. Since then, Link REIT continued to make acquisitions and the scope extended from retail shopping arcades to offices. In February this year, Link REIT acquired 99% of the ownership of the Trade and Industry Department Tower in Mong Kok at a tender price of $5.91 billion, indicating an official start of making investments in commercial buildings.


Moreover, Link REIT also has business operations overseas. In April 2015, Link REIT acquired a shopping arcade in Zhongguancun in Beijing, formally extending its scope of operation to China. In July of the same year, Link REIT acquired two commercial buildings and office towers, together with their shops and parking spaces, in Shanghai at over RMB 6.6 billion, which is the largest acquisition made by Link REIT so far. Up to this point, the essence of Link REIT has changed substantially since its listing. Furthermore, Link REIT started to divest its shopping arcades since 2014 and has sold shopping arcades and car parks of 24 housing estates so far. In 2015, the shareholders' meeting of Link REIT granted approval for the plan of allowing Link REIT to engage in property development. Just 12 days after the end of the shareholders' meeting, Link REIT expeditiously formed a consortium with Nan Fung Group and succeeded in bidding for a commercial lot in Kwun Tong, which means that Link REIT has become a developer. Link REIT nowadays is completely different from the one in 2005 and it is certain that public housing estates and courts will not be the major investment of Link REIT in the future. Even if we use public money to buy back the shares of Link REIT, we may not achieve the aim of protecting the interests of residents of public housing estates and small shop operators. The Government may get itself into trouble by buying back the shares as it has to manage many assets, including those in China, after spending a huge amount of money. Besides, a buy-back of the shares of Link REIT by the Government will create uncertainties. According to the track record, even if the Government is the principal shareholder of a listed company, it would use the need for protecting the interests of minority shareholders as an excuse and refuse to … there was a case that the Government failed to do anything and the best example is the MTR Corporation Limited ("MTRCL"). Although the Government holds around 75% of the shares of MTRCL, it is often dominated by MTRCL and has to pay for the cost overrun of the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. As the Government has no say in making decisions, the public has no choice but to accept the fare increase made by MTRCL every year. The Shatin to Central Link has incurred a cost overrun of $20 billion, making it the most expensive railway project in Hong Kong―however, Deputy President, the Shatin to Central Link will soon "jump the queue" to apply for funding―but the Government may have to meet the cost overrun eventually. Does the Government still need to pay for making itself miserable? We may have to


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spend over $110 billion to buy back all the shares of Link REIT at the current market price. Indeed, taxpayers should no longer pay for making ourselves miserable. Deputy President, in fact, the biggest problem created by Link REIT is that its operation in the past decade has deprived many residents' of their right to choose. For example, On Ting Commercial Complex and Yau Oi Commercial Centre in Tuen Mun are recently redeveloped and merged into H.A.N.D.S by Link REIT. It is crystal clear that Link REIT aimed at creating a medium-end shopping arcade which will not only attract local residents but also, most importantly, tourists or other customers, making it the flagship shopping arcade of Link REIT in Tuen Mun. However, as we all know, the two housing estates concerned actually rank among the oldest housing estates in the territory. Local residents were driven into a corner by the establishment of a medium-end shopping arcade. Why did Link REIT decide to do that? The residents could not even retain the last right to choose. We deeply believe that Link REIT will continue to deprive the ordinary public of their interests and such a practice is, indeed, totally unacceptable. As proposed by the Civic Party, we hope the Government can build more public markets and set up bazaars or hawker permitted areas as well as buy back the assets of Link REIT, which can actually solve the problems confronting us right now. We know that some Members of other political parties might have participated in the march held on 1 January 2005, the theme of which was "Protesting against politicians stirring up troubles in Hong Kong" and one of their demands was "Overthrowing 'Tai Pan' Albert CHENG". The Hong Kong Securities and Futures Industry Staff Union, a member union of the Hong Kong Federation of Trade Unions, was the organization which initiated the march. Therefore, it is fine if one can rectify his own mistakes and I hope the Government can buy back the assets of Link REIT. MR WU CHI-WAI (in Cantonese): Deputy President, today many Honourable colleagues have mentioned in their speeches that back then, the assets were sold to The Link REIT in the hope of introducing the management approach of the private market to improve the then operation of the shopping arcades and car parks by the Hong Kong Housing Authority ("HA"). At that time the relevant management work was even often criticized as being most unsatisfactory under the bureaucratic framework.


However, to be fair, over the past decade or so, HA has acquired a lot of experience in the management of shopping arcades. For example, if we now go to Domain in Yau Tong, we will be unable to tell whether the shopping arcade is managed by HA or Link REIT. We have also noted that the situation of illegal hawking which was rampant in public housing estates in the past has gradually diminished. This proves a point. Is the bureaucratic system always ineffective in business management? Very often, it is not about one's ability. It is actually about one's refusal to act, which eventually caused the public to harbour various kinds of discontent with the elements of commercial operation in the Government's management of properties, shopping arcades and car parks, thus giving rise to the decision of selling HA's shopping arcades. Regrettably, after the sale, Link REIT's practice has simply reaped all the fruits of the Government's sale of assets at miserably low prices. As we can see, and also as mentioned by some Members just now, the present asset value of Link REIT has reached $110 billion. In these 10 years or so, that means the 10 years of The Link, the amount of dividends distributed reached some $20 billion, which is absolutely not a simple figure. The Link had such outstanding performance because, on the one hand, it really had strengths in management, but on the other, it reflects that objectively speaking, the Government had indeed sold these assets at miserably low prices which enabled Link REIT to have its way as it pleases. However, in the present situation, if we casually talk about buying back Link REIT, of course we will face another challenge as follows: instead of spending $110 billion to buy it back, can this sum of money actually be used for better purposes? For example, if we spend $110 billion to build public markets, we may be able to build 20 to 30 of them. Hence, we must deal with the matter carefully. However, I would like to raise a point. When Link REIT sold the properties, did HA ever consider seeking suitable mall services in compliance with the Housing Ordinance ("the Ordinance") for the local residents? Since it was selling the properties, HA might as well put in a tender. Did HA ever consider that? Or would it simply give no consideration to putting in any tender? If that is the case, it exactly reflects that in the whole process, HA just washed its hands of it after selling the assets. After the sale, it has not squarely faced the fact that the present divestment of shopping arcades often affects the


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living of the local residents. It also obliges HA to face its duty stipulated in section 4(1) of Cap. 283, Laws of Hong Kong, which provides that HA has the duty to secure the provision of appropriate services for local residents. Members may say that such facilities may not necessarily have to be provided by HA, which was stated in the judgment handed down by the Court of Final Appeal at that time, but it was also mentioned in the judgment that this matter should be handled carefully because HA has the statutory duty to secure the provision of appropriate services for local residents, even though such services may not be directly provided by HA. However, if what happens is that Link REIT's approach can no longer provide services for the local residents, HA will have to face a great responsibility. Has it ever considered that? At least the Government needs to consider how to ensure that the new operator can provide the local residents with appropriate services after the divestment. Even though it does not have to adopt the approach of bringing in small shop operators, the Government still needs to work out a way. Has the Government ever studied or examined the relevant situation? Our observation is that the Government has not even taken a look. The result is obvious, particularly in the case of parking services. After the car parks were sold, they were immediately divested. In the end, they were sold to residents from other districts. What does that mean? What attitude is that? Hence, I think HA has an unshirkable responsibility in this regard. Meanwhile, in introducing keener competition, we certainly know that it is by no means easy to build new markets or provide more shopping arcades which can compete with each other. Nevertheless, is it not an appropriate approach to make more use of the existing public space and give members of the public more choices through setting up bazaars or similar venues? It can preserve the unique characteristics of the community and also offer the public more choices with no restraints. Are there any more options? After all, has the Government ever thought about how to provide the residents with more different choices? If it has not thought about it, there is dereliction of duty because according to the Ordinance, HA has the duty to secure the provision of relevant services for the residents, or at least it should ensure that such services can be provided to the residents as scheduled in accordance with the requirements under the Ordinance. Failing that, HA has, in my opinion, neglected this duty.


In closing, the Democratic Party holds that at least the Government has the duty to implement the standard for building public markets under the Town Planning Ordinance. Otherwise it will lead to monopolization of various kinds of market services by Link REIT, thus affecting the residents' choices. Lastly, I hope the Government can make good use of the existing space to provide more different choices for members of the public. Thank you. DEPUTY PRESIDENT (in Cantonese): Does any other Member wish to speak? (Mr LEUNG Kwok-hung stood up) DEPUTY PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, do you wish to speak? MR LEUNG KWOK-HUNG (in Cantonese): No, I saw Mr Paul TSE indicate a wish … DEPUTY PRESIDENT (in Cantonese): Do you wish to speak? MR LEUNG KWOK-HUNG (in Cantonese): Mr Paul TSE has indicated a wish to speak. DEPUTY PRESIDENT (in Cantonese): Do you wish to speak? If not … MR LEUNG KWOK-HUNG (in Cantonese): Then I speak now. DEPUTY PRESIDENT (in Cantonese): Please do.


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MR LEUNG KWOK-HUNG (in Cantonese): Coming back to the basics, let me read out Article 75 of the Basic Law: "The quorum for the meeting of the Legislative Council of the Hong Kong Special Administrative Region shall be not less than one half of all its members. The rules of procedure of the Legislative Council shall be made by the Council on its own, provided that they do not contravene this Law." I think this Council cannot contravene the Basic Law. DEPUTY PRESIDENT (in Cantonese): You have raised a point of order, not a request to speak, right? MR LEUNG KWOK-HUNG (in Cantonese): This is a point of order. DEPUTY PRESIDENT (in Cantonese): Are you requesting a headcount? MR LEUNG KWOK-HUNG (in Cantonese): I think this Council should abide by Article 75 of the Basic Law. DEPUTY PRESIDENT (in Cantonese): Please sit down. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (While the summoning bell was ringing, THE PRESIDENT resumed the Chair) (After the summoning bell had been rung, a number of Members returned to the Chamber) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, do you wish to speak?


MR LEUNG KWOK-HUNG (in Cantonese): Yes, President. Let me put on this thing first. (Mr LEUNG Kwok-hung put on a mask) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please take off the mask. MR LEUNG KWOK-HUNG (in Cantonese): I have to use it for my expression of views. (Mr LEUNG pointed at the mask) This is Link REIT … PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please take off the mask. MR LEUNG KWOK-HUNG (in Cantonese): You people should not chid it anymore! PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please take off the mask. MR LEUNG KWOK-HUNG (in Cantonese): DAB and FTU, it was you who hastened its birth. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please take off the mask. (Mr LEUNG Kwok-hung took off the mask) MR LEUNG KWOK-HUNG (in Cantonese): … President, this is Link REIT, a ghost with sharp teeth. But thanks to your powerful ban, I could not finish what I should have said. Link REIT has had the opportunity to wield its despotic power not only because those in the pro-government FTU and DAB had, as a Chinese idiom goes, "helped King Zhou to do evil" back then … as I said "helping King Zhou to do evil", there must be a King Zhou, right? Members are all well versed in Chinese culture. So who is King Zhou?


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President, you do know him, and he is TUNG Chee-hwa, "Uncle TUNG", and his most important assistant, namely the then Convenor of the Executive Council, LEUNG Chun-ying, "689". Frankly speaking, without the leadership of these two guys, there would not have been this scourge of Link REIT. President, look here, this is how it is like―a green face with sharp teeth. Why did I chide them just now? In fact, President, on 1 January 2005 a massive demonstration took place in Hong Kong. It was organized by DAB and FTU, and I think some people in this Chamber might have taken part in that rally. The slogans of that rally were "Strike off Tai Pan", "Kill Long Hair", "Blocking the listing of The Link stops people from getting rich", and "Blocking people from getting rich is as wicked as murdering people's parents". It was said that 10 000 people had participated in that rally. They vowed to kill me, and some people even charged at me and assaulted me. The police then said helplessly, "Mr LEUNG, I have to arrest you if things go on like this, or else we would not be able to stop them if they beat you as we have only a few cops here." Then they arrested me. Buddy, those rioters were indeed no ordinary people. Honestly, those foul expressions alone were amazingly multifarious as there were the Sichuan tone, Hunan tone, Guangdong and Guangxi tones. They swore at me with a mixture of words and expressions used in all provinces. Why did they do it? Because I said back then that the Government absolutely, absolutely, absolutely, absolutely, absolutely should not sell at pitifully low prices the sweat and toil of Hongkongers, that is, the shopping arcades, markets and car parks of public housing estates and courts constructed with government funding. They were sold at only some $20 billion, and even businessmen like Tommy CHEUNG … Buddy, it would be better to let Tommy CHEUNG take the advantage, and I bet once Tommy CHEUNG was told of it, he would go to Hongkong Bank right away to secure a loan and the latter would immediately lend him money. This is such a good bargain. Did you not feel it heart-rending? No. You people have come to your senses only now, after being hit so many times by the things that I hurled at you, right? President, Ms YUNG Hoi-yan is in front of me. She said that market competition should be enhanced. Buddy, are you out of your mind? Market competition should be outside public housing estates. These estates should be managed by the Government, and this is the responsibility of the Government. Under section 4 of the Housing Ordinance, the Government has to provide services as it thinks fit in the interest of the residents. The same applies to car parks, which are not meant for speculation, buddy.


Right, Ms YUNG Hoi-yan, the Government is exactly doing this. President, there are two points here. First, Link REIT is saying now that this is too much for it and so, divestments have to be made. We are not suggesting a buy-back wholesale, and we may as well make the Hong Kong Monetary Authority ("HKMA") buy back all of them secretly. Do not come to the Legislative Council to seek funding, for this would alert Link REIT which would then jack up the price. We should let HKMA buy them back bit by bit and when all the shares have been bought back, Link REIT would have to close down. We would long have achieved this outcome had this been done in 2008 when the stock price had fallen to be so cheap, but let us not pursue responsibilities over this. Is it possible to buy back these five shopping arcades? After buying them back, section 4 of the Housing Ordinance can be invoked since it is said that home care service for the elderly is lacking and day care service is also lacking, and after buying them back, the Government can put them all to non-business uses. LEUNG Chun-ying said that there is a lack of land and a lack of housing flats and such being the case, he should buy them back to serve these people. DAB, you people always say that you have to do something. I now suggest that these five shopping arcades be bought back by all means. We should buy as many as are available. It is selling them at rock-bottom prices, and they should be bought back for provision of these services. This is the first point. Second, do you think that Link REIT is the only bad ghost? Look at Shui Chuen O Estate. Are there Members of New Territories East in this Chamber? Mr Holden CHOW should know it, right? The problem now is not that it is sold to Link REIT but it is contracted out to others, and everything has been turned into assets. There is this logic that it is not viable to send a ghost to manage society. Just as Dr Junius HO … Is he in this Chamber? He is a blockhead. He said that Link REIT has made contribution. A triad society engaged to watch over a venue may also make contribution initially. They can certainly manage a place effectively, and you may as well ask a triad society to watch over a venue for you. However, a triad society, by nature, makes money by oppressing other people, and Link REIT is just like this. What does capital mean? Capital is the massive accumulation of goods and wealth with the objective of adding value. In an era of capitalistic monopolization, profit maximization is the purpose.


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Now Donald TRUMP is going to deregulate the American market and I bet a tsunami will come pounding at our shores again. Let us not talk about this point for the time being. So, what do we oppose? We oppose not only this vampire of Link REIT, but also others who, by way of outsourcing, oppress the small shop tenants and bully the residents and people around them. If you fancy carrying on a business … LEUNG Chun-ying always say that more large-scale shopping arcades should be constructed, more hotels should be constructed and more offices should be constructed. If he is fond of doing business, let him do it by himself. Therefore, I absolutely oppose it, and I will not support it. What should the Government do? It should counteract all avarices in the market. Whoever is so avaricious in the market as to have turned into a ghost must be killed, just as what you did just now, instead of chiding only the big ghost but letting in the small ones. President, I am a ghost, a green-faced ghost with sharp teeth. On that day I was said to be a ghost by those people. Look here, I think you people are more like ghosts, not me. Mr WONG Kwok-kin, this is for you. (The buzzer sounded) PRESIDENT (in Cantonese): Mr LEUNG, please stop speaking. Does any other Member wish to speak? MR WONG KWOK-KIN (in Cantonese): … do not leave now, "Long Hair". Do you think shouting aloud means your arguments are valid? President, I have clarified many times that the Hong Kong Federation of Trade Unions ("FTU") did not support the listing of The Link Real Estate Investment Trust ("The Link REIT") but Mr LEUNG Kwok-hung is still lying aloud here and, therefore, I must request him to retract his remarks. (Mr LEUNG Kwok-hung stood up) Will he please … President, I am speaking right now so will you please tell him to sit down. Please tell him to sit down.


PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, this is not your turn to speak. Please sit down. MR WONG KWOK-KIN (in Cantonese): President, please order Mr LEUNG to sit down. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. (Mr LEUNG Kwok-hung remained standing and talked aloud) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. (Mr LEUNG Kwok-hung was still standing and talking aloud) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. MR WONG KWOK-KIN (in Cantonese): In 2005, a motion was discussed in the Legislative Council which was proposed by your friend, Mr Albert CHAN, but how come you have no idea about it? The subject of that motion was "Demanding the suspension of privatization" while the contents of the motion included the listing of The Link REIT. At that time, Members of the FTU, including Ms CHAN Yuen-han, Mr KWONG Chi-kin and Mr WONG Kwok-hing, voted for the motion and supported the suspension of the listing of The Link. It can be found in the records of the Legislative Council. You should not make slanderous accusations of us. "Long Hair" is slinging mud at us. (Mr LEUNG Kwok-hung remained standing and talking aloud) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, this is not your turn to speak. Please sit down.


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MR LEUNG KWOK-HUNG (in Cantonese): Can I make a clarification? PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. You should wait and make a clarification after Mr WONG Kwok-kin has finished his speech. MR WONG KWOK-KIN (in Cantonese): … what do you want to clarify? What points do you have to clarify? Go check the records and talk to me after you have done so. You are making remarks aloud which are totally unfounded and you kept repeating them. We have clarified that many times. Voting results do not lie and you should not make untrue remarks about us. Therefore, some people made thoughtless comments and slung mud at others in an irresponsible manner simply to achieve their political purpose. Mr LEUNG Kwok-hung is exactly this kind of man. Today, FTU has to make it clear to everyone once again that we did not support the listing of The Link REIT. This is a plain fact. Will you please check the records of the Legislative Council carefully before talking to us again. (Mr Alvin YEUNG stood up and indicated his wish to raise a question) PRESIDENT (in Cantonese): Mr Alvin YEUNG, what is your point of order? MR ALVIN YEUNG (in Cantonese): President, I would like to seek your clarification. Is it correct that Members should present their viewpoints to the Chair instead of talking to each other directly? PRESIDENT (in Cantonese): Yes. Please sit down. (Mr LEUNG Kwok-hung remained standing and talking aloud)


PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. This is not your turn to speak. Mr WONG Kwok-kin still has seven minutes to speak. Will Mr LEUNG Kwok-hung please sit down. Mr WONG, please speak. (Mr LEUNG Kwok-hung remained standing and talked loudly) PRESIDENT (in Cantonese): Mr WONG Kwok-kin, please continue with your speech. MR WONG KWOK-KIN (in Cantonese): President, will you please order Mr LEUNG Kwok-hung to sit down and stop talking first. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, if you continue to refuse to sit down, I will order you to leave the Chamber. MR WONG KWOK-KIN (in Cantonese): Mr LEUNG Kwok-hung, when you were giving a speech earlier, I showed respect to you and made a response only after you had finished your speech. PRESIDENT (in Cantonese): Mr WONG Kwok-kin, please present your viewpoints to the Chair. MR WONG KWOK-KIN (in Cantonese): President, Mr Alvin YEUNG spoke in a most righteous and serious manner just now. Yet, did he say anything when "Long Hair", Mr LEUNG Kwok-hung, shouted at me directly earlier? This is what we call "the butt commanding the brain" and "the stance commanding the brain". Why did he pretend to be righteous and serious? President, honestly, it did not surprise me to see these things in the Legislative Council. However, FTU is no slouch and we will not put up with smears. Originally I did not intend to speak but by making a speech right now, I only wanted to make a clarification to society and the people of Hong Kong once again that FTU has never supported the listing of The Link REIT. When the


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motion on the suspension of the listing of The Link REIT was discussed in the Legislative Council in 2005, three Members of FTU (Ms CHAN Yuen-han, Mr KWONG Chi-kin and Mr WONG Kwok-hing) had all voted for the motion, that is, we supported the suspension of the listing. Mr LEUNG Kwok-hung and some District Council members of the Democratic Party went to Link REIT to stage a protest earlier on. However, when the proposal for the listing of The Link REIT was passed by the Hong Kong Housing Authority back then, the Democratic Party actually voted for the proposal. He considers those people who supported the listing of The Link REIT as despicable but he conspired with those people and staged a protest together. Does he actually wish to join forces with the Democratic Party? He should reflect upon it! (Mr LEUNG Kwok-hung stood up) MR LEUNG KWOK-HUNG (in Cantonese): I have to make a clarification. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please point out the part of speech that you seek to clarify. MR LEUNG KWOK-HUNG (in Cantonese): He said I was wrong and pointed out that FTU did not vote in favour of the listing of The Link REIT. Yet, that was not what I said so I have to repeat my point. On 1 January 2005, many member unions of FTU staged a march which claimed to pursue my responsibility. I was talking about the march. What does it matter to me how FTU voted after 1 January 2005? PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, you have strayed from the subject. Please sit down. The remark you made just now is not a clarification. MR PAUL TSE (in Cantonese): President, any decision, political or personal, may need to be revised in the wake of changes in time and circumstances. Otherwise there would not have been so many divorce cases to deal with.


President, I have heard many Honourable colleagues make a lot of criticisms of what happened in the past or raise various suggestions, such as buy-back, provision of shuttle bus service to help members of the public and construction of more markets, as remedies. Certainly, these are approaches that merit consideration, but they seem to be distant water which cannot put out the fire nearby. Of course, simply put, regarding a buy-back, I believe that taking into account the present market value, as mentioned by many Honourable colleagues, it is not feasible. There is also the suggestion about whether the Competition Commission ("the Commission") can be requested to review the relevant situation and examine whether the issue can be handled through legal proceedings as stated in the motion if a buy-back is not viable. With my understanding of the working principles of the Commission and the relevant statutory requirements, I believe this is also rather difficult. Moreover, there is a suggestion of withdrawing investment, treating its shares as "evil shares". A buy-back may lead to an upsurge in the share price, but if we withdraw investment, treating it as an evil without offering any help, will such an approach work? I believe that in Hong Kong society, as long as there is profit, people will soon make investments to make money, so it is difficult to achieve the relevant purpose. President, then what solutions do we have? And the Government is so passive. Certainly, my proposal may not have undergone thorough and mature consideration. Chief Secretary for Administration Carrie LAM said there are three "mountains" we urgently need to overcome, including Link REIT and another troublesome one, which is the MTR Corporation Limited ("MTRCL"). Inspired by some Honourable colleagues, I came up with this idea. Can we use MTRCL to fight Link REIT? Let me try to spell out this idea. At present, the Government holds about 70% of the shares of MTRCL. Sometimes it may use its dominant stake to make MTRCL come to certain decisions. Of course, it cannot infringe on the interests of the minority shareholders, but it can offer the passengers some concessions, including the existing monthly special offer on Saturday. Can this concession be extended to every Saturday and Sunday? Even if members of the public cannot go to the markets by MTR to buy foodstuffs on weekdays, at least they can travel to some great markets by MTR over weekends at even more concessionary fares,


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including such well-known markets as Wan Chai Market, Pei Ho Street Market in Sham Shui Po, Shui Wo Street Market in Kwun Tong and Chun Yeung Street Market in North Point. I once tried a bowl of bean curd pudding for $6 in Pei Ho Street in Sham Shui Po, which was a mega-bargain. In this situation, although it is unable to help those members of the public who cannot leave their housing estates, at least to a certain extent it allows the public to use the concessions of MTRCL to slightly get away from the "territory" or "evil clutches" of Link REIT and go out shopping during weekends. This idea certainly needs further consideration, but as Link REIT has now used its enormous resources to air a television programme called "Bazaar Carnivals" on TVB Jade, can we make use of the advantage of MTRCL to introduce greater offers to contain the other "evil", using the two evils to counteract each other? I hope the authorities will consider whether this is a feasible direction or enhance this proposal. President, the second point I would like to make is what we should do when there is no other alternative. We must not lose any more control. Where has control been lost? Earlier on, Link REIT wished to take the opportunity of selling its shares to another company to increase the management fees. I believe many Honourable colleagues have talked about this issue earlier. I have also personally handled a case in Kwong Tin Estate. At that time five social welfare organizations, including Lam Tin Kaifong Welfare Association, and a government body were confronted by this problem, too. Of course, thanks to the Government's immediate response, including its reply to my letter and its pledge at the meeting of the Panel on Housing in May 2016―as a matter of fact, it has been fulfilled―that it would carefully monitor whether the new buyer had violated the relevant covenant. In this respect, the "bleeding" has stopped for now, but we have to stay vigilant. We cannot allow Link REIT any opportunity to further extend its clutches and cause any social welfare organizations or government bodies to lose the protection and rental concessions which the original policy has promised to give them. It has been alleged that the rental concessions did not take the management fees, maintenance costs, regular expenses, etc. into account. The Government has already clarified them one by one. In fact, this allegation is totally unreasonable because these issues had already been considered when the concessionary rents were fixed.


Hence, I urge the Government to stay vigilant in dealing with this matter. Once there is any sign of any problem, we should immediately take legal action when it is the right thing to do, like the way we deal with those Honourable colleagues who violated the oath-taking requirements. To deal with evil clutches or monsters like Link REIT, we need all the more to resort to legal proceedings. If it is workable, we must lose no time in doing so. President, in the remaining one minute, I would like to slightly enlarge the focus. Many Honourable colleagues keep targeting Link REIT, but the real culprit behind the monster is the management concerned. As far as I understand it, although their emoluments are not linked with Link REIT's return, it is only when they can genuinely push up the share price of Link REIT that they will enjoy various benefits, such as bonuses, privileges and dividends. Come to think about it. A CEO could receive an annual salary of $35 million in the last financial year. What a monster! And more than 10 directors shared a total of some $700 billion as their emoluments. What kind of return is that? I hope the media will also make their efforts on various fronts. Even if we cannot tackle such a situation by law in a capitalist society, at least in terms of morals, we need to condemn the culprit behind such a monster for continuing to extend the evil clutches (The buzzer sounded) … PRESIDENT (in Cantonese): Mr Paul TSE, please stop speaking. Does any other Member wish to speak? MR PAUL TSE (in Cantonese): … Thank you, President. MS STARRY LEE (in Cantonese): President, this Council has discussed topics relating to Link Real Estate Investment Trust ("Link REIT") a number of times. It is true, as many Members said, that we should stand united on the same front. Now, Link REIT has indeed broken the promises it made at the time of listing. Since the supply of goods in an estate is monopolized by Link REIT, many members of the public are forced to purchases goods at higher costs and many small shop operators are forced to close down. As a result, we cannot see small businesses in shopping arcades. The public feel distressed by these situations.


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However, in every discussion about these topics, many Members will seize the opportunity to piggyback on others. Mr LEUNG Kwok-hung is a case in point. On each of these occasions, he would say it was because we had supported the listing of The Link Real Estate Investment Trust that Hong Kong has come to this pass. The public have grown accustomed to these acts of piggybacking and besmirching. Yet when we look into the social environment back then, we would notice that there was overwhelming support from all sectors for the listing of The Link REIT. I know that Mr LEUNG Kwok-hung opposed the listing at that time. Yet has he ever pondered why his dissenting views failed to win the support of the public? Why were there an overwhelming public opinion supportive of the listing of The Link REIT? In fact, the decision was made against the social background back then based on practical needs. Therefore, he cannot play the hero by disregarding the situation back then. Had he been able to persuade the public to come forward to oppose the decision with his justifications, the consequence might have been different. In fact, Mr LEUNG Kwok-hung, "Long Hair", will resort to this approach every time to piggyback on others. Am I right? He does not only oppose the listing of The Link REIT but nearly every policy proposed by the Government, or he will simply be absent when the vote is taken. Indeed, this is the easiest way, for if there is any problem, he may blame Members or political parties who have voted for the questions for causing the problem. He definitely can say so, for he is always absent at voting. He did not vote for the setting up of the Innovation and Technology Bureau. He filibustered when this Council was processing the motion on Old Age Living Allowance. Every year, during the examination of the budget, he filibusters and requests cuts of a number of public expenditure items, like the expenditure for the Hong Kong Police Force and that for the Customs and Excise Department, and so on. This logic is easy to follow. Hence, I would like to tell the public who are watching the live broadcast that this is how the legislature works. Members opposing the policies do not have to be held accountable. All they need to do is raising opposition, so that when anything goes wrong with the policy, they only need to put the blame on those Members supporting the policy. Nonetheless, has it ever crossed their mind that the public have benefited from some good policies because of our support? When we say that we have made an effort to strive for the relevant policies, they will mock us for claiming credit with slogans stating "success of striving". This is the way they play this game. They oppose every motion, and when problems arise, they put the blame on others. The public can see this


clearly. They will only adopt tactics of staging opposition, besmirching, absence from voting, absence from meetings and requesting headcounts at every meeting. Yet with these tactics, how many problems can they solve for the public? How many issues of Hong Kong can they address? The answers are obvious to all. President, back to the present question, many Members have stated the predicament we are facing now. As for buying back Link REIT, the current market value of which is $110 billion, I think we must act cautiously. In fact, this is not a very realistic proposal, for it is doubtful if its value is really $110 billion. Besides, will all the problems be solved through a buy-back of Link REIT? I hope those who advocate or support the buy-back will consider this carefully. We all understand that public opinions supported the listing of The Link REIT back then, and the most important reason for such support was the poor management of markets under the Hong Kong Housing Authority. If the Government were to buy back Link REIT and adopt the same management model, the problems will remain unsolved. By the same token, even if the Government buys back Link REIT, there will not be a sudden surge in the number of small shop operators in these shopping arcades. Members should have learnt that from the operation of wet markets. There are still vacant stalls in certain public markets, but why have not these public markets been developed into a paradise for starting special small shops or small businesses or the operation base of these shops? It is exactly because the management problems of these markets have remained not properly addressed over a long time. Hence, we must consider carefully the way to resolve the present predicament. We should not use "buy-back" as a political slogan, for we cannot hastily agree with the proposal without any thorough consideration. In fact, the Government should work on increasing supply. Chief Secretary for Administration Carrie LAM has stated repeatedly that Link REIT and the MTR Corporation Limited are two mountains Hong Kong has to tackle currently. The problem arising from Link REIT is monopolization. The solution to the monopolization problem is increasing supply, but this long-term measure is no remedy to the immediate shortage, and a number of Honourable colleagues have pointed this out earlier. How can supply be increased in the short term? The only way is to set up bazaars or small shops in districts affected by the monopolization by Link REIT when circumstances permit. However, the progress of planning is extremely slow. I hope the Secretary will explain this in detail in his response later on.


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Some time ago, we met with the Chief Secretary for Administration, and we had consulted the views of various districts. We have requested the Government to construct new markets in at least four districts, namely Tseung Kwan O, Siu Sai Wan, Tin Sui Wai and Ma On Shan. We have also proposed six feasible sites to the Government and requested the Government to construct new markets there. We hope that the Government will remove the hurdles in its mindset, for the problem of monopolization by Link REIT can only be dealt with by increasing supply. President, I so submit. DR LAU SIU-LAI (in Cantonese): President, today, originally I … (Mr Paul TSE stood up) PRESIDENT (in Cantonese): Dr LAU Siu-lai, please hold on. Mr Paul TSE, please state clearly the contents of your speech that you seek to elucidate. MR PAUL TSE (in Cantonese): My apologies, President. I would like to give an explanation under Rule 38(3) of the Rules of Procedure because in my speech earlier there was one point which was misunderstood. I wish to clarify it. Just now I said that the annual salary is $700 billion. It should be $70 million. Thank you, President. DR LAU SIU-LAI (in Cantonese): President, today, originally I did not intend to speak because both Mr CHU Hoi-dick and I have in the past endeavoured to fight in the community against Link Real Estate Investment Trust ("Link REIT") and campaign for the implementation of a policy on bazaars. But having heard the speeches of Members of the pro-establishment camp, especially the shameless, boastful remarks made by Ms Starry LEE, I could not help giving a response indeed.


The listing of The Link Real Estate Investment Trust ("The Link REIT") back then was staunchly advocated by the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB"). Why was it that the public opinions were mostly supportive of its listing? It was because these Members had kept on deceiving the public in the community, telling us that the Government was short of funds and that there would not be any problem with the listing of The Link REIT. Irrespective of how many experts and members of the public and even some elderly ladies expressing the view that the assets should not be sold at rock-bottom prices, these pro-establishment Members continued to make every effort to sling mud at them and deceive the public. Now that as this bitter fruit is resulted, not only have they failed to reflect on themselves and admit their mistakes, they have even made the utmost effort to attack the pro-democracy Members, saying that other people have besmirched them. It is actually these Members themselves who made this issue so nasty and dark. Over the past few years, they have failed to rectify their mistakes and what is more, they have spared no effort to crack down on bazaars in the community. In recent years, the night markets set up during the Chinese New Year had been forcefully suppressed by District Councillors of DAB. Even Members of the Hong Kong Federation of Trade Unions have suggested to eliminate the morning bazaars which are very common in the community. No matter how they voted back then, it is actually these people who have, over the past few years, persistently targeted actions on bazaars in the community. When non-governmental organizations have worked painstakingly in the community to campaign for the implementation of a policy on bazaars to counteract Link REIT, in the hope that the public can have a bit of breathing space, suppression by these people from the pro-establishment camp has never ceased. While they verbally gave their support, they have in reality cracked down on bazaars rigorously over the past few years. Now that as there is news from the Government that the policy on bazaars will likely be relaxed, they are here to strive for, to move motions on and to throw weight behind the implementation of this policy and then say that they have fought for it successfully. This is their logic. Do not think that they will become benevolent and righteous by using some beautiful words and expressions to describe their behaviour. They are, in fact, neither benevolent nor righteous. They said categorically that a buy-back is impractical because the market value of Link REIT is currently worth over $120 billion, but this is something affecting the livelihood of the ordinary public most profoundly. I would like to


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ask why we can have the resources to build the third runway of the airport at $141.5 billion and the Hong Kong-Zhuhai-Macao Bridge and the useless Express Rail Link but when it comes to Link REIT which is affecting the people's livelihood so immensely, we dismiss a buy-back because it seems to be a tall task. It is because they have been making a mockery of public opinion and fooling the public. Therefore, I support buying back Link REIT, but before buying back Link REIT or even after buying it back, I agree that bazaars should be set up in housing estates under the Housing Department. I, therefore, support this motion. But I think that an amendment is worth making to the effect that these bazaars are set up not only on holidays but should be made permanent because the goods sold at these bazaars are actually different from goods sold in shops or large-scale chain stores. Residents of these housing estates are grass-roots people. It is necessary to provide them with a greater variety of goods as choices. The goods that they buy are some very cheap stuff which Mr KWOK Wai-keung refers to as rubbish that nobody cares to buy. Those who made such remarks are entirely ignorant of the living of the petty masses. Many people actually want to buy these goods. Many elderly people said that they really do not wish to travel to a faraway market because they cannot move around easily. Besides, they very much hope to have a place just downstairs of their home where they can meet up with friends, and they very much hope to have shops where less expensive goods are sold. They hope to have a place to go for leisure and bazaars can precisely meet these needs of the elderly, and the provision of a diversified range of products can also help reduce the rental of shops under Link REIT and may hence make it easier to buy back Link REIT. For these reasons, I support Ms YUNG Hoi-yan's motion, and I also support Dr Fernando CHEUNG's amendment in particular. PRESIDENT (in Cantonese): Does any other Member wish to speak? (No Member indicated a wish to speak) PRESIDENT (in Cantonese): If not, Ms YUNG Hoi-yan, you may now speak on the amendments. The speaking time limit is five minutes.


MS YUNG HOI-YAN (in Cantonese): President, five Members have proposed amendments to my motion, but I will only support the amendments by Mr Wilson OR and Mr Andrew WAN. First of all, Mr SHIU Ka-fai's amendment points out right from the outset that despite the drop of the value of total retail sales, retail shop rentals have been persistently high. However, some members of the business sector have told me that as retail sales have worsened, retail shop rentals have seen a significant drop. In my previous speech, I cited statistics of the decline in rentals of private retail properties in the New Territories, indicating a certain extent of downward adjustment in prevalent rentals of shop premises, which are not persistently high as Mr SHIU suggested. Moreover, he requests the Hong Kong Housing Authority and the Hong Kong Housing Society to study the re-assignment of spaces on the lower floors in some of their housing estates or courts for retail purposes, and let such spaces to small shop operators at relatively low rentals. I do not agree with it, as such arrangements obviously only cater for the retail industry at the expense of residents' needs for education, social welfare, etc. Mr SHIU has also changed the "temporary bazaars" in my proposal to "holiday bazaars". Both the New People's Party and I cannot agree with such an amendment because holiday bazaars can only operate on holidays. Yet what many residents want is not bazaars to be set up just on holidays, but ones that they can go visit in the morning and evening every day, such as dawn bazaars in districts such as Sham Shui Po, Mong Kok, Tin Shiu Wai and Sai Wan Ho. Every day many people take a cozy stroll at these bazaars, gradually getting into a habit. Even without making any purchases, it is enjoyable for them to chat with fellow residents during the stroll. Bazaars will then become a spot for social cohesion. Dr Fernando CHEUNG proposes in his amendment to buy back shopping arcades, markets and car parks divested to Link REIT, whereas Dr KWOK Ka-ki has made a similar buy-back proposal but suggests buying back shopping arcades and markets divested by Link REIT. Nonetheless, regardless of how or from whom to make such a buy-back, I neither think it is feasible at the current stage, nor do I see the conditions to do so. Therefore, I have reservations about these buy-back proposals. In fact, given the large number of Link REIT investors, if


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the Government really wants to buy it back, from the market perspective, the selling price will definitely rise sky-high. Even if it is bought back, the Government has to continue dealing with long-term management problems. So long as these problems are not solved, it is not an opportune time to buy back Link REIT. For this reason, a buy-back may not be the most effective way to solve the Link REIT problems. President, though I will eventually support Mr Andrew WAN's amendment, I am not satisfied with his deletion of the statement "Link REIT has ignored the affordability and living necessities of grass-roots people, thereby aggravating the burden on their livelihood" in my original motion. However, considering that his amendment is similar to my original motion in principle, I will support Mr WAN's amendment. Moreover, I would like to give a response in respect of Mr OR's amendment. My original motion proposes the introduction of district-based pilot schemes. I believe Mr OR approves of such a direction so that in his amendment he pinpoints a few areas where Link REIT has achieved dominance. It is learnt that among them Tin Shui Wai and Tung Chung are the worst cases, giving us a cause for concern. Therefore, I will support Mr OR's amendment. Thank you President. I so submit. SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, I would like to thank nearly 40 Members for their speeches and the concerns expressed by a number of Members about the operation of The Link Real Estate Investment Trust (now known as Link Real Estate Investment Trust ("Link REIT")) and its divestment of commercial facilities and car parks. In my opening speech, I already elaborated the relationship between Link REIT and the Government, as well as the Hong Kong Housing Authority ("HA"), and the restrictions currently imposed on Link REIT by the land lease conditions and covenants signed with HA. I have also explained why it is not in compliance with the principle of prudent use of public funds should the Government buy back Link REIT fund units and its commercial or car parking facilities today. Irrespective of whether the divestment decision previously made was right or wrong, it is both infeasible and undesirable to buy back Link REIT now.


I also made it clear in my opening speech the constraints imposed by the restrictive covenants signed between HA and Link REIT on Link REIT and its successor in title, including letting out relevant units to non-profit-making organizations nominated by specified units at concessionary rent for social welfare or educational purposes. Moreover, management fees or other charges must not be collected. I also pointed out in my opening speech that should Link REIT or its successor in title breach any statutory provisions, land lease conditions, or covenants signed with HA, the relevant government departments and HA will definitely pursue the matter and take action, including legal action, accordingly. In the debate, some Members criticized the operation of the commercial facilities under HA. In fact, like the general public, public housing residents require a variety of public facilities and relevant services, including education, health care, social services, cultural and recreational facilities, and commercial facilities in their daily life. Nevertheless, the demands for these facilities and services vary from district to district, and change with the times. Various dedicated government departments will consider the actual circumstances and make planning accordingly. As regards the proposal for providing additional public markets, Secretary Dr KO will give a response later on. President, HA did not divest all of its retail and car parking facilities in 2005 to The Link REIT. Neither did it divest the relevant facilities again subsequently. Currently, HA is still managing the major commercial and retail facilities in its 47 housing estates, and some of these facilities are situated in the vicinity of the commercial facilities under Link REIT. HA will, having regard to the actual circumstances, provide additional shops at suitable locations in the existing shopping arcades for the provision of additional retail services. In addition, HA will continue to provide commercial facilities in newly completed public housing estates. Since the listing of Link REIT, HA has seen the commissioning of a total of 14 shopping arcades in Kwun Tong, Ngau Tau Kok, the Kai Tak Development Area, Yuen Long, the North District and Sha Tin separately. Coupled with a large shopping arcade in the district, Domain, which is situated adjacent to a shopping arcade under Link REIT, and managed by HA, the total area of commercial and retail facilities currently provided by HA has reached 220 000 sq m.


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In planning new public housing projects, HA will strive to build the largest number of residential units to provide affordable homes for more residents, so as to maximize land utilization. However, HA will also, in the light of circumstances, provide social services and commercial facilities in public housing estates and courts to provide daily necessities for the residents. Some Members disapprove of a single-operator letting arrangement for the markets under HA in the hope of preventing single operators from obtaining the operating rights of markets by offering the highest bids. I must point out that bidding will be adopted by HA in its newly completed markets under a single-operator letting arrangement. In other words, a single tenancy is awarded to an operator who will let parts of the leased area to individual stall operators, and the operator will be responsible for the management of the whole market. This model has been proven since 1988. Such practice allows HA to leverage on the expertise and experience of the private sector with a view to providing better shopping choices, services and environment for residents. In evaluating the proposals put forward by the operators, however, HA will, having regard to their past performance in market operation and tendered rents, use a mixed scoring system for such evaluation and award of tenancy agreements, rather than granting the agreements to bidders offering the highest bids. President, HA will also monitor the single operators by regulating the trade types, enhancing protection for stall operators and adopting a more comprehensive performance appraisal system, with a view to suitably striking a balance between the required flexibility in business operation and the shopping needs of residents. According to the tenancy requirements signed between HA and a single operator, the single operator must not collect any fees other than rent, air conditioning charges, rates and management fees from the stall operators. Moreover, the single operator shall ensure that the premises will be operated as a traditional market and provide a certain proportion of food and miscellaneous trades. In this regard, an elaboration was already given by me at a Legislative Council meeting in March this year in my reply to Dr Fernando CHEUNG. On the other hand, HA will carry out regular inspections on markets to ensure that the single operators comply with the tenancy requirements, maintain quality management services and establish a good relationship with various stakeholders including stall operators, and so on. HA will assess the performance of single operators every two months, taking into account feedbacks from the Estate Management Advisory Committees. Whether the daily operation of the market has been effectively and smoothly discharged by the


single operator is the most important factor in HA's consideration as to whether or not to award a renewal of tenancy. The Housing Department will arrange for meetings with those who fall short of the expected standard and issue warnings to them. If poor performance persists despite the warnings, HA has the right to terminate their agreements before the expiry of tenancies and not to invite them to submit bids for other single-operator market contracts for a specified period of time. There were previous cases in which market operators were served Notice to Quit to have their tenancies terminated due to contravention of their agreements. Some Members have also proposed the provision of additional shops in public housing estates under HA and the Hong Kong Housing Society ("HKHS"). Since the space in these housing estates is limited, HA and HKHS will review from time to time the situation in these housing estates, make effective use of space and, on the premise of ensuring that adequate public space is provided for the residents for circulation and leisure, strive to balance their needs for various facilities, provide additional non-residential facilities where practicable, and provide community, education, welfare and retail facilities for the residents. As regards the proposal for setting up bazaars, as mentioned by Members just now, the relevant policy of the Food and Health Bureau is definitely involved. I would like to emphasize here that HA will cope with the policy and operational arrangement of the Bureau in relation to the policy on setting up bazaars, and adopt an open-minded attitude in dealing with the relevant proposals put forward by community organizations or District Councils. Centainly, housing estates are in general densely-populated. This explains why HA must give prudent consideration to the impacts of setting up bazaars in the open space in housing estates and the approach on their residents and the environment, such as whether or not environmental hygiene will be compromised, public access will be blocked, residents will be disturbed, unlicensed hawkers will be lured, and so on. Nonetheless, we will listen to the views expressed by housing estate residents and other stakeholders fully. Actually, the aforesaid stance of HA on the provision of additional shops and holiday bazaars in public housing estates was already discussed in detail in May this year by the Panel on Housing of the Legislative Council. Thank you, President.


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SUSPENSION OF MEETING PRESIDENT (in Cantonese): It is now 7:54 pm. I suspend the meeting until 9:00 am tomorrow. Suspended accordingly at 7:54 pm.


Annex I


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Appendix I

WRITTEN ANSWER

Written answer by the Chief Secretary for Administration to Mr Charles Peter MOK's supplementary question to Question 4 As regards the archival records transferred to the Government Records Service ("GRS"), as per the mandatory requirements stipulated in General Circular No. 2/2009, bureaux/departments are required to transfer their records having archival value to GRS for permanent retention according to the respective records and retention and disposal schedules. The relevant information for the past 10 years is set out in the table below:

Year Quantity of records transferred to GRS from the bureaux/departments (Linear Metres)

2006 370 2007 247 2008 369 2009 190 2010 552 2011 343 2012 356 2013 370 2014 596 2015 782

As shown in the above table, the quantity of records transferred to GRS fluctuates from year to year, depending on the nature and number of records that have to be disposed of by the bureaux/departments.

LEGISLATIVE COUNCIL ― 23 November 2016 A2

Appendix II

WRITTEN ANSWER

Written answer by the Chief Secretary for Administration to Mr CHU Hoi-dick's supplementary question to Question 4 As regards visits and exchanges relating to records management, in the past four years, officers of the Administration Wing and the Government Records Service ("GRS") visited the following countries for studies and exchanges:

Date Place Purpose of Visit/Exchange May 2013 London,

the United Kingdom

The Director of Administration led a delegation of GRS' officers to visit the National Archives, other institutions responsible for managing records and archives, the Cabinet Office and a government department with a view to understanding the United Kingdom's records and archives management system and enforcement of the Public Records Act, and learning from the United Kingdom's experience in implementing electronic records management.

October 2014 Girona, Spain

A GRS' officer participated in the Annual Conference of the International Council on Archives ("ICA") and exchanged views with counterparts from other countries.

October 2015 Fukuoka, Japan

The Deputy Director of Administration led a delegation of GRS' officers to participate in the 12th General Conference and Seminar of the East Asian Regional Branch of ICA and exchanged views with counterparts from other countries.

June 2016 Canberra, Australia

The GRS Director led a delegation of GRS' officers to visit the National Archives of Australia and other relevant national organizations to understand Australia's records management system and enforcement of its Archives Act, and to make reference to Australia's experience in the appraisal and maintenance of electronic records and establishment of a digital archive.


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WRITTEN ANSWER — Continued

Date Place Purpose of Visit/Exchange September 2016

Seoul, Korea

GRS' officers participated in the ICA Congress and exchanged views with counterparts from other countries.

All the countries mentioned above have enacted laws to regulate government records and protect freedom of information.

OFFICIAL RECORD OF PROCEEDINGS Wednesday, 23 ...

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