LEGISLATIVE COUNCIL ― 21 February 2019 6883

OFFICIAL RECORD OF PROCEEDINGS

Thursday, 21 February 2019

The Council continued to meet at Nine 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, G.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, G.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.

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THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P.

THE HONOURABLE PAUL TSE WAI-CHUN, J.P.

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, S.B.S., J.P.

THE HONOURABLE WU CHI-WAI, M.H.

THE HONOURABLE YIU SI-WING, B.B.S.

THE HONOURABLE CHARLES PETER MOK, J.P.

THE HONOURABLE CHAN CHI-CHUEN

THE HONOURABLE CHAN HAN-PAN, B.B.S., J.P.

THE HONOURABLE LEUNG CHE-CHEUNG, S.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, J.P.

THE HONOURABLE DENNIS KWOK WING-HANG

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

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THE HONOURABLE IP KIN-YUEN

DR THE HONOURABLE ELIZABETH QUAT, B.B.S., J.P.

THE HONOURABLE POON SIU-PING, B.B.S., M.H.

DR THE HONOURABLE CHIANG LAI-WAN, S.B.S., 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.

DR THE HONOURABLE PIERRE CHAN

THE HONOURABLE CHAN CHUN-YING, J.P.

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THE HONOURABLE TANYA CHAN

THE HONOURABLE CHEUNG KWOK-KWAN, J.P.

THE HONOURABLE HUI CHI-FUNG

THE HONOURABLE LUK CHUNG-HUNG, J.P.

THE HONOURABLE LAU KWOK-FAN, M.H.

DR THE HONOURABLE CHENG CHUNG-TAI

THE HONOURABLE KWONG CHUN-YU

THE HONOURABLE JEREMY TAM MAN-HO

THE HONOURABLE GARY FAN KWOK-WAI

THE HONOURABLE AU NOK-HIN

THE HONOURABLE VINCENT CHENG WING-SHUN, M.H.

THE HONOURABLE TONY TSE WAI-CHUEN, B.B.S.

THE HONOURABLE CHAN HOI-YAN

MEMBERS ABSENT:

THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P.

THE HONOURABLE MARTIN LIAO CHEUNG-KONG, S.B.S., J.P.

THE HONOURABLE YUNG HOI-YAN

THE HONOURABLE KENNETH LAU IP-KEUNG, B.B.S., M.H., J.P.

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PUBLIC OFFICERS ATTENDING:

THE HONOURABLE FRANK CHAN FAN, J.P. SECRETARY FOR TRANSPORT AND HOUSING

MR JOSEPH CHAN HO-LIM, J.P. UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY

DR RAYMOND SO WAI-MAN, B.B.S., J.P. UNDER SECRETARY FOR TRANSPORT AND HOUSING

CLERKS IN ATTENDANCE:

MR KENNETH CHEN WEI-ON, S.B.S., SECRETARY GENERAL

MISS FLORA TAI YIN-PING, ASSISTANT SECRETARY GENERAL

MS DORA WAI, ASSISTANT SECRETARY GENERAL

MR MATTHEW LOO, ASSISTANT SECRETARY GENERAL

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MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Good morning. This Council continues to deal with the motion moved under the Legislative Council (Powers and Privileges) Ordinance.

Mr LAM Cheuk-ting, please speak.

MOTION UNDER THE LEGISLATIVE COUNCIL (POWERS AND PRIVILEGES) ORDINANCE

Continuation of debate on motion which was moved on 20 February 2019

MR LAM CHEUK-TING (in Cantonese): President, I thank Ms Tanya CHAN for proposing the appointment of a select committee to inquire into the problems of incomplete construction documentation and deviation from the works plans of the Shatin to Central Link ("SCL").

President, the name of MTR in full is the Mass Transit Railway. Some members of the public have renamed it the "Most Terrible Railway", and now SCL is called the "Most Terrified Railway". What is most terrifying about it? It is not serious cost overrun or years of delay. Nor is it falsification in the project. Rather, it is the sudden disappearance of relevant construction records, records of materials, plans, etc. after the scandal concerning falsification in the project was exposed. If the offenders in the substandard piling works case back then had such brains of these masterminds behind the SCL scandal today, as long as they flatly denied everything and destroyed all traces of evidence, I believe they would not have been convicted even if the entire building tilted like the Leaning Tower of Pisa.

President, Members of the pro-establishment camp often say that the pro-democracy camp is fixated on SCL, picking on the Government and the MTR Corporation Limited ("MTRCL"). Let us recap the whole incident. Since the very first day this big scandal was exposed, what attitude has been held by the pro-establishment camp? First, they trust MTRCL. MTRCL has a good reputation and is renowned worldwide. Since MTRCL has already denied the relevant matters, we should not start rumours and stir up troubles here. Second, they believe the consultant of MTRCL. The consultant said it is only necessary LEGISLATIVE COUNCIL ― 21 February 2019 6889 to conduct a load test of the platform. There is no need to open up the concrete to check the rebars. Neither is there a need to conduct another inquiry. Third, they trust the independent Commission of Inquiry, considering that an inquiry by the Judge will suffice. There is no need for the Legislative Council to conduct any inquiry because there are a lot of political disputes in the Council. An inquiry by the Legislative Council will only be a waste of time and efforts.

Let us review the whole picture. Actually what has happened? It is way more serious than what we imagined on day one. Not only were the rebars not connected with the couplers and the works not carried in accordance with the plans. Now even the Request for Inspection and Survey Checks ("RISC") forms, materials testing records and altered works plans have gone missing. What is this if not destruction of all traces of crime?

Earlier on, MTRCL and the Government spoke with ease and assurance. They came to the Legislative Council and said they had been monitoring the works of MTR closely. They would conduct regular inspections. The monitoring system was flawless. After the scandal was exposed subsequently, MTRCL produced a large pile of records and stated at the press conference to this effect: "All of our works have been accepted by professionals and confirmed with signatures." Now where are these records? Or is it like a movie story? Among the pieces of paper put on the desk, those on the top were $1,000-notes and those at the bottom were just blank paper. Is that what has happened?

The Government kept saying that the RISC forms were used to verify the quality of works at the hold points, i.e. whether the rebars had been screwed in tightly. It was only after such a check and no problem was found that concreting could be conducted. How perfect! This goalposts were imposed by itself. But now what has happened to these goalposts? When a penalty kick is awarded against MTRCL and the opposing team is about to take the shot, they find that the goalposts have disappeared. All the standards have gone. All the records are missing. Who is the referee responsible for judging in this match? Secretary Frank CHAN. He is a director of MTRCL as well as the Secretary for Transport and Housing. Such a big scandal was exposed right before his eyes, and during investigation, such important documents could completely go missing. Where have they gone? No idea. Why were they lost? No idea. How many materials testing records have gone missing? Again, no idea.

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May I ask the pro-establishment camp how members of the public can believe in all the investigations under Frank CHAN's supervision? Let alone the investigation by MTRCL which found a so-called independent consultant to come forward to say that a rebar screwed into the coupler by 60% of the full depth could already provide a sufficient loading capacity. May I ask whether MTRCL would pay the contractor only 60% of the project fee. Would MTRCL charge the public only 60% of the fares? Would the Secretary for Transport and Housing receive only 60% of his salary? How can we possibly allow MTRCL to engage this so-called independent consultant to advance such a specious argument which even a three-year-old would not believe? As we can see, the strategy of MTRCL in handling the whole SCL scandal is, firstly, denial. At first they did not admit there were these problems. Secondly, they are playing down the matter. They conducted those load tests, took some measurements and said there was no problem. The rebars have been screwed into the couplers by 60% of the full depth. There is no problem either. Lastly, I wonder if MTRCL had any involvement, that is, in the destruction of all traces of crime so that all the records have disappeared in silence without a clue.

The pro-establishment camp said that the Legislative Council should not inquire into this matter because given the numerous political disputes, the inquiry would just be a waste of efforts. However, this is an important livelihood issue. Should the Legislative Council not probe into such scandals involving significant public interests? This is our significant role of monitoring the Government accordance with the Basic Law. Facing such a major issue, why may the Legislative Council not conduct an inquiry? The latest argument of some Members of the pro-establishment camp is that now we cannot commence an inquiry because the current term of the Legislative Council will end in 2020. With only some one year left, there is not enough time to conduct an inquiry. When the problem was exposed last year, we already pointed out that the problem was very serious and we needed to commence an inquiry expeditiously. At that time they opposed conducting an inquiry. But now they are saying that there is not enough time to do so. They can really put it in whatever way they like. The situation can be likened to a child playing all day without studying or doing his homework. At 9:00 pm, his mother asked him, "Have you done your homework?" The child replied, "No. But I will not be able to finish it on time because I have to go to bed at 11:00 pm. I cannot miss my bedtime. I had better not do the homework." Is this reasonable? It is just a specious argument.

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President, today, facing the SCL scandal in which more ugly stories have been uncovered, can we still trust Secretary for Transport and Housing Frank CHAN and believe that he is capable of investigating and dealing with this scandal? Yesterday, Secretary Frank CHAN said he was duty-bound to thoroughly investigate the matter and affix the responsibility. He added that he would engage in humble introspection. How is he investigating the matter now? On the one hand, he would try to look for documents in the office and meet with the officers concerned. On the other, someone took away boxes of documents right before him and destroyed them one by one. Is this how he thoroughly investigates the matter? Is this how he affixes the responsibility? Is this how he does humble introspection? He himself is a director of MTRCL, but he has talked about the whole issue as though he is not responsible. It has nothing to do with him. It was done by other people. He could not have noticed such a trifle. Is that the case? Being the Secretary for Transport and Housing, does he bear no political responsibility at all? So far I have never heard that Secretary Frank CHAN has done any genuine introspection. On the contrary, during the last debate, the Secretary said that the Legislative Council should not inquire into the issue. If the Legislative Council sets up a select committee to do so, it will affect the progress of the SCL project. Last time I already slammed Frank CHAN. Was the falsification in the project done by us? Are we the ones who did not screw in the couplers? Is it the Legislative Council which deviated from the works plans? Is it the Legislative Council which destroyed those RISC forms? He has got to find out clearly who should be held responsible. He said he would engage in humble introspection, thoroughly investigate the matter and affix the responsibility. In fact, he was just bragging unblushingly.

President, Hong Kong has degenerated to such a state today that many people of Hong Kong find it heart-rending and even feel desperate. The extent of confusing right with wrong, confounding good with evil and absurdity is shocking. Many people in the middle class and professionals have told us that they wish to emigrate as soon as possible. Some have even left Hong Kong already. When the upright people of integrity and upholding their principles leave Hong Kong one by one, the remainders are those who confound right with wrong in high positions. They keep denying and playing down various scandals, reversing black and white and confusing right with wrong. All kinds of evil deeds will only make Hong Kong degenerate to an unimaginable state.

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President, the campaign slogan of Chief Executive Carrie LAM was "We Connect". Now it turns out that the couplers have disconnected, and the evidence in respect of those scandals has disappeared, reflecting the dishonesty of some professionals and management officers. It is a duty of the Legislative Council to discover the truth. We cannot let what is wrong become right and what is black become white. We cannot let Hong Kong continue to degenerate and degrade itself. Besides, I believe, irrespective of the ultimate investigation findings, Frank CHAN should take the blame and step down as soon as possible because he has no credibility at all. Neither is he competent in taking charge of such important livelihood policies on transport and housing.

I so submit.

MR TONY TSE (in Cantonese): President, this motion moved by Ms Tanya CHAN under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance"), if my memory has not failed me, is the sixth one proposed under P&P Ordinance in the current-term Legislative Council on the Shatin to Central Link ("SCL") project. Relevant motions have been proposed since the middle of last year, the Year of the Dog, and now we have already come to the Year of the Pig. Moreover, we cannot assert if there will not be the seventh and eighth relevant motions moved under P&P Ordinance.

In saying so, I do not mean to criticize the opposition Members proposing such motions for persistently abusing the Legislative Council proceedings so as to steal the limelight and seek news coverage. In fact, had there not been endless scandals about the SCL project which, as many Members said, keep astounding us with something new and dreadful, I believe no matter how creative and tenacious the Members concerned are, they could have hardly come up with this half-dozen motions under P&P Ordinance.

When I spoke on the motions moved under P&P Ordinance on the previous few occasions, I mentioned that the past railway projects of the MTR Corporation Limited ("MTRCL") had considerable reputation both locally and overseas in terms of construction, management and service operation. However, subsequent to the continual exposure of problems of the SCL project ranging from the initial cost overrun and delay in works, then the scandal about the cutting of rebars and the resettlement issue exposed last year, to the latest incident of disappearance of a large number of construction records, as I have said earlier in a radio LEGISLATIVE COUNCIL ― 21 February 2019 6893 programme, the reputation built up by MTRCL over the years and the confidence of the people of Hong Kong in it have vanished completely after the said events.

To a certain extent, the issue of incomplete construction documentation of Hung Hom Station into which this motion requests an inquiry is even more serious than the earlier scandal about the suspected cutting of rebars. It is because under the usual procedures, the relevant documents must be signed and approved by the staff responsible for overseeing the project before the contractor can commence the works of the next stage. Moreover, the relevant documents should consist of a number of copies respectively kept by the project manager, the principal contractor of the project and various subcontractors concerned.

Now it has been reported that both the originals and duplicates of as many as 40% to 60% of the construction documents of the relevant railway project have gone missing. Deducing by common sense, I guess the two greatest possibilities are: first, for a certain reason or purpose, some people have destroyed as a collective act the relevant documents so that nothing can be traced; and second, actually the relevant documents have never existed and never been signed. The relevant works have nevertheless proceeded without written authorization.

The Chief Executive in Council has already officially announced the extension of the working deadline of the statutory independent Commission of Inquiry in respect of SCL ("the Commission"), and expansion of the scope of inquiry to cover the works in the North and South Approach Tunnels and stabling sidings in Hung Hom Station, as well as the disappearance of the relevant construction documents. Pinpointing the large number of missing construction records, the Police have also stepped in and commenced a criminal investigation. For this reason, I do not wish to make any unnecessary wild guesses here. Nevertheless, no matter whether someone has destroyed the relevant documents or such documents actually do not exist, or there are some other reasons, it has caused suspicions about whether the system for monitoring railway works in Hong Kong has thoroughly collapsed and degenerated.

In the incident of late submission of construction records of the Hong Kong-Zhuhai-Macao Bridge which has recently come to light, its nature is not as serious as that of the incident relating to Hung Hom Station. Although it does not involve unauthorized alteration to works plans and methods, to a certain extent, it shows that such problems have emerged not only in the railway projects 6894 LEGISLATIVE COUNCIL ― 21 February 2019 of MTRCL. In other large-scale infrastructural and civil engineering projects in Hong Kong, such malpractices of non-compliance with procedural guidelines in the execution of works and loopholes in the monitoring system may also exist.

Since the problems of the SCL project came to light one after another, members of the sector represented by me have asked me from time to time why the Government monitors private construction projects, including the construction of housing, shopping malls and offices, so strictly. All the plans and works procedures require the signature and confirmation of the authorized person ("AP") or other registered professionals, and applications must be made. No works can commence until approval is granted. If AP will be on leave and away from Hong Kong, he must inform the Government and assign another AP to temporarily oversee the relevant works project for him.

However, why does the Government monitor the infrastructural and civil engineering projects, especially railway projects, in such a lax manner which can even be described as entirely lacking supervision? Works can be carried out when the plans have not been approved. The project can proceed to the next step without the signature and confirmation of the person-in-charge. Even alterations to the plans can be approved by MTRCL itself without the Government's approval. What is most outrageous is that when something has gone wrong, it seems no one needs to bear any professional or legal responsibility, and the relevant professionals and supervisory officers at fault can get away by merely submitting resignations. Now we keep saying that MTRCL should take the responsibility. But MTRCL is a company. How can it do so?

The culture of strict adherence to the established procedural guidelines, the system of accountability for the professionals in charge and the system of affixing responsibilities are proven and have worked well in the construction of buildings. However, in infrastructural, civil engineering and railway projects, they seem to be totally ineffective. Hence, in respect of this incident of incomplete construction documentation and the series of problems of the SCL project revealed earlier, on the one hand we should continue to affix the contractual, legal and political responsibilities of the persons and companies concerned so as to do justice to the public. More importantly, we should on the other hand conduct a fundamental review and reform of the legal system and procedures relating to railway, infrastructural and civil engineering projects, as well as the rights and responsibilities of professionals, so as to perfect the relevant regimes, with a view LEGISLATIVE COUNCIL ― 21 February 2019 6895 to restoring the confidence of members of the public and the international community in the quality of infrastructural works in Hong Kong. Moreover, the relevant reform should not wait until the Commission has submitted its report. The Government should immediately kick-start the work now.

Firstly, it should strengthen afresh the monitoring of infrastructural and civil engineering projects, particularly railway works, including reviewing and amending the Buildings Ordinance. It cannot allow projects under the charge of MTRCL to be fully or partially exempted from the regulation under the Ordinance anymore. Even projects directly under the charge of the Government should not enjoy full exemption either. It is also necessary to study the need to enact a new law focusing on infrastructural and civil engineering works, and mandate the engagement of suitable independent professionals in the relevant projects, such that their independent roles and responsibilities in the monitoring mechanism, including legal responsibilities can be enhanced.

Secondly, MTRCL should be reformed and the Government's relationship with MTRCL reviewed. Earlier on, it has been reported that the Government has identified a suitable candidate to take over the Chairmanship of MTRCL. There is hearsay that a candidate has also been identified as the Chief Executive Officer. In my view, however, personnel changes are simply not sufficient. It is also necessary to review and reform the internal structure, governance culture and monitoring mechanism of MTRCL.

Besides, facts have proved that there are indeed problems with the concession approach of the SCL project and that of the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. It warrants a review, too. The Government needs to change the old system and approach commonly known as "check the checker", that is, the present passive regulatory approach under which it mainly relies on MTRCL or external consultants to oversee infrastructural projects, and the government officials monitor MTRCL and the consultants concerned by reading papers and reports in the office. When the frontline monitoring function of MTRCL has obviously failed, and the consultants of large-scale projects have been alleged of monopolization and conflicts of interest, the Government must consider going to the forefront and stationing its staff at the sites of MTRCL and SCL to effect monitoring direct.

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As a matter of fact, early in the last term of the Legislative Council, the report of the Select Committee to Inquire into the Background of and Reasons for the Delay of the Construction of the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, in which I served as Deputy Chairman, already pointed out that the Government lacked staff with practical experience in taking forward railway projects. Monitoring over MTRCL by the Highways Department and the Railway Development Office was thus affected. It recommended the Government to enhance internal professional training. This incident of SCL has once again underlined the relevant problem. I hope the Government will seriously implement the recommendation as soon as possible, establish a professional team for railway projects and at the same time properly engage external independent professionals to assist in monitoring.

Back to this motion proposed by Ms Tanya CHAN. I have seriously pondered whether I should support it. But given that the terms of reference of the Commission has already been expanded and the relevant work commenced, while the Police have also launched a criminal investigation, I think an inquiry by the Legislative Council may not be able to find out the truth and where the problem lies more effectively, thoroughly and quickly.

If Members have paid attention to the earlier public hearings of the Commission, they would find that the relevant inquiry is rather complicated and professional, involving a load of documents, plans, witnesses, evidence and professional knowledge of engineering. It may take a longer time than the inquiry into the incident of substandard piling works in public housing back then because the substandard piling works incident only involved piling works, whereas the SCL incident involves various projects, contracts and companies.

Back then, the Legislative Council took two years to inquire into the substandard piling works incident. But there is only some one year left in the current term of the Legislative Council. Moreover, it is anticipated that the relevant select committee may need to commission some local and even overseas independent expert consultants to provide assistance, thus entailing considerable procedures, time and public money. Furthermore, as we may expect, if the Legislative Council probes into the SCL incident, it will not merely search for facts. Some Members will definitely raise a number of political and policy issues. As such, will there be enough time to conduct a comprehensive, in-depth, impartial and objective inquiry? I have great reservations about this.

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If Ms Tanya CHAN and other Members of the opposition camp wish to ascertain the political responsibility of MTRCL and the Government, they may as well play their own roles separately from the Commission. They can take follow-up action in the Legislative Council against the relevant persons and officials based on the facts uncovered and conclusions reached by the Commission. Compared with invocation of P&P Ordinance to form a separate select committee to make duplicated efforts in an inquiry, this should be more direct and efficient.

Lastly, regarding some Members' request for Secretary for Transport and Housing Frank CHAN to take the blame and step down for the SCL incident, Members who have really paid attention to the ins and outs of the incident should know that most of the works and monitoring problems did not arise during the tenure of Secretary Frank CHAN. In my view, the Secretary has made his best efforts to resolve the problems left behind by the Government of the last two terms. I hope Secretary Frank CHAN and the relevant government officials will remain steadfast in their posts and strive with greater efforts to straighten out this mess of SCL for Hong Kong, thereby restoring public confidence in railway projects and the monitoring system.

President, the speech made by me just now also represents the views of the "Group of Six". I so submit.

MR HUI CHI-FUNG (in Cantonese): Mr LEUNG, I speak in support of the motion moved by Ms Tanya CHAN under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance"). Just now I heard Mr Tony TSE say that Frank CHAN is only tidying up the mess left behind by the former Governments, that he has exerted himself to discharge his duties faithfully, and that he is brilliant and wise. I wonder if this is the biggest joke of all, for this is indeed vastly different from the views of the people. Just now he used a lot of words and on hearing them I could not but doubt whether they came from a pro-establishment Member. He said that fairness must be upheld, that there must be mandatory measures and in-depth investigation, that it is necessary to ascertain responsibilities and restore public confidence, and that there must be accountability and professionalism. All this is very strong wording. However, when we vote on this motion later to confer powers on the Legislative Council to conduct an inquiry, he, like the other pro-establishment Members, will either vote 6898 LEGISLATIVE COUNCIL ― 21 February 2019 against the motion or leave the Chamber. So this is the pro-establishment camp, and you still pretend to be responsible to the people, pretend to pursue responsibilities, and pretend to be very anxious about what happened? At the end of the day, you are just shielding the Government and the wrongdoers.

So this is why the problems with the quality of the Shatin to Central Link ("SCL") are unbelievably ridiculous to the public. Documents are primarily the most basic evidence for ascertaining the quality of works and who should be held responsible, but they can outrageously disappear. What did the Government say? The Government said that in accordance with the Project Integration Management System of the MTR Corporation Limited ("MTRCL"), there are a number of hold points in the construction process and at these hold points, the contractor can proceed with the construction works only when an approval is given or the works are considered satisfactory, such as when the connection of rebars is up to standard. Therefore, the missing of over 70% of the forms relating to Hung Hom Station is extremely serious. How can it be possible that 70% of the several hundred documents have gone missing? How can this be explained?

Article 64 of the Basic Law stipulates that the Government of the Hong Kong Special Administrative Region must abide by the law and be accountable to the Legislative Council of the Region. Therefore, the Legislative Council absolutely has the constitutional role, constitutional responsibility and constitutional status to monitor the Government. This saga of suspected fraud committed by MTRCL and irregularities in the works quality involves many different government departments, former officials as well as the incumbent ones sitting opposite us, and a number of listed companies and Mainland companies, and there is a chance that public safety has been seriously jeopardized. The Legislative Council is duty-bound to conduct an inquiry. As I have just said, this incident involves so many senior officials, departments and companies, so they might have formed an enormous syndicate for shielding one another. Of course, in this syndicate the pro-Government camp also has a part to play in helping shield their interests. The Legislative Council, being representative of public opinions, can make use of its coercive investigation powers. But under this huge syndicate of these people shielding one another, hardly do I believe we can uphold accountability and pursue responsibility to seek justice, just as the pro-Government Member said just now. I do not believe we can do that.

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The construction of SCL has incurred a cost overrun of $17.3 billion overall, and the total construction costs are as high as $97.1 billion. Exorbitant costs are involved and yet, scandals have never ceased, and problems in the construction works have compromised the safety of stations and will likely delay the commissioning of SCL. The Legislative Council is a body representing public opinions. Why can it not conduct an inquiry? The Highways Department and its Monitoring and Verification Consultant conduct regular checks on MTRCL's compliance with the procedures in its construction works, which include checking these inspection forms that are now missing to ensure that the forms are signed and kept as required. When these forms are missing now, I think dereliction of duty on the part of the officials is definitely involved. Moreover, with regard to the missing of these forms, the most serious situation is that frauds were committed in the construction works or the works were not carried out in accordance with the safety requirements, which would compromise the structural safety of the station as a whole, so this is major, significant public interest. We also believe, as mentioned by many Members, it is highly likely that some people had destroyed the evidence for fear of their fraudulent practices in the construction works being brought to light. This would be a serious criminal offence. We must summon the people concerned to give evidence and we will dig to the bottom of it.

In the past couple of days it was reported in the press that an external quality audit was conducted by MTRCL on 14 November 2016. The audit, which was performed by a Quality Assurance Engineer of MTRCL, was intended to inspect the stabling sidings and certain works projects at Hung Hom Station carried out by the contractor, namely, Leighton Contractors (Asia) Limited ("Leighton"), and the scope of the audit includes checking the Request for Inspection and Survey Checks ("RISC") forms, contractual documents, etc. In the audit report it was stated that Leighton had "reasonable document control and traceability of records for the design and construction process", and while the report also pointed out problems with several documents, they had nothing to do with the RISC forms at all, nor did the report mention the missing of documents in volumes. Subsequently, on 18 December 2017, MTRCL again conducted a similar audit on the newly constructed parts of Hung Hom Station, and there was no mention of any problem with the keeping of RISC forms. If this press report is true, it is very likely that these RISC forms did exist in the beginning and then they were nowhere to be found for reasons unknown, and this is inconceivable.

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The independent Commission of Inquiry, which will submit a report to the Government in August, probably cannot look into these situations in depth. There are still 20 months before the next general election of the Legislative Council and with the support of Members in this Chamber, the Legislative Council can launch an inquiry right away. Many pro-Government Members remarked before that there would not be sufficient time, but is this not ridiculous to the public? If all Members of the Legislative Council can unanimously and wholeheartedly support doing something, how can there be not sufficient time? The Bills Committee on the Guangzhou-Shenzhen-Hong Kong Express Rail Link (Co-location) Bill completed its deliberations in an extremely short period of time to enable the commissioning of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. Now you are saying that there is not sufficient time? When we call for an investigation into problems relating to the quality of the construction works and suspected cases of fraud, you said that there is not sufficient time. But when the pro-democracy camp in this Council is the subject of investigation, you will not say that the Legislative Council should not conduct an inquiry in view of pending court proceedings. Rather, you will do everything you can to carry out an investigation. When an investigation is directed at your political enemies, time will never be insufficient and no matter who else is already conducting an investigation, you insist on an investigation by the Legislative Council. But when it comes to an inquiry into the Government or problems in the construction works which can have a bearing on human lives and safety, you say that there is not sufficient time and that an inquiry by the Legislative Council is unnecessary given concurrent investigations being conducted by others. This is what the pro-Government camp has done.

Therefore, if it is said that inquiries by the government-appointed Commission of Inquiry ("the Commission") and the Legislative Council in parallel would be redundant, I have to point out that the Legislative Council and the Government's Commission have different focuses in their investigations. Their investigations are not redundant and better still, they are complementary to each other. Do members of the public mind having an additional inquiry with a different focus conducted by the legislature which is representative of public opinions, so that the whole issue can be presented from multiple perspectives and in full dimensions? Tell me, will members of the public consider this a bad thing at all?

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Therefore, despite an expansion of the terms of reference of the Commission, I think the Commission cannot comprehensively look into the situations that have emerged recently, including frauds or cover-ups. Particularly, regarding acts amounting to dereliction of duty or default on the part of the officials concerned, it is more appropriate and more reasonable for the Legislative Council to proactively conduct an inquiry.

Recently when I visited the districts, I heard many people lament about Hong Kong increasingly resembling the Mainland. The term "tofu-dreg" or jerry-built projects has taken root in the hearts of the people. These projects used to be seen only in the construction works or infrastructure in the Mainland, and in the past it was absolutely rare to see major incidents attributed to the quality of construction works happening and causing injuries and fatalities in Hong Kong. But it seems that a storm is really brewing, and Hong Kong can no longer be spared. Whether in respect of the political system, the rule of law or culture, Hong Kong has already aligned with the Mainland, as the Government has put it, but this is a gradual regression in the eyes of the public. Now that Hong Kong has probably aligned with the Mainland even in the quality of construction works. This is how the people feel and that is, they feel that Hong Kong has kept regressing. One day when SCL is completed and a major incident happened, causing in deaths and casualties, the public will ask the pro-Government camp which voted against invoking P&P Ordinance to conduct an investigation today where your conscience is.

Moreover, even the pro-Government camp has now aligned with the Mainland. In the past, the pro-Government camp or the pro-establishment camp supported motions proposed by the pro-democracy camp on the invocation of P&P Ordinance. They supported the Legislative Council to give play to its constitutional role and exercise its constitutional powers by investigating some major incidents. Mr Tony TSE said earlier that we have, for six times, proposed to invoke P&P Ordinance to inquire into issues relating to the quality of construction works of MTRCL. But on all of these six occasions the pro-Government camp refused to vote in support of the conduct of an inquiry by the Legislative Council. Please bear in mind that the issue is not referred to the pro-democracy camp for investigation, and you people in the pro-Government camp can also take part in it. You can also exercise your powers, so why should you castrate yourselves? Dr Junius HO, and Dr Priscilla LEUNG, Ir Dr LO Wai-kwok and Mr WONG Ting-kwong who are in the Chamber now, why 6902 LEGISLATIVE COUNCIL ― 21 February 2019 should you castrate yourselves? When you do not exercise your own powers but allege the pro-democracy camp if seeking to steal the limelight by proposing the motion and politicizing the incident, you are actually shielding the wrongdoers.

Therefore, there is the view that the supervision of major construction works in Hong Kong, the confidence of the public, and the good traditions that we used to embrace have been gradually been ruined and wasted in the hands of a minority in Hong Kong. Does this minority refer to the pro-Government Members in the Chamber now? Are you covering up the wrongdoers? You said that we could leave it to the Commission appointed by the Government to conduct an inquiry, and you tell the public to trust this Government and to trust this Chief Executive, Carrie LAM, who is responsible to Beijing, but would the public rather trust an inquiry conducted by the Legislative Council which at least has half of its Members returned by direct elections and which basically has the mandate from the people?

Therefore, I appeal to the pro-Government Members to not act against your conscience. You have been given six chances but you invariably refused to support the invocation of P&P Ordinance to conduct an inquiry. You may as well stand up and say that you will never support doing it, that P&P Ordinance should be repeated, and that you entirely trust Chief Executive Carrie LAM and you entirely trust the Beijing Government and when they said that there is no problem, there is no problem. If so, go keep shielding and covering up for them. If that is the case, please do not pretend to pursue responsibilities and pretend to call for an investigation in the Legislative Council. If you want to shield the Government, go do it till the very end.

Mr LEUNG, I so submit.

MR ALVIN YEUNG (in Cantonese): President, it is indeed rather taxing to count the exact number of times the question on whether an inquiry should be conducted into the problems of the Shatin to Central Link ("SCL") Project under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") is debated in the Legislative Council. In the relevant debates in the past, many Honourable colleagues already made clear their positions: Since the Government has formed an independent Commission of Inquiry ("the Commission") to conduct an inquiry similar to the one by the Legislative Council into the SCL scandal, why should something redundant and unnecessary be done, which is LEGISLATIVE COUNCIL ― 21 February 2019 6903 simply a waste of time? This time will certainly be no different. On Tuesday, the Government opportunely extended the scope of inquiry of the Commission to cover the relevant issues of Hung Hom Station into which an inquiry under P&P Ordinance is proposed in this motion today. That being the case, why do Members like us not give up on the hope of inquiring into the SCL incident through the Legislative Council?

President, the answer in fact is very simple. Despite the fact that a retired Judge appointed by the Government has formed the Commission to look into the incident, and that the recently revealed issue regarding the Request for Inspection and Survey Checks ("RISC") forms having gone allegedly missing is now being investigated by the Police following a report to the Police filed by the Highways Department direct, the Legislative Council still has an obligation and is in a position to conduct an inquiry, since the public money funding the project was approved by the Council. When the funding application for the SCL project was submitted to the Council for approval, some members of the Subcommittee on Matters Relating to Railways, the Public Works Subcommittee and the Finance Committee of the Legislative Council had spotted problems in the project and raised them to the Administration. Are those problems and questions previously raised echoed in the chaos today brought forth by a project fraught with blunders? Since the Legislative Council has approved the funding, it has an obligation to effect continued monitoring. I will go so far as to say that it is not just an obligation, but a power rightfully vested in the Council.

Certainly, Members are well aware that since March 2012, it has become impossible to exercise the powers and privileges conferred on the Legislative Council by P&P Ordinance. Members can do the counting themselves. How many years have passed since the motion calling for an inquiry into LEUNG Chun-ying's alleged conflict of interests in the "West Kowloon-gate" under P&P Ordinance was passed in this Council in March 2012? Seven years. During the interim, 29 attempts to trigger inquiries into various incidents under P&P Ordinance were made in the Council. Unfortunately, not one of the relevant motions were passed. Those incidents, from politically-charged ones to those concerning such livelihood issues as lead-tainted water, were all off-limits to inquiry by the Council. I have no intention to speculate here about whether this is an imperative order given to Members of the pro-Government camp by the Central Government or the "Western District" in an attempt to emasculate the 6904 LEGISLATIVE COUNCIL ― 21 February 2019 powers of the Legislative Council. I wish only to point out simply that, compared with the trend of exploiting powers to the fullest prevalent in the executive, the Legislative Council is unduly belittling and deprecating to itself in attitude and far too timid in its stance on issues of public interest.

President, let us recall the date on which the problem of incomplete construction documentation of Hung Hom Station as set out in Ms Tanya CHAN's motion first came to light. It was on 30 January this year, a day after the Government's Commission of Inquiry wrapped up its hearings. Was that a coincidence, or a deliberate act of the person behind the exposure with the intention of shaming the Commission and showing the incompetency of the Commission in finding out the truth? Certainly, I am neither sufficiently informed nor qualified to hazard a guess. What worries me, though, is whether a fresh scandal will break out on the day after the Commission has completed the second round of hearings? Will the Chief Executive again expand the scope of the inquiry and defer the date by which the report is due? Will Members of the pro-Government camp by then say that, given that an inquiry by the Legislative Council can easily take several years and the current term of the Council will soon expire, there is simply not enough time for an inquiry and pointless to conduct one. However, has it ever occurred to Members that as we worry about the possibility of the commissioning of SCL being affected by a prolonged inquiry by the Legislative Council, will the indefinite extension of the inquiry by the Government's Commission of Inquiry not similarly affect the commissioning date of SCL? That being the case, is it not preferable to have the Legislative Council share part of the work of the Commission so that the inquiry can be completed more speedily and SCL can be commissioned expeditiously?

President, the problems exposed in Hung Hum Station are not confined to Hung Hum Station or SCL. They point to a more deep-seated problem: What is happening in the engineering sector of Hong Kong? Hong Kong had gone through the episode of "seawater buildings". After much reflections on the painful lesson, the Government formulated a series of works standards, which paved the way for a safety record of Hong Kong's constructions in which Hong Kong people can take pride. Yet, why were there exposures after exposures of failings―even falsification―in respect of building quality or monitoring procedures in the works in recent years? A person well versed in the operation of the engineering sector has told me in private that the failure to fill out or LEGISLATIVE COUNCIL ― 21 February 2019 6905 delayed submission of RISC forms are very common phenomena these days, with contractors submitting them retrospectively only when the construction payment for them is due. The problem is that RISC forms are proof of inspection confirming that a given works procedure, upon completion, has been inspected on-site and signed off by someone as verification of the proper completion of the procedure. Why then did the companies or government departments responsible for works monitoring allow contractors to wait―as long as three to four years―until the completion of works and the commissioning of the relevant structures to submit their RISC forms? President, instead of a couple of forms, I am talking about tens of thousands of such forms. We are worried that, instead of implicating just a couple of companies, the relevant problem has spread throughout the engineering sector.

President, given contractors' unwillingness to fill out RISC forms―the so-called paper work―which they do not have time to fill out as they work in a rush, it begs the question of how did they gain the certification of International Organization for standardization ("ISO") without completing the required procedures, when the granting of ISO certification is contingent upon the completion of the relevant inspection procedures? Should ISO revoke the relevant certification? I wish to say to those people who have an engineering background, particularly those who often undertake public works projects of the Government, that Hong Kong should not be like this. Once the sector chose the path of depravity, young new entrants will follow their lead, resulting in the dissipation of prestige in the engineering sector of Hong Kong and in turn the gradual tarnishing of Hong Kong's lustre―a situation I believe no one in this Chamber would wish to see. Nor does anyone, presumably, would wish to see the people of Hong Kong feeling ashamed of the MTR Corporation Limited ("MTRCL") which had once made Hong Kong proud―a company that has made Hong Kong world-famous, and, with its successful bids for various projects overseas, had been a source of assurance, delight and pride for Hong Kong people whenever they saw the MTRCL logo overseas―due to the various lapses in operation, monitoring and management which came to light in recent years.

President, I must point out that while persevering on our quest, we are by no means oblivious to the political reality. We are not too optimistic about the outcome of this motion moved under P&P Ordinance, which may become the 30th consecutive motion of similar nature being negatived. Yet, I wish to quote a few 6906 LEGISLATIVE COUNCIL ― 21 February 2019 lines for the benefit of those Members who consider an inquiry by the Council and one by the Commission more or less the same, which read: Do you know who the most famous person in China is? His appearance resembles yours and mine. He has two eyes―but does not see very clearly; he has two ears―but they do not listen very well; he has a nose and a mouth, but does not distinguish much between different smells and tastes. His head is not particularly small―however―his memory is not very good and his thoughts are not at all lucid. That is an extract from the Life of Mr Chabuduo, written by Mr HU Shi 100 years―exactly 100 years―ago. A century down the line, Mr Chabuduo has actually found kindred spirits in this Council.

I so submit.

DR PRISCILLA LEUNG (in Cantonese): President, I really enjoy taking MTR very much. Recently, many friends are very interested in my success in losing weight. One of my secrets of success is to let the driver get off work earlier so that I would have the opportunity to take MTR more frequently. I am really a fan (supporter) of MTR.

When the scandal concerning the cutting short of rebars was uncovered last year, some Honourable colleagues considered that the incident might involve political motives. Yet, I remember I spoke in this Council in the first instance and pointed out that regardless of the background of the whistler-blower, we should not look at the incident from the political perspective since the matter revealed was a major issue related to people's livelihood.

Perhaps it is because I have worked in a public organization, and was some sort of a whistle-blower, I understand that it is very difficult for people working in a public organization to blow the whistle. A whistle-blower has to face his boss with abundant financial resources who might sue him for libel at any time. Therefore, those working for public organizations and even contractors who wish to blow the whistle have already put their career in great risks. I have assisted quite a number of friends and colleagues when they were experiencing such situations, so I paid much respect to the whistle-blower at that time and urged Honourable colleagues not to look at this issue from the political perspective right at the beginning.

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Eventually, the incident indeed turned out to be more serious, more infuriating and more disappointing than we had imagined. With regard to the cutting short of rebars at Hung Hom Station, it has been proved that a very large proportion of rebars do not comply with the standards after intervention and investigation by the Government. Regarding the settlement problems in the vicinity of To Kwa Wan Station of the Shatin to Central Link ("SCL"), I was also present at that time. In fact, the officials attending the District Council meeting could have done better, but I wonder if they were accustomed to concealing the facts, so they would not tell us the existence of settlement. Members of the public living in To Kwa Wan face the problems of cracked water pipes and fractures in buildings for which they have complained for many years. Eventually, blunders were uncovered one after another, turning the public from being disappointed to worried. Are there actually any problems with the safety of the works?

I remember that, at that time, I had asked some friendly people in the engineering field who could be trusted. I asked engineers of 12 different disciplines, and they also told me that there should not be any safety problems since Hong Kong had very stringent safety requirements and, therefore, the occurrence of these problems should―we can only say "should"―not undermine safety. Perhaps we are also accustomed to some kind of inertia.

That said, why have so many problems arisen? Are there any blunders in the procedures? We then started talking about Leighton Contractors (Asia) Limited ("Leighton"). Is Leighton a dinosaur? Will we be unable to carry out railway projects in Hong Kong without Leighton? As a matter of fact, everyone says that even if Leighton is kicked out, nowadays there are still quite many local engineering organizations and companies in the engineering sector which can undertake the relevant projects, so the Government should not be so wary of Leighton.

The problem now is that more than 60% of the documents are missing. When these strange incidents have arisen, I immediately associate them to someone wishing to destroy the evidence. Are these documents, known as Request for Inspection and Survey Checks ("RISC") forms, so easy to disappear? I have also asked my buddies, who are some comrades from the engineering field, let me read out their replies: The first one is "unreasonable, many documents should be in electronic form". The second one is "they are resting on their laurels, the reasons for not submitting the RISC forms should be found out. The 6908 LEGISLATIVE COUNCIL ― 21 February 2019

RISC forms signed may serve as evidence leading to prosecution, so they would destroy them. You can only condemn them at most in the absence of such document.". These are the views of some friends of mine from the engineering field whom I trust very much. For large-scale projects, there would be a dedicated team of personnel, namely clerks of works, responsible for maintaining the documents. The documents, usually in several copies, are kept by the signatories and then submitted to a higher level. Photos are often taken immediately with emails sent on the scene lest there should be any mishaps. Now, it seems that they have come to their wits' end, such that they have to destroy the documents to protect themselves.

I wonder if Secretary Frank CHAN has some friends from the engineering field, but I have a lot of friends from the engineering field and I hold them in high respect. I believe very much in the views raised by some friends of mine when they commented on the incident. Therefore, we can analyse this matter from four aspects: First, on the professional front, the relevant personnel should of course be replaced. Yet, what can be attained after replacing and dismissing some personnel and appointing a new chief executive officer? If the new personnel would put on the old clothes, would the situation be the same? Second, on the political front, the Government has set up the Commission of Inquiry immediately. I find the Government very smart in doing so, but in fact it should have been smarter at an even earlier time. We urged the Government to expand the scope of inquiry last year, but the Government announced the expansion of the scope of investigation only this year immediately after the missing of documents when there were no other alternatives. However, even though the scope of inquiry has been expanded, the Government must ensure that the findings of the inquiry can be announced before March, that is, the time limit they have promised. In case the findings are not announced in March to April, I believe the Legislative Council should revisit this issue by then.

On the legal front, now they have already reported to the Police which would conduct a criminal investigation. On the civil front, I have also participated in mediation in respect of the problems of cracks in buildings faced by residents of To Kwa Wan. I requested the MTR Corporation Limited ("MTRCL") to follow up as soon as possible. It should offer compensation to the residents as it has made enormous profits. Now, the number of victims is more than that of one year ago. A year ago, we thought that SCL would be commissioned on schedule, so we gave sufficient time to them as we did not hope LEGISLATIVE COUNCIL ― 21 February 2019 6909 to spend one to two or three to four years on conducting an inquiry. In fact, the residents also believe that it is the best to commission service immediately. Now, is the date of commissioning indefinite? I am responsible for the work in the district concerned and am aware that the residents hope that SCL can be commissioned, even in part. Yet, to protect public safety, it cannot be commissioned now, unless clear explanations are given on the relevant procedures and details.

In fact, why were these procedures formulated back then? I believe such procedures should have been jointly designed by members of the engineering field who thought that they were feasible. To ensure safety, and to make the public, professionals, politicians and the Government convinced that it is safe, quality control properly performed, before it can be put into service. Hong Kong has its own brand name in this respect. I would rather that SCL will be commissioned only after its safety has been confirmed. It cannot be rushed indeed.

However, there would also be some victims in this incident. The residents in the district are the victims directly affected. They face problems such as cracks in buildings and they hope for the commissioning of SCL. Yet, there is no definite date for commissioning now. Some people have also invested in properties in the district due to SCL, and the interests of some people would in fact be jeopardized directly.

Regarding the circumstances in which the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") was invoked in the past, I recall that P&P Ordinance was invoked in respect of the penny stock incident, the substandard piling works incident, the Lehman Brothers incident and the LEUNG Chin-man incident. P&P Ordinance was invoked in respect of another incident with the shortest investigation time, that is the West Kowloon incident; it took about four to five months to complete the inquiry. I have participated in the inquiries into the West Kowloon incident and the Lehman Brothers incidents.

What is the difference between an inquiry under P&P Ordinance and an investigation conducted by the Government? I would like to share my experience with some Honourable colleagues who have never participated in an inquiry conducted upon invocation of P&P Ordinance. Mr IP Kin-yuen should remember that the commission of inquiry appointed by the Government is very 6910 LEGISLATIVE COUNCIL ― 21 February 2019 powerful. Some years ago, a commission of inquiry was set up to investigate the Institute of Education, leading to the resignation of Fanny LAW. Arthur LI finally got away by claiming that he would initiate libel proceedings, so that he would not be scathingly criticized in the report. Yet, it is because commissions of inquiry appointed by the Government possess a summoning power, a strong summoning power, so there would be a high level of open participation.

What is the difference of an inquiry conducted by the Legislative Council? Some years ago, I also participated in assisting an inquiry at the City University. It took about half a year to complete the inquiry which was open and transparent. An inquiry would indeed exert a great deal of pressure on policymakers, but policymakers usually possess abundant resources―that is, attorney fees―thereby creating a lot of pressure on people summoned to give evidence. Therefore, I understand why Honourable colleagues hope to invoke P&P Ordinance and also hope that the commissions of inquiry appointed by the Government would be vested with the summoning power. It is because people giving evidence may sometimes say too much due to a lack of legal knowledge and are then sued for libel. They are so miserable indeed. Of course, this is premised on the principle that all of us are giving evidence in a reasonable manner.

According to my experience in the Lehman Brothers incident, after the inquiry was commenced, on the civil front, banks began to soften their stance; whilst on the criminal front, some people would sue the front-line staff. It is hence easier for a settlement to be reached. The Consumer Council would also intervene. An inquiry would certainly involve some political factors. Each Member would make representations in different ways and be accountable to their voters.

With respect to this incident, we have seen the mentality of the engineering field. However, even some engineers told me―I asked them yesterday with the hope of voicing out their feelings in giving my speech today―but we have not seen the mentality of the public. What is the mentality of the public? The mentality of the public refers to politics, that is, the Legislative Council.

In view of this, some Honourable colleagues remarked just now that P&P Ordinance should not be invoked due to the lack of time. My personal opinion differs from theirs, as I have participated in the West Kowloon incident. The LEGISLATIVE COUNCIL ― 21 February 2019 6911 inquiry was completed in the shortest time, only a few months. However, in the meantime, should we wait for the inquiry report of the Government, that is, that of the independent inquiry led by a retired judge?

What is the difference between a retired judge and the Legislative Council? I can only say with due respect that a retired judge would definitely apply the law and administer justice properly. He would not let the relevant parties say too much or too less. Indeed, Members of the Legislative Council would sometimes speak more, or say a few more words for their voters, which is the normal procedure of political discussions in the Legislative Council, and I think it should be allowed. For a while, people would think of political manipulation once P&P Ordinance is mentioned. I really do not hope so as I believe that P&P Ordinance is indeed an extremely valuable power of the Legislative Council of Hong Kong.

I hope that the Government will listen to our opinions on major issues and when necessary. When the Government slashed the welfare benefits of elderly people aged 60 to 64 some time earlier, I also remarked that they could not take it for granted. I hope the Government will realize that the pro-establishment camp is discussing this issue very seriously.

You have indicated that a report would be submitted in April. We can give you the time. "Worms will breed only in something rotten", will there be any changes after sacking those people? It seems that you cannot give me the confidence. I do not know whether someone would eventually be held politically accountable in this incident, obligating a step down. Yet, would the problems of this mechanism be solved after someone has stepped down? I think we must follow it up. Both the Legislative Council and the Government must follow it up. The practice adopted in the substandard piling works incident some years ago is a specific example which we should follow. After the incident, the Government set up the Construction Industry Review Committee in 2000 to conduct a comprehensive review and reform with the introduction of systems such as information technology and artificial intelligence, etc. I think it is necessary to include Members, and to be specific, Members of the Legislative Council in such a committee. In addition, for the sake of fairness, Members from both camps should also be included. There should be Members from the pro-establishment camp and those from the opposition camp as well, so as to make improvement to the system.

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Another example is the setting up of the Financial Dispute Resolution Centre by the Government after the Lehman Brothers incident. It is because during the inquiry, we found that the whole system―to put in bluntly―the wealthy people were cold-blooded when they designed such a mechanism. They did not know how harsh it would be when people with a pension of only $100,000 made investments with it and lost this sum of money. When this kind of intervention is made, there should be changes to the entire system. However much I enjoy taking MTR and however much confidence I have in it, I think the system should be completely transparent, so that we can give advice and study how to prevent the same mistakes from recurring. Of course, we would have the chance to rectify the problems only after an incident has arisen. With respect to the entire financial structure … I must say this even though "Brother Christopher" is present in the Chamber. I was criticized by Mr Abraham SHEK last time for saying that: "Even for directors, there must be a mechanism in the commercial sector for directors' remuneration to be deducted when they have made too many mistakes, so that they would feel the pinch. We should not only deduct that of the organizations." He asked me to withdraw my remark, but sorry, I cannot do so. It is because we have to be responsible in the commercial, political and policy aspects for full pursuit of liabilities. I hope that the Secretary can listen to us, and I would like to give the Government some more time. Having said that, I believe the Legislative Council should revisit the entire issue, for Mr Abraham SHEK also agrees that at least the Public Accounts Committee should investigate it. President, it is necessary to ascertain who should be held accountable. (The buzzer sounded) … President, I so submit.

PRESIDENT (in Cantonese): Dr LEUNG, please stop speaking. May I remind colleagues that according to the Rules of Procedure, Members should address their views to the Chair.

MR CHARLES PETER MOK (in Cantonese): President, I understand that sometimes Members would want to turn their eyes elsewhere. I hope you would not mind.

First of all, I thank Ms Tanya CHAN for moving this motion under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") to request again that an inquiry be conducted into the problems under the relevant LEGISLATIVE COUNCIL ― 21 February 2019 6913 works contract of the Shatin to Central Link ("SCL"). I think some people will find us persistent. And more importantly, if the motion is not passed, it can indeed once again demonstrate to the general public the absurdity of the system. Certainly, people covering up their faults will say we are wasting time.

Problems relating to the SCL project are exposed one after another as the inquiry digs deeper and deeper. A problem was found in the construction works of one station, only to be followed by another one in another station. After a problem has emerged, another one comes to light. Members from the pro-democracy camp have tried, for many times―I have lost count of the times―and through various means in the Legislative Council, such as invoking P&P Ordinance to request that documents be submitted or a select committee be appointed, to find out the truth of various problems. Indeed, we only hope to give the public a clear account and put a stop to such problems and a mess―as described by the pro-establishment camp as well―and find out who should bear the responsibility. However, no matter how serious a problem exposed of the MTR Corporation Limited ("MTRCL") or other contractors, Honourable colleagues from the pro-establishment camp would only repeat: MTRCL is not right and neither are the contractors, and the Government is at fault too for failing to enforce effective monitoring; but the Government is conducting an inquiry and so the Legislative Council should not waste more time conducting another inquiry on its own so as not to duplicate efforts.

At around 4:00 pm the day before yesterday, the Government issued a press release to announce an expansion of the terms of reference of the independent Commission of Inquiry it appointed and chaired by a judge. It happened to be very similar―only similar―to the contents of the motion proposed by Ms CHAN. The Government stated that: "to […] ascertain the relevant facts and recommend appropriate improvement measures relating to the irregularities that have recently surfaced in the construction of the North Approach Tunnels, the South Approach Tunnels and the Hung Hom Stabling Sidings under the MTR Corporation Limited's Contract No. 1112". Given this, some Honourable colleagues from the pro-establishment camp would say: As the Government has asserted that an inquiry will be conducted, we need not spend so much time and effort to do so. It repeats the work and wastes time―obviously, the time we originally have in the Legislative Council would be drained away by them in the end.

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However, is it true? Now the terms of reference of the independent Commission of Inquiry ("the Commission") have been expanded but only to "ascertain relevant facts" and "recommend appropriate improvement measures", excluding the civil and criminal liability involved. It is of grave concern to the people. Do not say it is useless to do these things. If, after a problem has emerged and the Government says it having been corrected means that it has been solved, people who should be held responsible will then think it is okay and that they will never be punished. Then, our laws―be it civil laws or criminal laws―will have no value in existence at all. Prisons can be spared, wrongdoers will not be punished and fines need not be paid. It is only necessary to give them a chance to correct themselves. It is not so. The purpose and terms of reference of the Commission set up by the Government are only to inquire into the causes of the series of construction problems, without touching accountability. It is unable to give an account to the public.

We ought to remember that, given an inquiry conducted by the Government, regardless of what kind of an independent commission of inquiry is set up, the terms of reference and scope of inquiry are both drawn up by the Government. For example, as regards the shortened rebars in the construction works of SCL Hung Hom Station, previously a witness wanted to come forward with the person who committed the act, but was stopped by Mr Michael HARTMANN, Chairman of the Commission appointed by the Government. He had no other way as he was performing his duties as per the terms of reference. It shows that the Commission may not be able to fully inquire into who should be held responsible. For this reason, in view of the power the Legislative Council possesses under the legal regime, we as Members should discharge our duties. The terms of reference and scope of inquiry of a select committee set up under P&P Ordinance can be determined by Members from both camps―the pro-establishment camp even has a majority. Placing the interests of the public above all else, the select committee will find out who should be held responsible and whether public funds have been put to appropriate use. It can carry out the most comprehensive, specific and open inquiry. To the public, it is the best approach to give them an account, and, as far as the Government is concerned, it is the best approach as well.

A select committee may be by invoking P&P Ordinance and now the Government has appointed a judge to chair the Commission. The two, on the surface, have a very similar―or even the same―scope of inquiry, but they have different directions and functions and would not duplicate each other's efforts or LEGISLATIVE COUNCIL ― 21 February 2019 6915 waste time. Admittedly, the select committee of the Legislative Council may not, as compared to the Commission of the Government, focus on identifying improvement measures―this aspect should then be passed to it―but we can find out who should be held responsible. Therefore, now some Members oppose the motion on all kinds of pretexts. I am afraid they are merely trying to defend MTRCL, the contractors and the Government, conceal their mistakes or even harbour them so that they eventually escape bearing the responsibility. They have been procrastinating on various excuses, hoping to sit on the incident as time passes.

Moreover, the scope of inquiry of the Government's Commission does not cover similar problems uncovered in the construction works of Exhibition Station undertaken by Leighton Contractors (Asia) Limited ("Leighton") and China State Construction Engineering (Hong Kong) Limited ("China State"). If we can invoke P&P Ordinance to set up a select committee, we can inquire into who should bear the responsibility for the construction problems found at Exhibition Station and, at the same time, into problems in the construction works at other SCL stations. I believe it is the meaning of "other related matters" in the wording of Ms Tanya CHAN's motion, which gives us crucial flexibility. President, no one can really tell. Perhaps on the news tomorrow whatever problem of whichever station will be uncovered as well. As the scope of inquiry has been set to be quite rigid, newly found construction problems cannot be included in the inquiry because they are not within the scope set when the Commission was established. Given that the Government, of its own accord, expanded the terms of reference of the Commission the day before yesterday, it is evident that such an approach is problematic. Hence, greater flexibility can be achieved by an inquiry conducted by a select committee of the Legislative Council, which can best address people's demands.

Therefore, nowadays, if Honourable colleagues from the pro-establishment camp still choose to negative the establishment of a select committee under P&P Ordinance, what exactly are they thinking? It is certainly important that the Government identifies the root of the construction problems, but does it obviate the need to investigate who should be held responsible? How do they give an account to the people? The construction works have spent so much public funds, wasted so much time and suffered so many delays. Does the Government want to give an account to the people? Can the Government truly face itself and say that it is not harbouring anyone?

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Honourable colleagues from the pro-establishment camp are also aware of the severity of the problems. For example, Ir Dr LO Wai-kwok from the engineering constituency stated that―I am quoting him―it is truly strange. In particular, the loss of the Request for Inspection and Survey Checks ("RISC") forms was not the problem of a single person but involved many stakeholders, including applicants and personnel in charge of verification and final approval. Why did all parties fail to find them? It is very strange indeed. He said it is strange but I do not know in what way he plans to find out the causes, or, in such a group―instead of one single person―who should be held responsible. I also find it really strange that Ir Dr LO did not say more and did not mention how accountability should be ascribed. He only said it is strange. I hope such strange things will not happen again.

Dr Priscilla LEUNG has just quoted members of the engineering sector as claiming that 60% of the forms were missing. She even said it could be "destruction of evidence"―these are her own words. Members of the engineering sector told her it should not be the case. She said it was "possible" destruction of evidence but no inquiry was to be conducted. It is really strange for she would not handle other matters in such a manner. Do not say I wish to politicize the incident yet. Should the pro-democracy camp commit any wrong, for instance, I am suspected of destroying some evidence, will she say: Do not subject Charles Peter MOK to an investigation as there is not enough time? Certainly not. What has happened now? I really cannot fathom what kind of logic it is. They showed their teeth when making criticisms but then cast dissenting votes when the motion was put to the vote.

RISC forms are important documents for monitoring the progress and quality of construction works, and they must be submitted and handled in accordance with various steps in the procedure in an orderly manner. Proper safekeeping of RISC forms is the basic code of the industry. Even the Government may allow MTRCL to submit the documents in arrears after the deadline as required by the procedure―it is already undesirable to do so in arrears―at least there are written records for the purpose of inquiry. It is truly bizarre that documents processed just a few months ago are nowhere to be found now. MTRCL even later discovered that documents processed a few years ago are missing as well. It is so ridiculous. Let us support invoking P&P Ordinance to set up a select committee and become members of it. If the motion is passed and a select committee is set up in the Legislative Council, needless to say, it will have more members from the pro-establishment camp. And the LEGISLATIVE COUNCIL ― 21 February 2019 6917 scope of inquiry will be the causes for the loss of forms and of responsibility. Is it not the best approach?

The pro-establishment camp was so fierce in criticizing MTRCL, Leighton, China State and the Government. Sometimes, they directed way harsher criticisms at the President―I am addressing the Chair―and the Secretary than us. And yet, after making criticisms, they cited some simple reasons for not conducting an inquiry. They considered that an inquiry had been conducted by making those criticisms. I hope the people can clearly observe this point.

In fact, the scope of inquiry of the select committee under P&P Ordinance will focus on problems such as the works plans or the "vanished" works records. It can presumably complete its work before the end of the current term of the Legislative Council. There were many past examples of the Government and the Legislative Council conducting inquiries in parallel. The Legislative Council should do its job properly. The pro-establishment camp often says the Legislative Council does not do what it is supposed to do―they like to use such a notion to criticize the pro-democracy camp. However, having joined the Legislative Council, they do not exercise the powers vested in the Legislative Council and rather wait for results from the Government and other parties. Did people elect us to the Legislative Council to wait? They often criticize Members for being absent from meetings, saying we do not participate in meetings. I get it now. They actually think that attendance at meetings suffices and that the job of a Member of the Legislative Council is to wait. Regarding problems that people are truly concerned about, they instead say: Let the Government handle them. Then is there any need for the Legislative Council? Their idea is to occupy the seats to complement the Government's work.

The most recent case of the Legislative Council invoking P&P Ordinance to set up a select committee was in 2012, which was the Select Committee to Study Mr LEUNG Chun-ying's Involvement as a Member of the Jury in the West Kowloon Reclamation Concept Plan Competition and Related Issues. On this subject, I have a little bit of sympathy for LEUNG Chun-ying―on this issue only. It really seems that only he had been subjected to an investigation under P&P Ordinance by the Legislative Council. There was only once. Perhaps for this reason, after he had assumed office, he tried different ways to disable such a so-called "imperial sword" so that no attention needed to be given and no inquiry conducted when significant public interests were jeopardized.

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This time around, we must pursue the construction problems in SCL. President, if an archives law and the legislation on access to information were already in force in Hong Kong and the ambit of such laws went beyond the so-called public organizations to include publicly-funded major works and organizations such as MTRCL, I believe MTRCL would definitely do a better job of the safekeeping of important works documents. Of course, it will be contingent upon the penalties stipulated in such laws. Under the existing legislation, there is certainly no provision that specifies the penalties for such construction problems. And such laws are not the topic of our discussion today. But we hope to take this opportunity to make people see how self-protective the Government institution-wise. According to the existing laws, some organizations are not required to file nor disclose documents on matters involving significant public interest. Moreover, they need not give any account for problems that have arisen while enjoying the protection of many Members of the Legislative Council.

For this reason, I have to mention a point in passing, even running the risk of digressing from the question. Members of the public must express their views on an archives law and access to information to the Law Reform Commission of Hong Kong by the end of the consultation period, which will be 5 March. Do not appease the Government, otherwise the problems we have discussed before will continue to arise. Certainly, at that time the Government will dilute the laws with its powers, and we may not be able to do anything about it. But we must make people realize the injustice of the entire incident. People can definitely point out to the Government, through votes or public pressure, that it cannot act in such a manner and say that there is no need to pursue responsibility for any matter. The outcome will be we may have to ride on the extremely unsafe SCL.

Therefore, President, I definitely support the motion moved by Ms Tanya CHAN.

MR JEREMY TAM (in Cantonese): President, we have made multiple requests in the past for the forming of a select committee by the Legislative Council to inquire into the incidents concerning the Shatin to Central Link ("SCL"). Yet, these efforts were thwarted by the majority of the pro-establishment Members with their absence or abstentions, if not outright opposition, at the votes. Some Members talked in all earnestness about the seriousness of the SCL issues which LEGISLATIVE COUNCIL ― 21 February 2019 6919 warranted an inquiry, but found it inappropriate for the Legislative Council to conduct it. Other pro-establishment Members pointed out that it was not the right time for proposing dual-track inquiries, since the Government has already commenced the relevant work, making another inquiry by the Legislative Council unnecessary.

However, is such an approach completely unprecedented? As pointed out by several Members just now, the select committee formed in February 2001 to inquire into the substandard piling works case concerning the Home Ownership Scheme ("HOS") buildings under the Hong Kong Housing Authority ("HA") in Yuen Chau Kok is a case in point. At the time, HA first established an investigation panel under the chairmanship of Mr John E STRICKLAND, the former Chairman of The Hongkong and Shanghai Banking Corporation Limited ("HSBC") to probe into the incident, and then appointed a special panel led by the then Director of Intellectual Property. Nevertheless, the Legislative Council concurrently passed a motion for an inquiry under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") into the substandard piling works case concerning HOS buildings in Yuen Chau Kok. The dual-track inquiries were conducted without a hitch. In its report, which was an inch thick in its entirety, the select committee of the Council managed to uncover the truth and censured top government officials who should be held accountable for the incident.

In bringing this up, I hope Members can understand a crucial reason for our support for Ms Tanya CHAN's motion moved under P&P Ordinance: There is no other way for us to ascertain which government officials should be held responsible, when doing so should be an integral element of the accountability system. Secretary Frank CHAN should recall that, in the last meeting in which the issue of the missing Request for Inspection and Survey Checks ("RISC") forms was raised, I asked Jimmy CHAN, Director of the Highways Department ("HyD"), in the second round of questions about the identity of the staff member to whom the so-called copied message, which brought to the Administration's attention for the first time in 2016 the issue of the missing RISC forms, was addressed. By whom that copied message, in whatever form―I have no idea whether it was sent as an email or a letter―was ultimately received? We cannot accept that the relevant personnel had ignored it for two years. It was not until 2018, when the consultant again informed the relevant department of the missing of over 10 000 documents, that the department awoke to the problem and made a 6920 LEGISLATIVE COUNCIL ― 21 February 2019 loud proclamation of appointing an independent consultant to go over the relevant records. What has happened over that two years?

Since RISC forms are so important, and Secretary Frank CHAN has pointed out that a record of these forms must be kept as stipulated in the contract―certainly, the Secretary has refused to answer whether such documentation was important, despite much probing by several Honourable colleagues, other than repeating that the documentation was necessary.

Since some procedures remained incomplete, it begs the questions of who was responsible for monitoring, what was the role of the relevant personnel and why the problem had not been reported for two years. Had such personnel in fact raised the alarm but the message somehow got awry as it passed through the chain of command? I am sure the copied message would not have been sent to the Director of Highways direct. Then, to which level of personnel the message was sent? Members should bear in mind that there is a Project Manager responsible for project oversight in HyD.

Indeed, if it was not for the time constraint in posing questions at the last meeting, I would have asked the two officials flanking the Director whether they had seen the relevant letter or email message. If they did, is the absence of a public account to the situation on their part an act of covering up their own faults? When questioned by me on that day, Jimmy CHAN initially said that he "could not recall", then―after my probing―replied to this effect: "I have to go back and check first but will decide later on whether to inform Members of the identity of that person." Due to the time constrain at the last meeting, there was really no way for me to keep probing.

Looking at the whole affair with common sense, I can hardly believe that Jimmy CHAN as the Director of Highways, did not inquire about the identity of the staff member responsible for the relevant follow-up in 2016, as the incident concerning the large number of RISC forms gone missing escalated to such magnitude. If such an inquiry had been made, was he, in replying that he "could not recall" before the Legislative Council―and in putting on a show with the Secretary and submitting numerous documents to boot, trying at a cover up? Given that the Chief Executive had requested the Secretary to give a public account, and the Subcommittee on Matters Relating to Railways had placed on its agenda an extraordinary item for a discussion on the missing RISC forms LEGISLATIVE COUNCIL ― 21 February 2019 6921 concerning Hung Hom Station, I can hardly believe or imagine that the Director would actually reply that he "did not know"―or "could not recall" to be precise. Later on, when I requested him to go back and check then come back to us, he turned cautious, saying that he would decide what to do after checking. Why can he decide on what to do only after checking, when my request concerns no more than the identity of the personnel? Is this an act of covering up, or had they already identified that person?

I hope the Secretary can explain this, as well as whether HyD was responsible for what had happened during that period, in his speech later on. Or, does the Secretary think that no one should be held accountable and consider the simple excuse of "could not recall" satisfactory? Or, is it the Secretary who swept the problem under the carpet after being informed of it? Or, is the accumulation of missing documents which ran to over 10 000 caused by a failure to check email messages? If this is the case, there is indeed a problem with the system.

In respect of these situations, can the Commission of Inquiry ("the Commission") appointed by the Government find out the truth? I do not think so. However, in the event of an inquiry conducted under P&P Ordinance, Jimmy CHAN would not be able to say he "could not recall", still less that "I will go back and check first but decide later on whether to inform Members of the identity of that person", as he did at the last meeting. Which staff member or which level of officer had been informed of the whole affair on that day in 2016 but had not followed up for two years? Had that officer never followed up the problem, or had he already reported it to his/her superiors? Indeed, was Jimmy CHAN already in the know and thus dared not come straight?

Or, were the two HyD officials sitting beside Jimmy CHAN at the meeting of the Subcommittee on Matters Relating to Railways that day also in the know and thus immediately warned the Director against giving away the information, lest one of them, being revealed as the person responsible, might be flayed and sacked. Was that the case?

The Government's way of doing things strikes me as funny, as if it would do nothing without being probed and forced. If Ms Tanya CHAN had not proposed an inquiry into the incident concerning the missing RISC forms of Hung Hum Station under P&P Ordinance, would the Chief Executive have announced 6922 LEGISLATIVE COUNCIL ― 21 February 2019 two days ago an expansion of the scope of the Commission the immediate inclusion of that incident? What sort of work attitude is that?

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

Honourable colleagues of the pro-establishment camp will surely say that with the Commission probing into the issue, the Legislative Council need not concern itself with it. Yet, can they face their local constituents with a clear conscience? On the other hand, Dr Priscilla LEUNG―who has left the Chamber―too strikes me as funny in asserting that if Members find the report of the Commission, due to be published next year, unsatisfactory, we can then discuss again whether to conduct our own inquiry. She seems to be confused about one thing. As far as I―a newcomer, being elected as a Member for the first time―know, if a motion invoking P&P Ordinance on a single issue was scrutinized and negatived, another motion concerning the same issue cannot be proposed again to the Legislative Council. In other words, as far as "opportunity knocking only once" is concerned, we should be mindful not of the opportunity involving the Guangdong-Hong Kong-Macao Greater Bay Area, but the one concerning this motion under P&P Ordinance which we are now discussing. If Members do not support this motion today, it would be impossible in future to have another discussion on this motion of Ms Tanya CHAN in case it is negatived by the pro-establishment Members. As far as I know, it is not possible. I have no idea why Dr Priscilla LEUNG sounded as if there can be another discussion.

As things stand, the entire affair is apparently about a group of persons having failed to submit RISC forms. But what was the role of the Government? Could it wash its hands off by contracting out all responsibilities to a consultant? On the other hand, officials of both HyD and the Transport and Housing Bureau did not answer a question of mine. I have no idea whether they were being evasive or running out of time for an answer, as they did at the last meeting of the Subcommittee on Matters Relating to Railways. If Secretary Frank CHAN has time later on, will he please give a response on this point. Payments for a given project must be made in phases. It is impossible for the Government to wait until the completion of all procedures to write a single cheque to settle the bill. Payments must be arranged at intervals and in phases, with the Government making the relevant arrangement depending on the progress of works or LEGISLATIVE COUNCIL ― 21 February 2019 6923 completion. In the course of making payments, I am sure the Government will take into account the percentage of works completion as ascertained by the relevant consultants and pay the amounts as recommended by the latter, or make payments as per stages of works as stipulated in the terms of contracts. So, what is the role of the Government? Does the Administration write a cheque as soon as a consultant recommends it to do so? This is impossible.

Is RISC form a necessary document in ascertaining the progress of works? If it is the case, it means that payments had been authorized without the relevant RISC forms―by which works progress was ascertained―being verified. Is this not a serious problem? If the Secretary insists that it is not, that it is not necessary to do so, since it has not been stipulated in the contract that progress of works must be determined by submitted RISC forms, there is a problem with the system. What is the point of submitting the forms then? This is all very practical: Why would contractors submit those forms when they can still get paid without completing the necessary procedures? How could they wait two years after works completion to submit the documentation?

Secretary, let us say that you go to HSBC for a withdrawal of―not to say hundreds of billions of dollars―just $200. Can you ask the teller to pay out the $200 from your account first and put your signature on the withdrawal slip two years later? It is impossible. Is the submission of these forms one of the conditions for authorizing payments? The Government has never given an account on that.

Besides, assuming that it was not necessary to submit the relevant forms given the lack of such a requirement in the contract and that the relevant personnel were not at fault since they were not required to submit them, it still begs the question of on what grounds did the Government believe that the relevant works was up to the prescribed standard. Once concrete was casted, the works would be covered and impossible to be examined, not even by breaking up the concrete. On what grounds, then, could the relevant personnel, without the help of RISC forms, determine that the works had been completed properly? On nothing but their own will?

Lastly, we are concerned not only about the money or procedures. These forms exist for an important reason: ensuring works safety. How can workers tell whether the next procedure should commence, or whether the previous 6924 LEGISLATIVE COUNCIL ― 21 February 2019 procedure has been completed properly? Have the relevant authorities ever considered the personal safety of the workers working on the construction sites? Without these forms, how can we tell that it is safe for workers to work on a given construction site? The same goes with the temporary supports placed on the site of the Exhibition Centre Station. If the contractor was allowed to continue excavating at greater depth without installing temporary supports, the consequence could be dire―potentially fatal, much like what happened in some of the coal mines on the Mainland. RISC forms serve a similar function. Can the Commission probe into all the issues I mentioned just now? Hence, we must support Ms Tanya CHAN's motion for an inquiry under P&P Ordinance into the first, second, third and fourth points I raised just now. I so submit.

MR CHUNG KWOK-PAN (in Cantonese): Deputy President, Honourable colleagues all have experienced the problem of seawater buildings in the 1960s and 1970s and have been aware of its perils. Therefore, the Government has made proactive efforts subsequently to improve the standards and quality of building construction. At the time, mainly systems of the United Kingdom, i.e. the British Standards, were adopted. The requirements for the relevant standards were high. For example, given a standard of 100 marks, 50 marks already mean a pass. Then what problems would have emerged? People, particularly the construction sector, know that it is unnecessary to attain the highest standards and slightly poorer performance is fine. The problem that has arisen this time may be due to jerry-building and people considered that there would not be any problem. The outcome was naturally that construction procedures were not followed to the letter. I believe one of the reasons for the incident being exposed is the unsettled distribution of interests among the contractor and subcontractor, and so the latter spilled the beans. As a result, more problems have been uncovered and they get more and more serious, leading to the situation today.

Why was the overdue submission of Request for Inspection and Survey Checks ("RISC") forms not given any attention? The reason is possibly that it has become a habit in the construction sector which considered that the structure must be sound, and so late submission was fine so long as the construction works were carried on. Moreover, as time was running out, if the completion deadline could not be met, problems such as cost overruns would result. Therefore, I believe it is most likely the bad habit which deems slightly late completion and LEGISLATIVE COUNCIL ― 21 February 2019 6925 submission of forms acceptable. Why has such a large quantity of forms been missing this time? The possible reason is that, as I have suggested, someone committed jerry-building, making those forms unfit to be seen. For this very reason, those forms could not be submitted. As regards the intention to destroy evidence, I dare not make any assertion. But I believe these are roughly the happenings of the incident.

Given that the Police have now initiated an investigation, I believe the criminal liability therein is rather obvious. As for whether the Independent Commission Against Corruption ("ICAC") will take part in the investigation later on, I believe the likelihood is fairly great, because it was certainly impossible that a problem of such magnitude was caused by some contractor or subcontractor singlehandedly and with absolute control. I believe personnel from their management and even within the MTR Corporation Limited may be held criminally liable, and the truth should be revealed shortly.

Members who have spoken today have their respective reasons for supporting the motion or otherwise. In the event of a major incident, why is an inquiry not conducted? We, of course, have to employ every means possible to conduct an inquiry. Accordingly, as a matter of course, the Police and ICAC would be deployed, and Mr Michael HARTMANN and the Legislative Council would be engaged. However, more pragmatic Members, like me, may not think in the same way. Just now, some Members have cited insufficient time as an excuse, but time is insufficient indeed. Some Members have proposed speeding up the process by holding meetings every day for the inquiry so that there can be an outcome in one year's time. However, it is absolutely impractical and we cannot make such simple and straightforward consideration.

Some people said that the inquiry into the West Kowloon incident by virtue of the powers conferred by the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") only took a few months to complete. But it involved purely political considerations and also only one person and one document. It was certainly achievable. According to the past records, be it the substandard piling works incident, the Lehman Brothers incident or the LEUNG Chin-man incident, relevant inquiries took over two years, even four years, to complete, before reports were released.

6926 LEGISLATIVE COUNCIL ― 21 February 2019

Of course, the Legislative Council has the responsibility and powers to inquire into any incident in which we consider public interests are at stake or as and when necessary, but, at the same time, we are also duty-bound to complete the relevant inquiries. If we commence an inquiry but fail to complete it, is it responsible behaviour? Although there are 20 months or so remaining until the next term of the Legislative Council, after deducting the time spent on administrative work, even if a select committee is approved to be set up today, it will be almost June when it can really start functioning. Come July next year, at the time of the general election for the next term, the Legislative Council will be dissolved, so will the select committee consequently. What is the point if it will be dissolved after having been set up for less than one year? We must let the people of Hong Kong clearly understand this point. It is not true that we are unwilling to work, to shoulder responsibility or to exercise the relevant powers to conduct an inquiry. But what is the point if we commence something but fail to see it to completion? I consider it even more irresponsible.

Recently, some Members like to make some grandiose and high-profile moves to please the people and win kudos. They can definitely earn votes by doing so but in effect will fail to finish the relevant work eventually. If it is the case, what would happen? This year is an election year. Factoring in the election in November, Honourable colleagues all long to gain some recognition from the people.

Are we going to do nothing? Certainly not. The first report by Mr Michael HARTMANN will be published soon. Honourable colleagues may take a look at it then. Moreover, the Subcommittee on Matters Relating to Railways will also hold a meeting in March to discuss Mr Michael HARTMANN's report. There are views that the Government has cleverly requested Mr Michael HARTMANN to expand the scope of inquiry so as to prolong the inquiry being undertaken by the Commission of Inquiry. Let us read the report first. And I am positive that it is more effective than the Legislative Council invoking the powers under P&P Ordinance to set up a select committee.

We all have confidence in the rule of law in Hong Kong and respect for judges. I definitely believe that Mr Michael HARTMANN will conduct the inquiry in a fair and open manner and then present a report. Meanwhile, the Police will initiate an investigation and I believe ICAC will take part in it later on. Mr Jeremy TAM said that given such a motion on the relevant matters has been proposed this time around, it will be impossible to do so the next. Yet, if we find problems in Mr Michael HARTMANN's report, there will readily be another LEGISLATIVE COUNCIL ― 21 February 2019 6927 reason for proposing that P&P Ordinance be invoked, just that it will really likely happen after the next Legislative Council Election. By then, it is unknown whether Honourable colleagues will still be in office. Therefore, the incident should be left to relevant Members of the next term of the Legislative Council to handle.

Deputy President, I so submit.

MR AU NOK-HIN (in Cantonese): Deputy President, good morning. Mr CHUNG Kwok-pan asked just now if it is achievable, and he held that this might not necessarily be so. I think this is not unachievable. Why? First, I certainly recognize the efforts made by Mr Michael HARTMANN. But let me tell Members one thing. Concerning this whole issue, I would call it a cycle.

The Legislative Council has a new cycle now. What is this cycle? It all started with the outbreak of scandals involving the Shatin to Central Link ("SCL") which has aroused grave concern from the public. Then the pro-democracy Members repeatedly demanded that the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") be invoked to probe into the problems of SCL. I cannot tell for how many times this proposal had been made before it is again proposed here today. We have discussed it many times already. Then, the pro-establishment camp and the Government, of course, would not agree to the conduct of an inquiry by the Legislative Council. Then the Government appoints an independent commission of inquiry to carry out an inquiry, so that the pro-establishment camp could have a reason to vote against invoking P&P Ordinance to conduct an inquiry. This cycle continually repeats itself and brings along new developments. Why am I saying this? Because it is invariably the case that when a new problem emerged, the Government and the pro-establishment camp would join hands to expand the scope of inquiry of the independent commission of inquiry in order for the pro-establishment camp to have a new reason to put up opposition, and then when another project is found to have new problems, the Government will again expand the scope of inquiry. In the end, more and more issues are brought under investigation, giving rise to increasingly more problems. This is how the cycle works. So, the motion proposed by Ms Tanya CHAN on invocation of P&P Ordinance is also part of this cycle. I do not know if she can be compared to the oesophagus, stomach or other body parts but anyway, she has a part to play and what is more, a most 6928 LEGISLATIVE COUNCIL ― 21 February 2019 crucial part to play and so, it cannot be neglected, and I absolutely support this motion. Therefore, do not say that we in the pro-democracy camp are sore losers, because we will definitely dig to the bottom of it if a select committee can be set up.

Meanwhile, if the Legislative Council does not set up a select committee to inquire into this incident, how can we do justice to Hong Kong people? When facing a problem the Government has over and over again dealt with only part of the problem and it has been unwilling to make public all the information. Regarding the missing of the Request for Inspection and Survey Checks ("RISC") forms, the Government should be held responsible for it. This is not purely the responsibility of the MTR Corporation Limited ("MTRCL") because the Government already knew it a long time ago. Why did the Government know it a long time ago? I will explain it later. Therefore, I think Members should not say that the setting up of a select committee by the Legislative Council would be redundant given that an independent Commission of Inquiry ("the Commission") has been established already. I only wish to make one point here. With regard to the Commission established by the Government, before the Government announced the expansion of its terms of reference, the scope of inquiry of the Commission can include investigation into the RISC forms. But why did the Government inform us of the missing of the RISC forms just before the Commission published its report?

Let us take a look at the terms of reference of the Commission. The relevant terms of reference of the Commission set out by the Government include firstly, the diaphragm wall and platform slab construction works at the Hung Hom Station Extension under MTRCL's Contract No. 1112 of the SCL project; secondly, the Commission is to review the adequacy of the relevant aspects of the MTRCL's project management and supervision system, quality assurance and quality control system, risk management system, site supervision and control system and processes, system on reporting to the Government, system and processes for communication internally and with various stakeholders, and any other related systems, processes and practices, and the implementation thereof; and thirdly, to review the extent and adequacy of the monitoring and control mechanisms of the Government, and the implementation thereof. I have read out a lot of words and in a nutshell, it means that the terms of reference of the Commission already include a review of the systems of MTRCL and the Government for monitoring the progress of works.

LEGISLATIVE COUNCIL ― 21 February 2019 6929

Secretary Frank CHAN said back then in the Panel on Transport that the contractor could proceed to the next procedure only after the submission of a complete set of RISC forms, meaning that it is necessary to pass one hurdle before proceeding to the next. Back then I compared it to Mario Bros. Some colleagues may say that they have not played this game before, and the key is that a player who fails to pass the first level cannot proceed to the second level. If they reached the last stage of works without meeting all the requirements before that and if photographs were submitted in lieu of the forms, that would be a deviation from the procedures and a deviation from the rule that approval has to be obtained before commencing the next stage of works. This would be a hoax, or cheating, and as far as I understand it, it is an offence to do such a thing in construction works.

The Government and MTRCL held a joint press conference the next day after the end of the hearings of the Commission to give an account of this incident to the public. It is very difficult not to arouse suspicions that the political purpose was to evade investigation by the Commission into the incident. What can this situation be likened to? It is like you, Deputy President, not feeling well today … I am sorry, for you are healthy, and I should not have drawn an analogy with you. This can be compared to a person who does not feel well visiting a clinic to consult a doctor. He first told the doctor, "Doctor, I have a sore throat." Then the doctor examined him to see if he had difficulty breathing and checked his throat. After examining him, the doctor wrote a prescription and just when the patient was going out to get his medicine, he turned back only at that point in time and said to the doctor―Dr CHAN is not in the Chamber now―"Sorry, but I got a fever of over 40°C." Could it be that the doctor has to make another diagnosis? You are about to get your medicine. What is it if you are not playing a trick on the doctor? Of course, this analogy may not be entirely appropriate. Why? Because what we are discussing today is not such trivial matters as catching a cold or the flu, but a public transport infrastructure or system that probably has a daily patronage of close to a million passenger trips.

What is more serious is that in this incident, the Government's response seems to be different from those in the past. The Government was unaware of it initially but made an announcement after the end of the hearings. I think it is not the case that the Government had forgotten it or it had been absent-minded; nor was it an unexpected accident. Rather, it is done deliberately by the entire Government, including the Executive Council and Chief Executive Carrie LAM. 6930 LEGISLATIVE COUNCIL ― 21 February 2019

Deputy President, do you agree? You are a Member of the Executive Council. In the last incident, the pro-democracy camp, the pro-establishment camp and the Government said in unison that MTRCL had attempted to conceal the problem, and they all came forth to strongly condemn MTRCL. How about this time around? The Government and MTRCL had all along been in the know but they divulged information on the problem with the forms only after the Commission had completed its inquiry. So why did you in the pro-establishment camp not make any condemnation? Secretary Frank CHAN said just now in response to a Member's question that the Bureau should engage in humble introspection. But I would like to say that had Chief Executive Carrie Lam or Secretary Frank CHAN really taken an attitude of soul-searching, the scope of inquiry into SCL would not have been expanded continued and the problems would not have been revealed only at the last moment when the Government had known it a long time ago already.

Honestly, had the Government revealed the problem right from the outset, just as it did when Hung Hom Station was first found to have problems, such as honeycomb concrete, deviation from the plans, and so on, the public would have understood it. I have talked to the public at street booths and actually the people very much wish to see the commissioning of SCL as early as possible. No matter what problems have emerged or whether an inquiry is conducted by the Government's Commission or by invoking P&P Ordinance, they only wish that the problem can be solved and SCL can commence operation early. It is just this simple, and of course, it is necessary to make compensation to residents in To Kwa Wan because there is a chance that the construction works can cause their buildings to collapse. However, this is not the case in reality now. The Government did not try to find out all the problems at the outset, and it did not reveal the problems openly and sincerely and face the problems honestly. Rather, it has adopted the worst public relations tactic of "squeezing a tube of toothpaste". Now it is not squeezing just one tube of toothpaste but several of them, and after squeezing the one with a mint flavour, it is now squeezing one with a charcoal flavour, a pineapple flavour, right?

I think it is not without reason that the public are enraged. If a thorough investigation can be conducted by Members from various political parties and groupings in the Legislative Council, at least the public will have the feeling that the Government seriously wishes to resolve the problems and to assume responsibilities. But while the Government was in one way or another aware of LEGISLATIVE COUNCIL ― 21 February 2019 6931 these problems, it did not reveal them and worse still, it adopted public relations tactics to deal with them. How can it live up to the expectations of the public? This is why the pro-democracy camp has again proposed today to invoke P&P Ordinance to form a select committee to conduct an inquiry. The reason is simple. Because the Commission set up by the Government can only review the existing supervision of works, quality control and risk management, but there are more problems that we have to tackle. We have seen cover-ups in the Government's attitude in handling the entire SCL incident, and we have also seen that the Government has a political purpose in what it has done. What is more, the Government is in one way or another trying to turn a big problem into a small one and as a result, the Government has concealed the facts and let slip the opportune time for revealing these construction problems in an open and honest manner. It is impossible for the Legislative Council and members of the community to let go of this matter easily.

How do the pro-establishment camp and the Government look at the SCL incident? Many Members have viewed it from an engineering angle, saying that the cutting of rebars, the alteration of the plans, the missing forms and the inspection of materials alike are individual issues, sounding as if each of these incidents is independent. But I would like to say that these are really not independent issues, or at least members of the public do not see them as such. It cannot be clearer that all these incidents broke out under Contract No. 1112 of Hung Hom Station. Why is it that they can be described as unrelated and then the scope of inquiry can be expanded as they like? Obviously the problems of SCL are actually not as simple as purely being problems in the construction works. They are more of a political problem, and a political problem has to be solved by political means. Had the Government made public all the problems in an open and honest manner half a year ago rather than acting evasively, the problems of SCL could have been mere construction problems. But as things now stand, even if you do not ask for our view but ask the view of an ordinary man in the street, you can see that this is a very serious problem. Therefore, Deputy President, I hope that all Members of the Legislative Council can support the invocation of P&P Ordinance to form a select committee to conduct an inquiry.

I so submit.

6932 LEGISLATIVE COUNCIL ― 21 February 2019

DR KWOK KA-KI (in Cantonese): Deputy President, I speak in support of Ms Tanya CHAN's motion moved under the Legislative Council (Powers and Privileges) Ordinance for the establishment of a select committee.

Today, when we discuss issues relating to the Shatin to Central Link ("SCL"), I have two feelings: shame and anger. In comparison with regions in the vicinity like the Mainland, Macao or other Southeast Asian countries, Hong Kong has all along conveyed the distinct impression that everything is handled according to law and principles as far as possible and in an orderly manner. Yet, incidents involving infrastructure projects that occurred in recent years are really appalling, and SCL is only the tip of the iceberg.

A couple of days ago, one of the steel cables of the Shenzhen Bay Bridge at the port area, which has been used for 12 years, was found broken. How would this happen in Hong Kong? This incident is the first of its kind, and it is really inconceivable. Of course, if the broken cable incident occurs in the Mainland, it is no surprise. Even the collapse of a bridge is not breaking news, and the collapse of bridges can be found among infrastructure in the South East Asia. These incidents are no news to us. Such happenings are no far cry from the cognition of the people of Hong Kong. In regions where "tofu-dreg" projects are found, including the Mainland, this is a common phenomenon. Yet, such an incident has now occurred in Hong Kong. The present project is funded by Hong Kong taxpayers at a cost of $97.16 billion at last. Moreover, the Government has stated unequivocally that the cost will overrun and it will come to the Legislative Council, the "automatic teller machine", to obtain further funding.

(THE PRESIDENT resumed the Chair)

What about the quality of works? For the North Approach Tunnel, South Approach Tunnel and stabling sidings of Hung Hom Station, 40% of the Request for Inspection and Survey Checks ("RISC") forms have been found missing. To members in the engineering sector, this is utterly inconceivable. The form comes in quadruplicate. One copy is kept by them. One copy is submitted to the MTR Corporation Limited ("MTRCL") and then submitted by MTRCL to the two government departments assigned, including the department responsible for the supervision of contracted works and the Highways Department ("HyD"). A three-tiered structure is already in place, yet it has come to this pass.

LEGISLATIVE COUNCIL ― 21 February 2019 6933

The Commission of Inquiry ("the Commission") established by the Government has pointed out that―I will not go into the details here―it is impossible that the procedure of pouring concrete is carried out before the form is seen. Yet, this has happened in actuality, and it involves not merely one form, it has happened repeatedly. To us who are engaged in the health care sector, such a practice is tantamount to removing the liver, kidneys and all the other organs of a patient without the signed consent of the patient. This may happen in the Mainland, but it is impossible in Hong Kong.

In fact, various tiers of supervision have been put in place. On the part of the Government, there is HyD. Yet, this time around, not only HyD is involved, for the RISC forms must be verified by the Buildings Department ("BD"). If a number of government departments are involved, why would there be dereliction of duty of various departments in a collective manner and why have these departments not verified such forms? Then, there comes the outlandish remark suggesting the abolition of RISC forms. I have heard some members in the engineering sector say that the signing of the form is redundant and may as well be abolished. This is terribly appalling that Hong Kong has deteriorated to this "better-not-to-supervise" mindset. Following this line of thought, the Legislative Council might as well be abolished. We might as well apply the mode of the National People's Congress to the Legislative Council, so that we need only rubber-stamp the proposals and the Directors of Bureaux will not need to attend meetings either. In that eventuality, Hong Kong is finished.

Now, some Members from the pro-establishment camp have committed to bold words, levelling criticisms at the wrong practices and stressing the importance of SCL and the impact on the residents. Among them are Members from the Kowloon West Constituency, such as Dr Priscilla LEUNG and Dr CHIANG Lai-wan, whose speeches conveyed the impression that they would support the motion. Yet, at a sharp turn, they said it is unnecessary to take such action, and we need only place our trust in the Government as the Government has already established the Commission.

We all know that Carrie LAM is very smart. Back then, the purpose of establishing the Commission was not to conduct an investigation but as a means to cover up the embarrassment. Apart from Hung Hom Station and Exhibition Centre Station, a number of stations along SCL have been found problematic. She was smart to allow the Commission to examine the diaphragm wall only. She thought this would settle the issue. Yet, secrets cannot be kept in wraps. Problems with the projects were exposed again. After this, she expanded the 6934 LEGISLATIVE COUNCIL ― 21 February 2019 scope of inquiry of the Commission. What kind of government will act in this way? How can it expand or restrict the scope of investigation arbitrarily to fit its own agenda? Can we still trust the Government? This Government is hopeless. There was repeated dereliction of duty at various levels of supervision.

Let us wait and see. Many problems concerning infrastructure projects are not exposed yet. The steel cable of the bridge snapped merely after 12 years of use. I will see when things will come up in a row concerning the projects of Hong Kong-Zhuhai-Macao Bridge, the Express Rail Link and the East Lantau Reclamation, and so on. What did the government official concerned say? She said the works contractors could not escape. We all know that this is an illusion, for the Government has laid sound protection. Honestly, regarding the missing of RISC forms, any sober persons will know that it must involve collaborative falsification. These RISC forms may have been extracted or destroyed by collective action, or that signatures have been missing altogether because the construction works failed to pass the inspections. It may involve many dirty deals. Yet, the Government considers it the best approach to sweep all the problems under the carpet, and when the problems are out of sight, they would think that nothing has ever happened. The Government has deteriorated to this sorry state.

It is most embarrassing that government officials have to keep telling lies. As a number of Members quoted earlier, we have asked the Director of Highways about the officers signing the documents and responsible for these forms. Since every project is followed by a project manager, there should be staff from HyD specifically responsible for the relevant works. I remember clearly that during the discussion on the relevant works in the Legislative Council, whenever Members asked the Government about this issue, the Government, including HyD, would say that there was stringent supervision and there would not be any problem. When the Government applies for supplementary appropriation, it would agree with the various requests we made and state that they could fulfill the requests. Yet, it turns out that none of the requests have been fulfilled. Against this background, they are asking us to trust the Government. Is there anything wrong with them? Some people say that it should not be a cause for concern for the Police and the Independent Commission Against Corruption ("ICAC") will investigate the case. Yet, when they play this game of collective amnesia and collective dereliction of duty, the truth can hardly or will never be uncovered.

LEGISLATIVE COUNCIL ― 21 February 2019 6935

Some Members point out that if the Legislative Council investigates the incident, it will politicize the incident. I do not know why they have to be Members then. They had better go home and sleep. Monitoring the Government is the bounden duty of the Legislative Council, which is stated unequivocally in the Basic Law. If so, when we see the present performance of the Government and the collective dereliction of duty on the part of the Transport and Housing Bureau, HyD and BD, as well as the intolerable performance of MTRCL, should we not do our part in monitoring? We all know that MTRCL is the major party in charge of the SCL project, should MTRCL not be held accountable? In the submission of RISC forms, the first copy is submitted to MTRCL. MTRCL is charging close to $6 billion to provide supervision and management services, yet the performance of MTRCL is rubbish.

MTRCL is almost wholly owned by the Government, for more than 70% of its shares are owned by the Government. The Chairman of MTRCL and a majority of members of its board are appointed by the Government, yet they all try to protect each other. Long Hair is no longer in the legislature, yet he has a famous quote: "The stupid ones stick together". The board is full of this kind of people. Yet, they definitely are not stupid, and they are indeed reaping gains together. The construction cost of the project is $90-odd billion, adding to it previous projects of other railway lines, such as the Express Rail Link, the interest involved amounts to hundreds of billions of dollars. They are not stupid definitely. They are reaping gains together, working together to take advantage of the people of Hong Kong.

Now, problems found in works projects have grown increasingly ridiculous. It is because the Legislative Council has all along tolerated project cost overruns and allowed the authorities to apply for supplementary appropriation. Despite the poor quality of works, the authorities may come to us again to apply for supplementary appropriation and request that no investigation be conducted. Are Members from the pro-establishment camp living up to the expectation of their voters? We all know what the bounden duty of the Legislative Council is. Even if a select committee is established, the pro-establishment camp in the majority will suppress us in the minority and they will always get the chairmanship. Even though they will call the shots, we do not mind joining the select committee, for we just want to do our level best and make the most out of the select committee to ask questions and find out the truth. 6936 LEGISLATIVE COUNCIL ― 21 February 2019

Truth never changes. It will not change because the Government has appointed the Commission and that ICAC and the Police will investigate the case, nor will it change because the Legislative Council also conducts an inquiry.

In what way will we pose hindrances? Are we indeed blocking certain people from reaping gains? The present project costs about $90 billion to $100 billion, yet the safety of the diaphragm walls has been called into question and there is a possibility of collapse. If so, who have we blocked? Are we preventing them from making a fortune? Those civil servants will continue to get their pay and promotion, as well as their pension, and they will not leave. What kind of obstruction do Members fear we may cause to them? Members are now pretending that they see nothing altogether. The Government sees nothing. Members of the Legislative Council from the pro-establishment camp see nothing. They have turned a blind eye to these problems en masse. I have to give them the three monkeys, the monkeys of "see nothing" and "hear nothing". It is utterly ridiculous.

In the Commission, Mr Michael HARTMANN once stopped a witness in giving evidence. He said that given the limitation of the terms of reference of the Commission, he did not want the witness to reveal more inside stories because the issues revealed would be beyond the terms of reference of the Commission. We all know that the terms of reference of the Commission are "tailor-made" by the Government. I have no intention to blame any members of the Commission for they are simply conducting the inquiry according to the scope specified by the Government. This tactic of the Government is most awesome. By specifying the scope of investigation, it tries to contain the extent of the scandal as far as possible, hoping that the incidents will fade away as time passes. It simply wants to absolve itself of its responsibilities.

Had the Government been responsible, Members of the Legislative Council would not have to propose the forming of a select committee. The Government should have given a comprehensive account of the whole incident. Yet, we all know that this will not happen. Do not be silly. The Government will not do that. To the Government, no matter how poor the quality of works is, its gravest concern is face. Face comes before safety and the public. For the sake of saving face, it can betray anything, be it the public, safety or public money. After all, it is not using the money of the Government. Regardless of the remedies to be made and the amount of supplementary appropriation to be LEGISLATIVE COUNCIL ― 21 February 2019 6937 applied, it is using public money. Besides, many contractors are state-owned enterprises or China-affiliated enterprises, so it is not a concern at all. It will be good to reap gains together. Then, these enterprises may sponsor political groups of the pro-establishment camp. They may show support by sponsoring $12 million for the purchase of a painting, $12 million for a song they sing and several millions of dollars for doing some "monkey dance" with them. By means of these practices, they transfer the money to them, so they are sharing the same pool of money. Ultimately, they will support the Secretary and the Chief Executive to rise to positions. Dirty, what a filthy tank it is.

Yet, Hong Kong is living in such a filthy state, where the Government and Members from the pro-establishment camp continue to condone these practices. How can these things happen indeed? How can they oppose the forming of a select committee indeed? The power of the select committee is just to find out the truth. The truth will not change because of our investigation. On the contrary, this will let the public see the truth. Our ultimate goal is to ensure that Hong Kong will have a safe railway. Most important of all, we hope that the Government will stop acting recklessly and doing things that will harm the interests of the public and citizens. This is intolerable.

President, I surely understand that with the pro-establishment camp playing convoy, the motion will very likely be negatived. Nonetheless, society and history will bear witness to the acts of these irresponsible Members in sheltering the Government and allowing the SCL project, which could have been done better, to be muddled through continually in the midst of these shady deals.

With these remarks, I support Ms Tanya CHAN's motion.

MR CHRISTOPHER CHEUNG (in Cantonese): President, I speak in opposition to the motion proposed by Ms Tanya CHAN which seeks to appoint a select committee under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") to inquire into the recent issues of the Shatin to Central Link ("SCL"). With regard to the new issues of SCL, the Police have intervened and the Government has expanded the terms of reference of the independent Commission of Inquiry ("the Commission") chaired by a former judge to cover them. Under these circumstances, I find a separate inquiry by a 6938 LEGISLATIVE COUNCIL ― 21 February 2019 select committee of the Legislative Council nothing but redundant. Hence, I consider that the precious time and resources of the Legislative Council should not be wasted on an initiative that will yield no result.

First of all, I have to clarity that my opposition to Ms Tanya CHAN's motion definitely does not mean that I approve of and accept the explanations and conduct of the MTR Corporation Limited ("MTRCL"). I am most perplexed and infuriated by the series of works scandals and degrading performance of MTRCL in managing SCL project. Nevertheless, I understand that making harsh criticisms of MTRCL will get us nowhere since the incidents have already happened. I hope MTRCL will act prudently and deeply reflect on its inadequacies.

President, MTRCL's unacceptable performance in managing the SCL project does not mean that it is necessary for the Legislative Council to appoint a select committee for follow-up because, as we all know, the Government did not turn a blind eye to the situation after the scandal of missing site records and unapproved modifications works at SCL Hung Hom Station was exposed. Rather, it intervened promptly and proactively by adopting multi-pronged measures in the hope of finding out the truth of the matter and minimizing the negative impact.

Upon the Government's report of the missing site records to the Police, the West Kowloon Regional Crime Unit has commenced evidence collection and investigation. Chief Executive Carrie LAM promptly expanded the terms of reference of the Commission to cover the newly identified issues at Hung Hom Station and undertook to follow up the incident seriously in order to verify the structural safety of Hung Hom Station. Hence, it is evident that the Government, the Police and the Commission are performing their respective duties in proactively following up the new issues at Hung Hom Station of SCL. As such, why should the Legislative Council take a superfluous action?

President, I fully understand the dissatisfaction and rage of the opposition camp, but I hope they will not be blinded by anger. Instead, they should ponder calmly over what cannot be found out by the Police and the Commission chaired by a former judge, but only by a select committee of a Legislative Council? Moreover, who can guarantee that there will be no more new problems with SCL and other railway projects under the poor management of MTRCL? It is clearly LEGISLATIVE COUNCIL ― 21 February 2019 6939 impracticable for the Legislative Council to intervene whenever a problem surfaces. Appointing a select committee to inquire into the matter at this stage is counterproducitve, as it may disrupt the ongoing inquiries conducted by the authorities. It should be noted that, once the Legislative Council invokes P&P Ordinance to inquire into the matter, detailed and confidential information concerning the case will be inevitably exposed and leaks of confidential information are probable during the inquiry which will not only affect the Police investigation, but also enable lawbreakers to get away from the long arm of the law. Hence, I hold that the Legislative Council should not appoint a select committee at this stage, so as to avoid causing disruption to the official investigation by the authorities.

President, Legislative Council Members should definitely be concerned about people's livelihood, in particular, matters concerning public safety. However, I noticed that whenever there is a major incident involving people's livelihood, the top priority of the opposition camp is pursuing accountability of public officers, instead of attending to the remedial work. While I certainly believe a sense of responsibility is a must for everyone, it is unfair and unhelpful to the investigation and the public to hold others accountable hastily and demand individual public officers to step down when the truth of the matter is not yet ascertained.

I wish to reiterate that my opposition to Ms Tanya CHAN's motion does not mean giving up the pursuit of accountability. I sincerely hope the Government will not merely call it "regretful" or "disappointing" every time a problem arises with MTRCL. The poor management of MTRCL certainly warrants criticism, but the Government can hardly absolve itself of the blame for failing to fulfil its monitoring role. Hence, the Government should really reflect on itself and examine promptly, comprehensively and seriously whether any public officers have neglected their duties; whether there are any deficiencies in the existing entrustment agreement arrangement, supervisory regime and penalty mechanism in relation to MTRCL, and then introduce effective improvement measures. People who should be held accountable, should be held accountable. Things which should be improved, should be improved. This is a truly responsible attitude that should be adopted by the Government as the major shareholder of MTRCL.

6940 LEGISLATIVE COUNCIL ― 21 February 2019

As for MTRCL, I hope it will not repeat the same mistakes after management replacement and always bear in mind that it carries on its shoulders commercial and social responsibilities. It should handle each project management task with a humble and prudent attitude so as to mend the fold and restore public confidence in MTRCL.

I so submit.

DR FERNANDO CHEUNG (in Cantonese): President, I speak in support of Ms Tanya CHAN's motion moved under the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") for the establishment of a select committee to inquire into the disappearance of a large number of documents and the entire scandal surrounding the Shatin to Central Link ("SCL").

While listening to the speeches of the pro-establishment Members just now, particularly the one given by Mr Christopher CHEUNG, I was struck by their arguments which were indeed full of contradictions. It was rather hilarious for Mr Christopher CHEUNG to concede that the relevant government officials should indeed reflect upon themselves and an examination for possible dereliction of duty on the part of public officers is in order, while stating that it would be inappropriate for the Legislative Council to demand an inquiry with the overriding objective of holding the Government accountable, as we simply do not know who is responsible. He also urged the personnel of the MTR Corporation Limited ("MTRCL") to adopt a humble and serious attitude. President, had these public officers never been negligent in performing duties and had MTRCL all along adopted a humble and serious attitude in its dealings, we would not have been presented such a mess today. It beats me to imagine what other overriding objective should the Legislative Council, as the most important institution of power to monitor the Government at the constitutional level, pursue other than that of holding the Government accountable.

Moreover, if we do not establish a select committee to conduct an inquiry, how can we determine who should be responsible? Given that we must hold the Government accountable―but without the benefit of an independent committee of inquiry and the knowledge of who was responsible, and that the Commission of Inquiry ("the Commission") under Mr Michael HARTMANN neither seeks nor intends to find out who should be responsible, what other mechanisms of inquiry do we have for identifying the parties responsible? Is this something that can LEGISLATIVE COUNCIL ― 21 February 2019 6941 only be done by the Police or the Independent Commission Against Corruption? And beyond the scope of criminal offences, should we just turn a blind to issues concerning governance and accountability? Does the common morality accepted in society not dictate that after the outbreak of the entire scandal, we should ascertain responsibility, conduct an inquiry to really find out the truth, and then hold the parties concerned responsible, not only at the criminal level, but also at the governance or political level? Since the Government is the corresponding party of Members, it is only natural that we will bludgeon the Government with questions.

The Commission led by Mr Michael HARTMANN was formed by the Chief Executive by virtue of the Commissions of Inquiry Ordinance. Certainly, it is similar to a Court with the powers to conduct inquiries and summon witnesses. Meanwhile, the Legislative Council is also vested with such powers. This Council is allowed to do the same under P&P Ordinance because it is a form of checks and balances on powers, and because we know powers corrupt, and checks and balances of different powers are thus warranted. If there is a problem with one power, especially with the biggest power―the executive power, the Legislative Council will have a chance of holding it accountable. Hence, it is stipulated clearly in the Basic Law that the Government should be accountable to the Legislative Council. And holding the Government accountable is precisely the function this Council should perform. What did pro-Government Members do in the past instead? Repeatedly blocking the Legislative Council from performing such a function―not just a couple of times, but eight times. Later on today, they will block this Council from performing its proper responsibility for the ninth time.

What has exactly happened in SCL? A railway project stretching just 17 km, SCL costs nearly $100 billion to build presently, and we have yet to find out how the project would be adjusted afresh after the emergence of one scandal after another. Is demolition necessary? Would it not be simpler to rebuild part of Hung Hom Station from scratch? I have no idea how much it will cost, but the figure will surely hit a new high, exceeding that of the Express Rail Link project. While SCL will certainly play a big role in transport in Hong Kong, its commencement, originally scheduled for the middle of this year, is now deferred indefinitely. From late May to August last year, a series of issues relating to the construction works along SCL were exposed by the media. Without these exposures by the media, we will still be kept in the dark today.

6942 LEGISLATIVE COUNCIL ― 21 February 2019

What were these exposures? They include, among a litany of other issues, rebars at the Hung Hom Station Extension being cut and water seepage at the connection joints of its diaphragm wall, the removal of rebars at platform slab of To Kwa Wan Station, the failure to install in-depth supports in accordance with procedural requirements in the course of excavation at Exhibition Centre Station, as well as the settlement levels of the buildings and underground facilities in the vicinity of To Kwa Wan Station and Exhibition Centre Station exceeding the permissible ceilings. Since the issues involved are extensive in scope, even featuring unauthorized alterations of plans by the relevant contractor―Leighton Contractors (Asia) Limited ("Leighton") and the cutting of rebars in stealth by workers, there are the distinct possibilities of the loading capacity of the entire platform being compromised and the relevant buildings falling victim to structural problems as settlement levels suggest.

If it was not for your repeated obstruction, we would have indeed established an independent committee of inquiry long since, given the magnitude of the scandals exploding one after another. Well, as soon as the Commission, formed by Carrie LAM under public pressure, finished its hearings and was about to wrap up the inquiry, there was this exposure of incomplete construction documentation in relation to the works of the North Approach Tunnel, South Approach Tunnel and stabling sidings of Hung Hom Station of SCL. President, it turns out that such construction documentation, which concerns the Request for Inspection and Survey Checks ("RISC") forms as many colleagues have pointed out, is essential to a very rigorous process, serving the function of crucial hold points. Under the rigorous system of MTRCL, each RISC form comes in five hard copies, one goes to MTRCL, one to site offices, one to Leighton the contractor, with the remaining two being kept as filed records. Without such forms, contractors cannot ship concrete to a given site. And the procedures of erecting formwork and concrete pouring can proceed only with the joint signatures of the inspectors of Leighton and MTRCL on such forms. Given that over 60% of the RISC forms concerning those three construction sites have gone missing, and the entire construction situation has deviated from the original design, as indicated by the reports submitted by MTRCL subsequently, it is apparent that the entire affair is beset by a litany of problems relating to the oversight of different organizations and personnel. Well, there is indeed nothing new under the sun. As the works continued, no one seemed to have an idea of what was going on, which made a complete mockery of this system of monitoring and crucial hold points.

LEGISLATIVE COUNCIL ― 21 February 2019 6943

President, an independent select committee formed by the Legislative Council will inquire into the incident in a way commensurate with our duty and perspective. What has gone wrong with the governance structure involving the Government, which is the chief architect of SCL and the largest shareholder of MTRCL with representation on the latter's Board of Directors? Why has the Government been seemingly kept in the dark over blunders of such magnitude? What has gone wrong with the aforementioned governance structure, or the formulation and monitoring of the Entrustment Agreement, with which the Government entrusted the SCL works to MTRCL?

Of course, no one has ever said that the Commission chaired by Mr Michael HARTMANN cannot inquire into this part, but its main subjects are definitely MTRCL and the relevant contractors. Next, we must also consider, based on the inquiry report by Mr Michael HARTMANN, exactly how such a mess can be cleared up. However, I consider that the focus of the inquiry by the Legislative Council is to examine what responsibilities the Government should bear in this incident. As regards the future relationship between the Government and MTRCL, whether in terms of construction projects, operation and overall governance, exactly what direction should be adopted? It is the very matter that I hope the Legislative Council can examine through the select committee. President, we have observed such kind of governance, the Government's failure to perform effective monitoring in the SCL incident―whether because of the conflict of interests among board members or the conflicting roles between the entrusting and entrusted parties―and the loopholes in the Government's approval of the Entrustment Agreement that have come to our attention. In my view, we really must give serious and meticulous consideration to these aspects.

Moreover, I have heard Members from the pro-establishment camp say we do not have enough time, and, as a matter of fact, time is running out. Given the indefinite commissioning date of SCL, we very much expect that results will be available as soon as possible in the inquiry report by Mr Michael HARTMANN. Of course, Secretary Frank CHAN has said that MTRCL must submit a report by the end of this month, which is only to account for the serious blunder of incomplete documentation. More importantly, how is the safety of the project as a whole, and how can we enable the safe commissioning of SCL as soon as possible? Nevertheless, the Legislative Council's focus is on a farther horizon. We need to examine the entire governance framework between the Government and MTRCL in the future. If we were to maintain the existing framework, as well as the pattern of funding a railway fully by the Government, and having 6944 LEGISLATIVE COUNCIL ― 21 February 2019

MTRCL to design and operate it on contract, given the series of cost overruns and scandals in both the Express Rail Link and the SCL projects, which is now under discussion, are such framework and pattern still suitable for future projects? Therefore, President, we have our own roles and responsibilities. I hope Members from the pro-establishment camp will not defend for the ninth time (The buzzer sounded) …

PRESIDENT (in Cantonese): Dr CHEUNG, please stop speaking.

PRESIDENT (in Cantonese): Does any other Member wish to speak?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): If not, I now first call upon the public officer to speak again and then Ms Tanya CHAN will reply. Then, the debate will come to a close. Secretary for Transport and Housing, please speak.

(Dr Junius HO indicated a wish to speak. Ms Tanya CHAN stood up)

PRESIDENT (in Cantonese): Dr Junius HO, please hold on. Ms Tanya CHAN, what is your point?

MS TANYA CHAN (in Cantonese): You have already called upon the Secretary to speak in response, why can Dr Junius HO still request to speak?

PRESIDENT (in Cantonese): Dr Junius HO, I asked if any other Member would wish to speak just now but you did not indicate your wish to do so.

DR JUNIUS HO (in Cantonese): Because I noticed that several Members were still waiting to speak, so I pressed the "Request to speak" button immediately.

LEGISLATIVE COUNCIL ― 21 February 2019 6945

PRESIDENT (in Cantonese): But those Members were not present in the Chamber.

DR JUNIUS HO (in Cantonese): President, I had really pressed the "Request to speak" button. I do not know what Ms Tanya CHAN is worried about.

PRESIDENT (in Cantonese): I have already called upon the Secretary to speak. Secretary, please speak.

SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, it is an indisputable fact that the Shatin to Central Link ("SCL") project, plagued by poor management and a spate of irregularities, has disappointed the community and the Council alike. I can empathize with the comments on the incident as well as the expectations and criticisms of the staff, organizations and public officers concerned by those in the community and the Council, with deep introspection.

The Government has been dealing with the incident in an open and sincere manner, with nothing to hide. We have not only referred it to the Commission of Inquiry for a comprehensive and in-depth inquiry, but also established an Expert Adviser Team to supervise the follow-up and audit work on the construction of other SCL stations conducted by the Highways Department ("HyD"), so as to ensure structural and public safety.

As stated by Members in the discussions yesterday and just now, the Administration's team has, at different points of time, mentioned the referral to law enforcement agencies and the report made to the Police, and these statements are made by the Administration's team according to the facts. Members' suspicion of inconsistency is unsubstantiated. Certainly, as to whether the incident involves criminality as suspected by individual Members, given the ongoing investigation by the law enforcement agencies, we are currently not in a position to make any speculation or remark about it.

Members have also mentioned the management system, and concerning whether the missing of a large quantity of Request for Inspection and Survey Checks forms and the failure to enforce the established system are acceptable, I 6946 LEGISLATIVE COUNCIL ― 21 February 2019 must make it clear here: There is certainly a purpose and meaning to the existence of any management system or quality management system. The failure to proceed with activities relating to structural elements and the quality of construction in accordance with the mechanisms and procedures or even the missing of a large quantity of construction records is unacceptable. Hence, Members in the Council have, from whatever angle, made it absolutely clear that it is imperative for us to conduct a thorough investigation in a bid to get to the bottom of the whole truth. Regardless of our background and intentions, our goal is no different.

Today we have discussed the need to invoke the Legislative Council (Powers and Privileges) Ordinance ("P&P Ordinance") to form a select committee separately to inquire into the incident. Yesterday and today, I have carefully listened to a range of views put forward by a number of Members in their speeches, including Ms Tanya CHAN's speech on her motion. Concerning whether it is necessary to conduct an independent inquiry separately or invoke P&P Ordinance to conduct an inquiry separately, please allow me to give a consolidated reply briefly.

First, the Government will definitely follow up on a series of incidents surrounding construction Contract No. 1112 of SCL seriously. As regards the missing construction records and construction changes not authorized by the Government in relation to the construction works of the North Approach Tunnel, South Approach Tunnel and stabling sidings of Hung Hom Station, earlier on 19 February, the Chief Executive in Council amended the terms of reference of the Commission of Inquiry ("the Commission") appointed in accordance with the Commissions of Inquiry Ordinance under the chairmanship of Mr Michael HARTMANN, former Non-Permanent Judge of the Court of Final Appeal, to investigate also the three parts of construction works.

Second, the inquiry by the Commission covers not only the facts and circumstances surrounding the construction works at and near Hung Hom Station Extension under the SCL project implemented by the MTR Corporation Limited ("MTRCL"), but also the project management and supervision system of MTRCL as well as the monitoring and regulatory mechanisms of the Government, etc. After the Commission has completed its inquiry, we will spare no effort in following up on its proposed measures for improvement comprehensively. At present, while the inquiry by the Commission is underway and before the LEGISLATIVE COUNCIL ― 21 February 2019 6947 submission of a full report, we have already stepped up our efforts in project management. Since September 2018, in addition to the original regular inspections, HyD has also arranged for engineering officers at inspector level to conduct independent surprise site checks to inspect MTRCL's management and monitoring of the works in progress, which focus on quality-related control of works and supervision records, such as the completeness of records and whether the materials testing records have been verified by inspectors. Moreover, the Project Supervision Committee led by the Director of Highways will also step up its monitoring efforts by adding specific agenda items to monitor whether the issue of incomplete site records is also identified at other stations, thereby averting the recurrence of incomplete construction records and ensuring that the project management is up to standard.

Third, to ascertain the safety of the whole SCL project, we will also conduct an audit of all stations other than Hung Hom Station of SCL to ensure compliance of the relevant construction details with the design and structural safety. If the audit results show that they are up to standard, after completion of the works, MTRCL also has to submit to the Buildings Department ("BD") the relevant completion certificate, record drawings as well as test reports and certificates of construction materials, so as to certify that the relevant works have been completed in accordance with the approved plans as well as the design and stipulated requirements. BD and other government departments will definitely perform their gatekeeping role rigorously in the process. Members have also queried earlier whether it is collective dereliction of duty on the part of government departments. I must state here that various government departments have their respective roles to play at different stages of works. They will remain steadfast in their duties and perform their gatekeeping role rigorously at crucial moments.

Fourth, as regards criminal investigation, we understand that the law enforcement agencies have commenced the investigation. The Police have proceeded with a consolidated investigation into the alleged cutting of rebars and loss of a large quantity of site documentation at Hung Hom Station, with a special team set up under the regional crime unit dedicated to the investigation. The Government will fully facilitate the investigation.

As stated by me earlier, the aforesaid comprehensive and in-depth investigation will actually unveil the unadorned truth before us. Through the aforesaid investigation and audit, the design, the construction and the 6948 LEGISLATIVE COUNCIL ― 21 February 2019 as-constructed details of the whole project will be verified. There is no room for compromise when it comes to structural and public safety. We guarantee that no green light will be given until safety is assured.

Concerning the series of incidents surrounding construction Contract No. 1112 of SCL, the Government will definitely hold MTRCL and the contractors concerned accountable, and at the same time, examine the problems with the existing project management system in respect of the SCL project, so as to identify inadequacies and make improvement. In case of dereliction of duty on the part of any party as identified in the process, it will also be followed up seriously.

In view of my foregoing statement, the Government considers the current arrangement a practical approach, which serves as an effective solution. It is unnecessary for the Legislative Council to invoke P&P Ordinance to set up a separate select committee to inquire into the incident.

With these remarks, President, I implore Members to oppose the motion. Thank you.

PRESIDENT (in Cantonese): I now call upon Ms Tanya CHAN to reply.

MS TANYA CHAN (in Cantonese): President, I thank the many Honourable colleagues for their speeches. I hope that Members from the pro-democracy camp can come back to the Chamber as soon as possible.

I so submit.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Ms Tanya CHAN be passed. Will those in favour please raise their hands?

(Members raised their hands)

LEGISLATIVE COUNCIL ― 21 February 2019 6949

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr WONG Ting-kwong rose to claim a division.

PRESIDENT (in Cantonese): Mr WONG Ting-kwong has claimed a division. The division bell will ring for five minutes.

(While the division bell was ringing, Ms Starry LEE stood up)

PRESIDENT (in Cantonese): Ms Starry LEE, what is your point?

MS STARRY LEE (in Cantonese): President, I declare that my employer is the auditor of the MTR Corporation Limited but I have not participated in the relevant work.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Prof Joseph LEE, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr Dennis KWOK, Mr IP Kin-yuen, Mr SHIU Ka-chun, Dr Pierre CHAN and Mr KWONG Chun-yu voted for the motion.

Mr Tommy CHEUNG, Mr Jeffrey LAM, Mr WONG Ting-kwong, Ms Starry LEE, Mr CHAN Kin-por, Mr Steven HO, Mr Frankie YICK, Mr YIU Si-wing, Mr POON Siu-ping, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan, Mr Jimmy 6950 LEGISLATIVE COUNCIL ― 21 February 2019

NG, Mr HO Kai-ming, Mr Holden CHOW, Mr CHAN Chun-ying, Mr LUK Chung-hung and Mr LAU Kwok-fan voted against the motion.

Mr Abraham SHEK and Mr Christopher CHEUNG abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Dr KWOK Ka-ki, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Mr HUI Chi-fung, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted for the motion.

Mr CHAN Hak-kan, Mrs Regina IP, Mr Paul TSE, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Ms Alice MAK, Mr KWOK Wai-keung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Dr Junius HO, Mr Wilson OR, Mr CHEUNG Kwok-kwan and Mr Vincent CHENG voted against the motion.

Dr Priscilla LEUNG and Ms CHAN Hoi-yan abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 30 were present, 10 were in favour of the motion, 17 against it and 2 abstained; while among the Members returned by geographical constituencies through direct elections, 31 were present, 16 were in favour of the motion, 13 against it and 2 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the motion was negatived.

LEGISLATIVE COUNCIL ― 21 February 2019 6951

PRESIDENT (in Cantonese): Debate on motion with no legislative effect.

Motion on "Revitalizing the Mandatory Provident Fund".

Members who wish to speak please press the "Request to speak" button.

I call upon Dr Junius HO to speak and move the motion.

MOTION ON "REVITALIZING THE MANDATORY PROVIDENT FUND"

DR JUNIUS HO (in Cantonese): President, today I move the motion on "Revitalizing the Mandatory Provident Fund", as the Mandatory Provident Fund ("MPF") System has come under censure and has long been a subject of criticism since its establishment. The significance of the MPF schemes is to enable working persons to make savings through contributions with the employers, so as to meet their living expenses in retirement life. Statistics show that MPF has accumulated over $800 billion since its establishment, but the general wage earners are allowed to withdraw their MPF benefits only when they attained the age of 65. If the savings cannot be used in a timely manner or are found not enough when needed, it runs counter to the original intent of protecting retirement life.

As shown by the facts, each person suffers from an average loss of over $8,000 of their MPF at present. The MPF reports on the market pointed out that the current net value of MPF excluding inflation shows an increase of about 4% only. Regardless of whether it is a loss of $8,000 or an increase of 4%, I think that the result is not satisfactory at all. In recent years, many people who are about to retire or have retired (we call them the "new middle age" group), despite having reached the retirement age, feel very worried about the rising medical costs, especially whether they can meet the high medical expenses.

Just think about this. Given the current condition of living, what is the biggest natural enemy of a person? The answer is our age. As we grow older, our ability to make money becomes lower. But can our savings support or sustain our living and maintain our pre-retirement quality of life? This is a big question. Come to think about this. What does a person most care about? Apart from protection, it is health. The quality of life is directly related to 6952 LEGISLATIVE COUNCIL ― 21 February 2019 health. Assuming that a person starts to work at the age of 25 with a monthly salary of $30,000 and he will work for 40 years until the age of 65. If there is neither any increase in or adjustment to his monthly salary nor any inflation or accrued compound interest earning, he will save $36,000 a year and $1.44 million in 40 years. This $1.44 million sounds like a generous amount of money to protect his retirement life, but do not forget that the index of living is ever rising and inflation will erode his savings. By then, will this amount be really able to meet his expenses and maintain the quality of life?

The Heung Yee Kuk member drew a lot on the second day of the Chinese New Year. The oracle reads, "It is nothing joyable to plough a stone field, and a cake drawn on a piece of paper will never smell good. This is because a stone field cannot be cultivated to yield, and a cake painting will not lead to satiety". This is an apt description of MPF. There seems to be a sum of money, but can it be used or is it enough for the future? This is the biggest question. No matter what we do, we should plan ahead instead of working at the eleventh hour. We very much hope that the present savings can be used now to prevent crises in the future. It will be fine if we stay healthy at the age of 65, but we would have to cope with huge medical expenses in case we contracted serious illnesses. In the example I have just quoted, a person who works from the age of 25 to 65 will have made savings of $1.44 million assuming there is no profit and loss, but it can be spent entirely on two or three medical treatments if he needs to buy expensive drugs. In this case, a person may have his "purse emptied" when he suffers from serious illnesses if he is allowed to use his money only at the age of 65.

I have moved this motion on revitalizing MPF today is exactly to plan for the future by making plans today. MPF currently accumulates a certain amount of money every year. In addition to investing in equities and funds and choosing high-risk, medium-risk or capital-guaranteed investments, should we be allowed to use some of our MPF benefits to take out medical insurance? From my personal experience, a person may enjoy coverage of various items with the purchase of a medical insurance policy at a premium of $29,000, such as a particular limit of coverage of medicine and consultation fees each time. In addition, the most reassuring and secure is that it can offer an overall inpatient coverage of up to $30 million. A premium of $29,000 can buy an inpatient coverage of $30 million. For the general public, especially the "new middle age" group, I believe their physical condition may not get very serious after reaching middle age, but their health may become poorer. It would be great if they are allowed to use some of their MPF benefits to buy, say $10 million, LEGISLATIVE COUNCIL ― 21 February 2019 6953 inpatient coverage. I believe that making an investment decision for our own health is also in line with the MPF objective of protecting our quality of life in retirement.

Therefore, I hope Honourable colleagues can support my motion today. Money should not be put in the bank and found not enough when needed. Instead, we should plan for ourselves in a timely manner by having an additional option to buy an insurance policy for our own health. There are several reasons and advantages for this. I have just mentioned that there will be an additional option with flexibility. Secondly, a person may receive timely protection without having to wait until the age of 65. Imagine, if a 50-year-old person needs to use his medical coverage now, he has to go through a lot of formalities in order to get the money, which may not be enough for him to meet the expenses. If a small amount of money can be used to buy medical insurance every year, he can enjoy greater protection. If he can make use of his insurance coverage, there will be no need to rely on the public health care system. If this is possible, he can make his own decisions, receive medical services in the private health care system and be supported by insurance. In this way, public medical resources can be released for other people in need.

I think it is timely to make this proposal on MPF, as some people have criticized earlier of the excessively high commissions of the fund managers and the absence of an opportunity for contributors to participate in their MPF investment schemes. After discussions among various sectors of the community, the Government has now made appropriate adjustments to reduce the commissions of MPF administrators. Despite that, the cost remains high.

On the other hand, contributors are currently allowed to invest their MPF in high-risk or capital-guaranteed funds. While it is only limited to the choices of investment, it proves that the original intent of establishing MPF and the system at that time are not unchangeable. Instead, it can be refined in response to social opinions. Therefore, I have discussed earlier with my voters, especially the middle class, about the inclusion of medical insurance in MPF as an additional option. Two weeks ago when the Chief Executive came to the Legislative Council, I raised this matter clearly. At that time, the Chief Executive said, Dr HO, the first …

(A Member's mobile phone rang)

6954 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): Will Members please turn your mobile phones to silent mode, as ringing does disturb the proceedings.

Dr Junius HO, please continue.

DR JUNIUS HO (in Cantonese): Good. The Chief Executive said at that time that, as the name implies, MPF must be mandatory. Secondly, the amount of MPF contributions is not great. If it is withdrawn now, the future amount may provide an even lower level of protection for the contributors. President, I did not agree with the response of the Chief Executive at that time, and later I had the opportunity to further explain this matter to the Chief Executive. In fact, the current proposal for withdrawal of MPF benefits to protect our health is exactly in line with its objective of offering protection to the retirees. Sometimes, we should not only focus on offering the retirees protection after the retirement age, but to bring more advantages before they retire as a preventive measure.

In addition, the amount involved in the example given by me earlier is actually not much, but only some of our MPF benefits. It is only complementary to withdraw some money for more advantages and greater protection. I hope this motion on revitalizing MPF moved by me today can be supported by Honourable colleagues in the Legislative Council. I know that a few Members will propose amendments, and I will not make any comments for the time being. I will give a response later on after listening to the views presented by Members.

I so submit.

Dr Junius HO moved the following motion: (Translation)

"That the fundamental concept of the Mandatory Provident Fund ('MPF') schemes is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, LEGISLATIVE COUNCIL ― 21 February 2019 6955

the average loss of each scheme member has exceeded $8,000, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation; in order to put the retirement savings of scheme members to more practical use, this Council urges the Government to revitalize MPF by allowing scheme members flexibility and autonomy in using MPF to take out medical insurance, so that when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Dr Junius HO be passed.

PRESIDENT (in Cantonese): Six Members will move amendments to this motion. This Council will conduct a joint debate on the motion and the amendments.

I will call upon Members who will move the amendments to speak in the following order: Mr CHAN Kin-por, Mr LUK Chung-hung, Mr WONG Ting-kwong, Dr KWOK Ka-ki, Dr Fernando CHEUNG and Mr Paul TSE, but they may not move the amendments at this stage.

MR CHAN KIN-POR (in Cantonese): President, there have been many negative comments on the Mandatory Provident Fund ("MPF") in society. MPF is often perceived as yielding low returns and charging high fees. I would like to take this opportunity today to talk about the issue of returns with the help of some data and facts, as I found that many people incorrectly relay erroneous messages and believe in hearsay, claiming that the MPF returns are very poor. These incorrect messages are the main reason for the negative comments of the general public on MPF.

Many people sing praises of the Exchange Fund for the high rate of return, but MPF may yield an even better return than the Exchange Fund if choices of MPF schemes are properly made. I will prove this with data. Of course, there 6956 LEGISLATIVE COUNCIL ― 21 February 2019 are areas for improvement insofar as MPF is concerned. I have been advocating a cut in the administration fees over the past decade and such fees have dropped a lot, but there should still be room for a further reduction.

When it comes to the rate of return, the figure quoted in this motion, i.e. the figure stated in Dr Junius HO's motion as amended by me, is the overall annualized rate of return of MPF schemes overall from December 2000 to December 2017, which was 4.8% per year on average after deducting the administration fees, as compared with an average inflation rate of only 1.8% for the corresponding period. While the latest full-year figures for 2018 were released just a few days ago, of which the overall annualized rate of return dropped to 4.1% due to a sharp fall in the stock market in 2018, the stock market has rebounded since January this year with the decline narrowed significantly. As such, I will stick to the latest figures as of 2018.

In fact, nearly 80% of the MPF contributions are invested in medium- and high-risk funds, including equity funds and hybrid funds. We can look at their return performances. Over the 18 years from 2000 to 2018, with the administration fees deducted from the return data mentioned as follows: the annualized rate of return on equity funds was 5%, representing a return of 5% per year on average in 18 years. The rate of return on index funds was higher at 5.5% per year on average. It is rare to find an investment with a rate of return of 5.5% nowadays. The rate of return on hybrid funds was 4.3% per year on average, which was same as that on the Exchange Fund of only 4.3% for the corresponding period. The rate of return on bond funds was 2.5% per year on average. The rate of return on guaranteed funds was 1.1% per year. The rate of return on conservative funds was 0.7% per year on average.

President, these figures speak for themselves. The rate of return on MPF is actually quite considerable. Unless it is a must to choose a guaranteed fund or a conservative fund, the rate of return on these two funds respectively underperformed inflation at only 1.1% and 0.7% per year on average. In contrast, the rates of return on MPF and the Exchange Fund were roughly the same. It was 4.3% for the Exchange Fund and 4.1% for MPF, while the administration fees were deducted from MPF but not the Exchange Fund. If MPF equity funds were chosen, the rate of return would be 5%. In comparison, the Exchange Fund pales.

LEGISLATIVE COUNCIL ― 21 February 2019 6957

In fact, the power of MPF returns would require a long time to accumulate on average, because sometimes it may fall as the investment market fluctuates. For example, the Hang Seng Index ("HSI") dropped 4 000 points in 2018 and the rate of return for MPF was -8.83%. But do not forget that HSI surged by 8 000 points in 2017 and the rate of return for MPF was +22.3%. In the first one and a half month of the year, the stock market reported a considerable return and significantly narrowed the decline in 2018. Therefore, we should evaluate MPF from a long-term perspective. We should not look at the down market in a particular year and say the MPF performance is poor, and of course, we cannot praise MPF as "king" for the market surge in 2017. MPF is an average investment method and subject to long-term performance. After 18 years of ups and downs in the investment market and two financial turmoils, its overall rate of return still stands at an impressive level of 5%.

MPF underperforms inflation only in terms of the low-return guaranteed funds and conservative funds. Fortunately, the public is very smart. These two funds only account for less than 20% of the overall MPF. Initially, the establishment of the guaranteed funds and conservative funds was to offer a choice to those members of the public who are close to their retirement age, so that they would not be affected by market fluctuations before retirement. In addition, those who are keen on financial management may transfer their money to conservative funds as a safe haven when they feel that the "bull market" is coming to an end. In fact, many people do not understand this or even have a wrong concept, but they still often advise others to choose a guaranteed fund. It turns out to underperform inflation for sure.

Therefore, those younger members of the public who do not know how to make the choice may choose the HSI Fund. It enjoyed considerable returns in the past and I believe it will continue to be so in the future, and the advantage is that its administration fee is the lowest. My amendment proposes to promote financial management education to teach people how to effectively manage their MPF investments, because the rate of return can differ greatly if the public does not understand the real situation, misbelieve some false information and believe in hearsay, and choose an unsuitable fund as a result. Meanwhile, I wish that people who do not understand the market should not spread wrong concepts and make nonsensical speeches that may make others victims any time.

6958 LEGISLATIVE COUNCIL ― 21 February 2019

President, the administration fees of MPF have long been a cause of criticism. In the past, I have been urging the Government and the trade to take effective measures to reduce administrative expenses. In recent years, charges have also started to drop from 2.1% in 2007 to 1.52% now, but I believe there is room for a further reduction.

Nevertheless, we should give it a fair deal. There are historical reasons for the high administration fees at the initial launch of MPF. Since legislation was to be implemented at that time, a huge investment was involved given that a large amount of income and expenditure and paperwork for MPF had to be handled manually each month and new computer programmes were deployed. At that time, the size of the MPF pool was very small. Given a small pool of capital and the calculation of fees based on total assets, the high administration fees were inevitable and necessary at that time. However, as contributions continue to increase and the administrative work is gradually streamlined, the administration fees can be lowered. As such, I propose to promote paperless processes while introducing an "eMPF" electronic platform as soon as possible, so as to substantially reduce manual handling procedures in order that bigger room for administration fee reduction can be occasioned. The Mandatory Provident Fund Schemes Authority ("MPFA") estimates that as long as the electronic platform has a 90% utilization rate, an enormous $23 billion can be saved over the next two decades. In addition, the minimum charge is only 0.71% if the public chooses the HSI Fund, which is an ideal choice given the extremely high rate of return.

Moreover, some people criticize MPF as not enough to meet retirement expenses. This boils down not to a matter of return, but an extremely low contribution ratio in Hong Kong. The Singapore Provident Fund has a high maximum level of contribution of 37%, which is 3.7 times that of Hong Kong. Naturally, it is more than sufficient to cover the expenses. The MPF contribution ratio was low as employers or employees were unwilling to contribute much when we established our scheme in the past. It is hoped that the Government will gradually enhance tax concessions for voluntary contributions to attract the public to make voluntary contributions. Currently, over $10 billion in the total MPF contributions is voluntary contributions. With such a huge capital flowing into the system, it proves that there are some points of attraction. Otherwise, all the voluntary contributions have already been withdrawn.

LEGISLATIVE COUNCIL ― 21 February 2019 6959

Mr Paul TSE proposes to allow the public to buy the Tracker Fund of Hong Kong, which charges a lower management fee, at their own expenses. I would like to remind the public of the bank charges. Since the minimum charge for trading securities via the bank is $50 for each transaction and a charge will be levied for each monthly contribution, a monthly contribution of $3,000 will incur a charge at 1.6% and a monthly contribution of $1,500 will incur a charge at 3.2%, compared with 0.71% for the MPF Index Fund. This implies that buying the Tracker Fund of Hong Kong at one's own expenses will be subject to a charge which is more than double.

Today, the public has a deep misunderstanding or even hatred against MPF. Of course, MPF has its own problems. But more importantly, the community is full of mistaken and unfair reports or information, which gives the public a very poor impression of MPF. While all I have cited today are objective data that MPFA would publish every year, few people will pay attention to them. As a result, no one has gone through the merits while the shortcomings are magnified. How will there be objective and fair comments on MPF? I also understand that, given the negative image of MPF, it is difficult to pass the motion at today's meeting unless MPF is "fiercely dressed down" by the motion and the amendments and it is best to keep the administration fees to an extremely low level. However, I think that it is not important whether my amendment can be passed. The most important thing is to clarify the facts about MPF, especially the rate of return, and it would be a most benevolent favour to the public if only people can realize the truth. Thank you, President.

MR LUK CHUNG-HUNG (in Cantonese): President, the motion on "Revitalizing the Mandatory Provident Fund," moved by Dr Junius HO, is a subject that many wage earners care about. However, in the Hong Kong Federation of Trade Unions ("FTU"), our understanding of what is meant by "Revitalizing the Mandatory Provident Fund" is different from that of Dr HO, and so I can only vote against his original motion.

The focus of Dr HO's motion is to revitalize the Mandatory Provident Fund ("MPF"), so as to allow scheme members flexibility and autonomy in using MPF to take out medical insurance, so that when they fall ill they can have choices other than seeking medical treatment in the public health care system, and this can help relieve the pressure on it. This sounds good, and is well-intentioned, but it defeats the original intent of MPF, because MPF is not medical insurance 6960 LEGISLATIVE COUNCIL ― 21 February 2019 but a mandatory and fixed-term savings programme for retirement protection of wage earners, who would then enjoy a certain degree of protection in their later years because these retirement savings. Moreover, the required amount of contribution in Hong Kong's MPF is very small. Unlike neighbouring regions such as Singapore that requires 30% of one's wage, we require contributions from both the employee and employer to 10% of one's wage in total. Such a small amount of money from the contributions, when taken out to purchase medical insurance or pay the down payment for a starter home as advocated by Mr Paul TSE in his amendment to the motion, would greatly undermine the effectiveness of the MPF System.

We have always opposed the offsetting of long service payment and severance payment against MPF contributions, and for the same reason, we take issue with the biggest problems of MPF today. What are those problems? High fees and low returns. High fees include administrative fees and management fees. Where in Hong Kong can you find a business that will surely make a profit not a loss? Become an MPF trustee. The management fees and administrative fees they earn every year can well exceed $10 billion. For the past 18 years, they have already received more than $100 billion. No matter how poor the returns were and how bad the investments performed compared with the overall market performance, they pocketed the fees all the same. How can we as wage earners and scheme members be convinced and content? In the light of this, the thrust of my amendment is to radically improve the MPF System by getting at the root of its inadequacies, thereby strengthening retirement protection for the wage earners.

First of all, FTU once again urges the Government to abolish the MPF offsetting arrangement as soon as possible. This arrangement is utterly unreasonable, unfair, and unjust. Although the Government has decided to do so, we still do not understand why we must wait for another five years for it to take place, that is, implementation in 2024. Can the Government, not losing any time, submit a bill to the Legislative Council for scrutiny during this term of the Council? I believe most of the Members present, regardless of their political affiliations, will express support and manage to find time to pass the bill.

Furthermore, why must we wait for two years for implementation after the bill is enacted into law? According to the Government's timetable, the bill on abolition of the offsetting arrangement will only be passed in the next term of the Legislative Council, that is, after 2020. Besides, why must implementation wait for two years after enactment of the law? Even if there is a need for minor LEGISLATIVE COUNCIL ― 21 February 2019 6961 adjustment of administrative measures, one year is more than enough at any rate. President, the MPF offsetting arrangement acts like a flush, capable of washing away $3 billion to $4 billion of the hard-earned money of employees in one year, and so it really is too long to wait for one more day. This has a far more serious impact on many of our grass-roots employees. Whether they work as cleaning workers, security guards, or in the catering trade, they are indeed to be found in the grass roots, and the money they earn is really meant for dealing with emergency and retirement, so this money is severance payment in the real sense. In this sense, why would they withdraw the MPF contributions? Would it not be possible that they do not have enough money to spend when they retire and become a heavier burden for society? In the light of this, the abolition of the offsetting arrangement must really be expedited.

Regarding the Government, it should all the more play an exemplary role because it is the largest employer in Hong Kong. It should take the lead by abolishing the offsetting arrangement for civil servants, non-civil service contract ("NCSC") staff, or employees of outsourced work, so as to set a good example as an employer.

Second, we keep pondering why MPF fees in Hong Kong are so expensive. An Honourable colleague just mentioned that the fees had been reduced somewhat. But the pace of reduction has been very slow. In the last four years, that is, from 2015 to date, the administrative fees and management fees have been cut from an average of 1.6% to 1.52%, so the cut was only 0.08%, and very small in four years given that the effect of the Default Investment Strategy ("DIS") initiative had already been factored in. What then are the reasons behind all this? In fact, MPF is not a totally open and competitive market. Everyone will be surprised at when hearing this. Is it not true that market economy is practised in Hong Kong? The MPF System is supposed to benefit mostly the employees or wage earners, but they cannot choose MPF trustees, who are chosen for them by their bosses, and their bosses would not consider whether the returns are good or bad, or whether the fees are high or low; they would mainly consider whether the work in handling MPF for employees is convenient or not. Employers would likely choose the banks or insurance companies that have business cooperation with their companies, just for the sake of convenience.

Even if the "partial portability of MPF benefits" (i.e. the Employee Choice Arrangement) is now being practiced, there is actually little true competition in the market, resulting in MPF trustees providing lackluster management as the fees 6962 LEGISLATIVE COUNCIL ― 21 February 2019 they earn are not affected by the rate of return, and so the returns are poor. In addition, no matter how high or low a fee is levied, it has no effect on the number of people joining the schemes, therefore no fierce competition will appear in the fees of MPF schemes. One of the technical problems obstructing implementation of "full portability of MPF benefits" is that the offsetting arrangement has yet to be abolished. Therefore, it takes us back to the previous point, which is that the abolition of the offsetting arrangement really needs to be implemented as soon as possible, so that "full portability of MPF benefits" can be implemented, and the technical problem solved. I believe that after "full portability of MPF benefits" is put into practice, competition in the market will become more intense, thereby bringing the fees down.

The third measure proposed in my amendment is to improve DIS under MPF. At present, the cap on the total fees of funds under DIS is 0.95%, which is relatively high. Take AP7 Såfa in Sweden as an example, its administrative fees are as low as 0.06% to 0.10%, therefore when we talk about the "cheap" fees in Hong Kong, we are actually talking about something that is anything but cheap. Therefore, we think that we need to continue to examine DIS, that the cap on its fees should be drastically lowered, and that the Government or a non-profit-making organization such as the Hong Kong Monetary Authority should take the lead in setting up a central default investment programme to minimize fees or to serve as a benchmark for low fees, so as to promote competition in the market. I hope that the review of DIS, to be completed in 2020, will bear fruit as soon as possible, and that the resultant recommendations or measures can be implemented immediately, in order to cut fees.

Fourth, I hope the Government can encourage MPF trustees to provide more low-fee funds such as index funds, or even stipulate that they must do so. In fact, a Member mentioned just now that the returns on index funds are often higher than those from equity funds that require active management, mainly because they save the management fees. In addition, I have noticed that there are some guaranteed funds in the market that yield returns which come close to or surpass inflation. I do not mean to do advertising here, but I need to mention it, that is, the guaranteed rate of return on the guaranteed fund of China Life Insurance (Overseas) Company Limited is 2.5%. That is to say, it is commercially viable and there are companies in the market that can provide a rate of return higher than inflation. Can the Government stipulate that all MPF trustees must provide guaranteed funds of this kind which offer a rate of return not lower than inflation? At present, the returns on guaranteed funds can be LEGISLATIVE COUNCIL ― 21 February 2019 6963 described as far from being satisfactory because they are much lower than the inflation. Such a condition cannot play the protective and anti-inflation functions for the assets of the wage earners. I hope that through this initiative we can increase the variety of funds, to give scheme members more investment options.

Fifth, I also hope that the Government can make MPF contributions for the low-income people. At present, low-income employees (i.e. those with a salary less than $7,100) need not make contributions. I think the incomes of these employees are low enough, so can the Government should make contributions for them so that the savings in their MPF accounts would not be too small for them to enjoy protection upon retirement? Of course, the last and the most important point is that FTU promotes universal retirement protection and advocates comprehensive retirement protection with tripartite contributions (i.e. workers, employers and the Government). Only in this way can we provide the most comprehensive retirement protection to wage earners. However, before this objective is reached, we think that the Government, in order to rid MPF of its bad reputation of being the "Coercive Provident Fund", is duty-bound to carry out reforms to tackle the issues of returns, fees, and diversified choices, whether through legislation or introduction of other incentives. It must carry out bold and resolute reforms in relation to MPF, only then can it strengthen retirement protection for the great mass of wage earners (The buzzer sounded) … Thank you, President.

PRESIDENT (in Cantonese): Mr LUK, please stop speaking.

MR WONG TING-KWONG (in Cantonese): President, before I speak further I have to make a declaration, that I have served as a non-executive director of the Mandatory Provident Fund Schemes Authority ("MPFA") for six years, followed by another six-year tenure as chairman of the Advisory Committee under MPFA.

President, there has been a lot of discussions on the problems of the Mandatory Provident Fund ("MPF") schemes in the past decade. At present, two things occupy the people's mind. First, they begin to expect relaxed restrictions on the use of MPF contributions so that they can have more pre-retirement investment choices. Second, it is the old problem, resulting from exceedingly high fees and greatly eroded returns.

6964 LEGISLATIVE COUNCIL ― 21 February 2019

Let me first talk about the problem of fees. Doubtless in the past few years MPFA has rolled out a series of measures in response to calls in society, to the effect that MPF fees have dropped somewhat, and the average fund expense ratio dropped from 2.1% in 2007, to 1.52%. There is still a 0.5% that needs to be cut compared with the goal of reducing MPF's average fee to 1% as proposed in the report of the Consultancy Study on MPF Trustees' Administration Costs, released by MPFA in November 2012. For this reason, I think MPFA needs to step up its efforts in the future.

As many people know, since the launch of MPF, the investment market has fluctuated more frequently compared with the 1980s and the early 1990s. There is no need to talk about things in the distant past, but we can take 2017 as an example. When market conditions were good in 2017, everyone made money more easily, and if their MPF investments were made in Hong Kong equity funds, the returns would be quite handsome, but what followed was the China-United States trade dispute, which apparently reversed the trend of market conditions in 2018, and eventually the amount of MPF benefits people lost in that year exceeded the amount of MPF benefits they earned in the previous year. On top of this, those who have scant understanding of investment prefer to put their MPF contributions in the Conservative or Capital Preservation Fund, which yielded poor returns over the years, but obligated payment of high management fees. Under this condition, the people have long had a negative impression of MPF, and even abhor the Government's regulation that made them make contributions to MPF. On the other hand, they see a reduction in their incomes every month, and feel being forced to deposit their wages in MPF, just to sustain the long-term loss.

Although none of these were the purposes or intentions of the Government when it set up MPF, many people feel strongly in that way. In the light of this, the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") has been calling on the Government to improve the MPF System over the years. For example, DAB called on the Government to implement "portability of MPF benefits," study rules on fixed amounts of administrative fees levied by MPF trustees, and shoulder up part of the fees of the funds under the Default Investment Strategy ("DIS"), including a maximum of 0.2% of recurrent out-of-pocket expenses, i.e. the annual audit fee, printing fee, postage, etc., so as to further reduce the fees of MPF trustees.

LEGISLATIVE COUNCIL ― 21 February 2019 6965

President, the current fee charged by an MPF trustee is based on a fixed percentage of the total value of account assets, and this amount is charged as the administrative fee and fund management fee. MPF has been in place for 18 years, with total assets exceeding $800 billion. In view of the growing assets size, there is a reason to expect effect from economies of scale, as well as reduction of average cost in the long term. For this reason, if we continue to use percentage as the basis for fees collection, fees will rise and inflate in an increasingly unreasonable way. At the same time, a considerable number of occupational retirement schemes in Hong Kong have adopted fixed-amount administrative fees, so have the retirement schemes in places like Australia and the United Kingdom. Therefore, DAB thinks that the authorities should be able to instruct MPFA to actively study ways to require MPF trustees to collect a fixed-amount administrative fee, which will be adjusted according to inflation, and use this method to replace the current method of taking a fixed percentage of the total account assets value.

In fact, the report of the Consultancy Study on MPF Trustees' Administration Cost has pointed out that, calculated on the basis of the average fund expense ratio of 1.74% at that time, administrative fee accounted for 0.75%, and investment management fee accounted for 0.59%, reflecting a very high ratio of administrative fee within the cost payable by scheme members. In the future, after the launch of eMPF―the centralized electronic platform, we should see a further reduction in administration cost. A change to fixed-amount administrative cost will make things more reasonable, and in the long term, it can help scheme members accumulate higher accrued benefits upon retirement. The only issue to consider is that the method of fixed-amount administrative fee has a drawback in that it is not favourable to those who are fresh in the workforce, because it would make the administrative fee paid by the newly joined members stand at a higher ratio relative to the assets in their MPF contributions.

In addition, MPFA has offered DIS products, so the problem of excessive MPF fees has been solved by and large. As for the return on investment, "Default Investment" is unable to provide reliable and stable returns. Some people expect MPF to be able to really preserve their capital, which they hope can be linked to inflation, therefore, DAB in the past few years has kept suggesting to the authorities that they should provide two types of fund products linked either to the return on the Exchange Fund or inflation. The first of our suggested products means that scheme members are allowed to choose to place their accrued benefits in the Exchange Fund. Regarding specific operation, it may be 6966 LEGISLATIVE COUNCIL ― 21 February 2019 the creation of an MPF constituent fund linked to the Exchange Fund, that is, it is linked to the Exchange Fund's investment portfolio in order to make investments; also, the Hong Kong Monetary Authority may act as a public trustee, and let the people make sound investment choices by means of the product.

As for the MPF fund product that is linked to inflation, we suggest that, in order to cut investment management cost, we may consider investing these funds directly in the Government's inflation-linked bonds, i.e. the iBond.

In addition, we suggest that the Government should, besides "Default Investment," consider creating MPF products that do not charge any fee and are offered in the form of bank savings. These can be managed by MPFA and offered to the older scheme members, such as those aged 55 or above, for them to choose. This measure can protect people who are about to retire and enable them to lock their accrued benefits once they find themselves in a period of economic downturn such as the one brought forth by the financial tsunami, so that they can avoid the risk of their MPF contributions being eroded significantly as a result of market fluctuations just before retirement.

As for increasing the degree of flexibility in the use of MPF contributions, DAB thinks that proposals such as allowing scheme members to use part of their accrued benefits to buy a starter home and purchase medical insurance are acceptable and should be studied. In respect of home purchase, we suggest that the authorities allow scheme members to apply to MPFA for withdrawal of half of their accrued benefits, to be used to buy a starter home. To prevent abuse and speculation, we need to ensure that applicants have retirement protection that can give them a comfortable environment; we think that this plan should be subject to certain restrictions, including the requirement that if an applicant sells the said property before the age of 65, then the entire amount drawn (The buzzer sounded) … from his MPF account must be returned. Thank you, President.

PRESIDENT (in Cantonese): Mr WONG, please stop speaking.

DR KWOK KA-KI (in Cantonese): President, first of all I thank Dr Junius HO for moving this motion. However, I found it very funny when I tried to look at it from his logic. His speech and the wording in his motion pointed to an impracticable system of the Mandatory Provident Fund ("MPF"). First, its LEGISLATIVE COUNCIL ― 21 February 2019 6967 management fees are too high, its returns on investments too low, and its benefits eroded by inflation to the extent that it does not work. This I fully concur. However, if we for this reason withdraw part of our MPF contributions to purchase medical insurance, the situation would resemble one in which we walk from one hell to another. Why would I say this? First, we all know that MPF originated from the Government's refusal to implement universal retirement protection as the most important basis of retirement protection, and hence MPF came about as a compromise. The Government's view was that retirement protection must be implemented, but they did not want to do this work, and suggested that it would probably be better if the job were handed over to fund trustees and managers. Fortunately, history tells everything, because the high management fees of MPF prove that MPF is not effective.

For example, I believe retirement protection funds are not a new thing, and places around the world have different forms of retirement protection. But in comparison, their fees are much lower than that in Hong Kong. The average fee in Hong Kong is 1.53%, which comprises a range from the lowest fee that is less than 1% such as the 0.69% for the money market fund, to the highest fee that is 3.39% for the guaranteed fund―this is higher than the 0.8% in Australia, 0.1% in the Netherlands and Denmark, and also many times higher than those of the larger and more stringently supervised retirement funds in many parts of the world. This proves that the most important consideration in implementing MPF is not to help the working class by according them retirement protection, but the system will certainly benefit the fund trustees and managers who reap profits from it. Put simply, it benefits many large-scale insurance companies and banks. Consequently, although Dr Junius HO has made many criticisms in the wording of his motion, Mr CHAN Kin-por deletes these criticisms which are actually facts, including how bad MPF has performed. This is regrettable, for the deletion of facts is unwise, and everyone can see clearly the industry's way of thinking, which is to grab as much money as possible―and this is the most important consideration to them.

Why is retirement protection implemented not through universal retirement protection but through MPF? One can hardly find any reason indeed. The last-term Government commissioned Prof Nelson CHOW to carry out a thorough survey, which won the people's support and this is the most important point. This survey by the Government in 2016 received more than 18 000 written submissions, most of which accepted a non-means-tested universal retirement 6968 LEGISLATIVE COUNCIL ― 21 February 2019 protection system―not a scourge, but is adopted in many places around the world as a way to handle retirement. Some people argued that universal retirement protection needs a large amount of funding, but Prof CHOW, the consultant commissioned by the Government, had already done an actuarial study and pointed out at that time that the start-up funding would be about $100 billion, to be followed by tripartite contributions and, for this reason, it could actually absolve the Government in the long term of the burden of perpetual increases in expenditure on Comprehensive Social Security Assistance ("CSSA"), elderly CSSA, Low-income Working Family Allowance, etc. Because of this, what would happen eventually some 50 years later is that due to the implementation of universal retirement protection with tripartite contributions, the Government's expenditure would not increase, but decrease. However, everyone knows that things could not be so good; just yesterday, WONG Yuen-fai said he was lucky not to have become "Nelson CHOW 2.0"―what he meant was he felt sorry for him, too, what a pity Nelson CHOW. Surprisingly, the Government's moral standard is so low, to the extent that it shelves the report compiled by the consultant it commissioned.

Although Carrie Lam said in the very beginning that she would not consider universal retirement protection, I need to say here that the Government is mean to more than 3 million workers in Hong Kong, because everyone knows this thing has become a never-ending cause, for MPF is simply unable to help the people cope with retirement. That is the reason why the Government keeps using other means to cover up its errors; it did so through many measures, such as forcing people aged 60 to 64 to work, because everyone knows that this is not workable …

PRESIDENT (in Cantonese): Dr KWOK Ka-ki, with my indulgence, you have spent a long time talking about contents irrelevant to the motion.

DR KWOK KA-KI (in Cantonese): President, I am coming back to the subject of the motion.

PRESIDENT (in Cantonese): Please come back to the subject of the motion.

LEGISLATIVE COUNCIL ― 21 February 2019 6969

DR KWOK KA-KI (in Cantonese): Yes, I am coming back to the subject, please give me 10 seconds to explain it. Now, this is the main reason for "taking the wrong path instead of the right way." Second, must we deal with medical expenses through insurance? The Research Office of the Legislative Council Secretariat conducted an unambiguous research in July 2018. The medical insurance premiums in 2015 …

PRESIDENT (in Cantonese): Dr KWOK Ka-ki, I remind you again, please come back to the subject of the debate.

DR KWOK KA-KI (in Cantonese): President, have you ever looked at my amendment? I have deleted the part of the motion that allows the people to use MPF to take out medical insurance. Have you read that? President, come on; kindly take a look at my amendment. Given such a low level, I do not know how to communicate with you. Now, from the $9 billion of premiums, only $5.3 billion were drawn to pay insurance claims, and the research report by the Legislative Council Secretariat pointed out that the number was lower than 60%. If the MPF funds, now handed over to the trustees, are transferred to insurance companies for taking out health insurance, then it is the same as going from the mouth of a big predator to another. It does not do any good. Is it true that no one in Hong Kong purchases any policy? The research by the Legislative Council Secretariat shows a prevalence rate of 20% in 2006, or 1.35 million people. In 2016, the number was 2.40 million people, and accounted for 80% of the working class, so the number was not small. There were 1.78 million people who held group-based policies, adding to this those who held individual health insurance policies the number came close to 2.30 million people, of which an overlapping 0.92 million people had both types of policies, and the total was 2.40 million people, a number that was absolutely not small. But can this help them solve the grave problem of medical care? If it is made known to everyone that the eroded part is 40%, that is, for every $10 that is added to them, the insurance companies earn $4, then, even a grandmother would know how to do the calculations. This cannot be the method for solving Hong Kong's health care problem in the long term.

Coming to the second problem, we all know that in the last 20 years the wage level of young people has not increased but has decreased after deducting inflation. In the future, how much spare money will the new generation and 6970 LEGISLATIVE COUNCIL ― 21 February 2019 employees have to pay the premiums and to take care of their own health care needs? I cannot imagine.

What is the role of the Government? Look at the big data and you will find that our health care expenditure as a percentage of our Gross Domestic Product is currently about 5.7%, of which the Government is responsible for a small portion of approximately 2.8%, while 2.9% is borne by the people, among whom 12% meet the expenses by insurance, and the rest pay for them themselves, i.e. out of their own pocket. But this is not a bad phenomenon at all, because the people do not have great confidence in protecting themselves or dealing with their health care needs through insurance.

As for the protection provided by the Government's latest tax rebate scheme, I feel that anyone well versed in medical services will know that it is a joke. To treat cancer, a patient can have an annual allowance of $30,000; however, the monthly fee of targeted therapy drugs dwarfs this amount, for it costs $40,000 to $100,000 per month. But each year the tax allowance is $30,000 only. The reason is very simple, because the Government has discovered that there is something profitable in this aspect after discussions with the insurance sector, so it has eventually acted in the way observed now. Asking the people to spend more money to take out policies will only let financial cartels and large financial institutions―including insurance companies and banks―make more profits. This is never a good initiative. Therefore, I hope Members can support my amendment, to let Hong Kong implement universal retirement protection as soon as possible, and to let all the wage earners in Hong Kong enjoy protection (The buzzer sounded) … I so submit.

PRESIDENT (in Cantonese): Dr KWOK, please stop speaking.

DR FERNANDO CHEUNG (in Cantonese): President, the people have been lashing out at the Mandatory Provident Fund ("MPF") System for 20 years, but they just cannot do anything about it. Dr Junius HO has moved this motion today, pointing to the problems of the System at least. He said he wanted to revitalize MPF, but I do not quite approve of the direction of revitalization. Honestly, the whole MPF System has gone in the wrong direction.

LEGISLATIVE COUNCIL ― 21 February 2019 6971

Back then, the colonial government floated the idea of an old age pension or universal retirement protection system before the reunification, but the matter was politicized so much so that the Mainland said it would result in a "car crash and deaths." Consequently, many so-called economists at that time, and even some in the academia echoed with one another in opposition to a system of universal retirement protection. Subsequently, the people lost an orange, and were given a tangerine. At that time, I already pointed out that this MPF System, whether from an academic angle or from the perspective of social justice, would be taking advantage of the people.

Over the years, this situation of gaining advantage has been unfolding clearly before our eyes. Given an economic system like Hong Kong, as well as our technological and economic levels, the administrative fees of our MPF are surprisingly the most expensive in the world. In the beginning, it was over 2%, and thereafter, thanks to the so-called efforts made over the years, plus the multiple measures rolled out by the Mandatory Provident Fund Schemes Authority, the current administrative fee is still over 1.5% and close to 1.6%. Just as many Honourable colleagues have said, this fee ratio is so strangely high.

Why would we allow a system, created by the Government by way of legislation, to mandate―mandatory as it says clearly―all wage earners to deposit an amount of money with a private organization, let it make investments on their behalf, and wait until the retirement age of 65 to withdraw the money? Moreover, the Government has all along adopted a laissez faire attitude towards the management fees levied by these organizations. The investments involved in the schemes are extremely complicated, with over 400 constituent funds and numerous MPF trustees in the market. In particular, in the early phase of implementation of the schemes, when the ordinary wage earners knew nothing about investment, how could choices be made? In fact we were not allowed to make that choice, because our MPF trustees were chosen by our employers. Therefore, the whole MPF System exists only to create a financial tool, to force all the wage earners in Hong Kong to set aside part of their incomes to make investments through these intermediaries, trustees, insurance companies, and banks, allowing them to collect fees that are five times and even 10 times higher than the international level. That is the way we have been bullied them for years.

President, the MPF System has been implemented for almost 20 years. Since its inception at the end of 2000, it has accumulated more than $800 billion. Well then, how much administrative fees they have charged? We made a 6972 LEGISLATIVE COUNCIL ― 21 February 2019 calculation and found that they had already collected almost $100 billion in the past. Exactly how much the MPF business is worth? Recently, I read an article by Jake VAN DER KAMP, an insightful commentator in the South China Morning Post, who pointed out that Standard Chartered Bank had just sold its MPF business to Manulife, at a consideration of US$400 million, and this MPF business accounted for about 24% of the entire MPF market. Estimated on this basis, the entire MPF business is worth $129 billion, which is a huge business. Each year, we hand over $100 billion of contributions to the trustees, who would make investments on our behalf, and then earn our money by charging us administrative fees.

President, MPF is said to be providing one more tier of protection to us when we go into retirement, and its targets are the wage earners. Well then, but are they the only persons who need retirement protection? Of course not. In fact, all the members of the families of these wage earners need protection, including housewives, persons with disabilities, and low-income persons or casual workers without long-term employment; these persons do not enjoy any protection, or have very little protection. Therefore, MPF fails to help the persons most in need of help. This is my first point.

Second, the authorities force us to hand over part of our hard-earned money such as wages and savings, and make us save that portion. However, overall wages in Hong Kong are already mean enough during the first round of market distribution, and as far as the world's advanced regions are concerned, the wages in Hong Kong are particularly low. Given the very unjust first-round distribution, it is an utterly irresponsible act of the authorities to force us, by way of MPF, to surrender part of our wages to the trustees. The authorities did not stipulate how the trustees could levy fees, and only until recently did they say hurriedly that they would introduce the Default Investment Strategy ("DIS") and reduce fees. They said they would establish an eMPF electronic platform to help link up various schemes, in a bid to reduce administrative fees through an information network of scheme members. Indeed, this is strange, too. How come 60% of the management work of our MPF schemes today is still done in the form of paper sheets and printed documents? We have this electronic and technological strength, but the cost is so high due to the handling of a lot of printed documents.

What has MPFA (Mandatory Provident Fund Schemes Authority)―maybe the authorities do not like the word "mandatory" so they use this instead―well then, what has MPFA done in the last 20 years? What has it done in taking LEGISLATIVE COUNCIL ― 21 February 2019 6973 charge of promotional measures to reduce the administrative fees? In the light of this, my amendment today is very humble. I only suggest that the Government takes one more step, to centralize fees collection and schemes management. Fundamentally, we should march towards a centralized provident fund system, like the one in Singapore, a place the Government is so keen to imitate anyway. Since Singapore has practiced this system for many years, why must we still hand over our hard-earned money to the trustees, and intermediaries, for them to nibble away our hard-earned rewards? What is the reason for the Government to refrain from taking up this responsibility? Why do the authorities not allow the whole MPF System to gradually move towards management by the Government? Furthermore, President, I think the MPF System does not have any risk-sharing effect; it is a system that lacks balance between both sides, or social justice either. In the long run, Hong Kong should use some form of social insurance to tackle its retirement protection system. Today, the problem of an ageing population is at our doorstep. If the Government still does not act, our elderly poverty problem will only become more serious in 10 to 20 years.

I so submit.

MR PAUL TSE (in Cantonese): President, retirement protection several decades from now is of course important, but the most urgent problem to Hong Kong people is housing. We are forced to live in dwellings that keep shrinking while the prices we pay for them keep rising. In the area of health care, the waiting time in public hospitals grows longer, an acute shortage of health care staff exists, and more and more of them quit their jobs. The more pressing problems are therefore housing and health care.

President, the people's common wish now is to have enough savings to buy a home as soon as possible, so that they can have a place to live and organize a family, or to take out medical insurance that can protect them and settle claims, so that they do not need to rely on the public hospitals that are congested all year round, with doctors and nurses joining the great exodus in droves.

President, what is more urgent and important is that, faced with our Mandatory Provident Fund ("MPF") System, one that is afflicted with all ills, with costly management fees and poor returns on investments, we had better carry out reform, revitalize it, improve the whole system, and let the people make 6974 LEGISLATIVE COUNCIL ― 21 February 2019 good use of their contributions to handle the issues of buying a starter home and purchasing medical insurance.

President, in the discussion on the subject of upward mobility of young people on 23 January this year, I proposed an amendment allowing the use of MPF contributions by young people to buy starter homes, and I also pointed out that this could help them and would be a practical approach, because the average accumulated MPF contributions of the people, as at September 2018, was $197,000, and at that time the cheapest unit of Lai Tsui Court, under the Government's Green Form Subsidized Home Ownership Scheme, required only $47,000 for down payment, so my method is practicable.

President, using MPF money to buy homes is a method that kills many birds with one stone. It can help the people become home owners so that they can save expensive rent which is unnecessary, and it can give them something to rely on in old age; in particular, if we revitalize the whole system of reverse mortgage to make it more flexible, then we can promote flows of money as suggested by Mr SHIH Wing-ching, and banks can provide extra incomes to the people every month, while the unused part of the benefits can be saved for descendants.

President, I have added several more options in my amendment this time, in order to give everyone more freedom, and I hope that employees can subscribe to passive index funds such as the Tracker Fund of Hong Kong on their own without involving any MPF trustees, whereas these funds charge much lower management fees.

President, I believe that except Mr CHAN Kin-por, every Member sitting here as well as the people out there will not dispute that large amounts of the "Coercive Provident Fund" have been eroded. MPF trustees will make a net profit whatever investments they make, pocketing the fees no matter what happens. Members may not believe in what I say, but as early as 25 September 2014, Mr LAM Pun-lee estimated that MPF management fees had nibbled away more than $70 billion of the contributions. We have seen the latest report in a newspaper―Members may not believe me, and if Mr CHAN Kin-por does not believe it, I can provide these statistics―which said that MPF has been established for 18 years and its deposit has reached $858.3 billion, whereas fund managers have earned about $101.7 billion in management fees. That is to say, LEGISLATIVE COUNCIL ― 21 February 2019 6975 for every $8, we need to pay $1 to the so-called intermediary or fund manager. President, why would the people be willing to make contributions?

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

Fund managers would collect the full amount of their service fees, but can they deliver something good in return? Let us look at the figures. In his criticism of me, Mr CHAN Kin-por said fund managers had done work, so we should pay them fees instead of ill-treating them. However, one has done work does not mean one has accomplished what is desirable of his effort, Deputy President, for these are two different matters. Since the establishment of the Tracker Fund of Hong Kong, its average rate of return is 7.3%, which is higher than the MPF's average rate of return of 4.8% to date―a rate that is reported by Mr CHAN Kin-por. But according to a report by Ming Pao Daily News in September 2018, that rate at that time should be 4.1%. Anyway, I do not wish to argue about this 0.7% difference, but on the whole, it is far lower than 7.3%.

Deputy President, Mr CHAN Kin-por made a criticism on 23 January without naming a person, but his criticism aimed at my pigeon hole. He said that fund managers had done work, that performance of funds cannot be judged by looking at just one year, and that we need to hit the mark, be more accurate when citing data, and refrain from always comparing with a foreign country―what he meant was Singapore. Regarding all these aspects, I accept. However, his criticism was wrong.

Deputy President, to the Members sitting here, and to the commentators in the community, the target of Mr CHAN Kin-por today and when he stressed again the so-called phenomenon of people relaying erroneous messages and echoing the views of others, it can be viewed as an insult to all of them. Deputy President, coming back to the data, we see that almost 70% of the MPF contributions are invested in the stock market. In his amendment, Mr CHAN mentioned that MPF's rate of return in 2017 was 22.3%―and indeed that year was a year of good harvest, but look at how much the Hang Seng Index rose in the same year. It was 35%, and MPF's rate of return was only 22.3%, which was enough to make someone complacent, but the Hang Seng Index rose 35% in the same year. Investment returns lagged behind the market trend, but full management fees were collected all the same.

6976 LEGISLATIVE COUNCIL ― 21 February 2019

Most of the funds that yielded better returns did not rely on the performance of fund managers in the pool, on their unique insight or wise choices, or on their help in selecting good stocks for us; most of the funds that yielded good returns came from investments mainly made in passive index funds like the Tracker Fund of Hong Kong. This is a most ironic point. Since this is a thing that can be done by the ordinary retail investors, why must we pay so much management fees to MPF managers who would make investments that would have lower returns? Why do we not let the people make their own choices and use their accumulated sums of money to invest in the passive index funds that levy lower management fees such as the Tracker Fund of Hong Kong? The management fee of the Tracker Fund of Hong Kong is only 0.09%, but the MPF trustees who mainly hold the Tracker Fund of Hong Kong, i.e. the fund trustees who mainly invest in the Tracker Fund of Hong Kong after receiving the money, collect a management fee that is on average 15 times to 20 times higher than the management fee of the Tracker Fund of Hong Kong. All these are objective and accurate figures.

Mr CHAN Kin-por intimidated everyone a while ago, claiming that if you buy the Tracker Fund of Hong Kong on your own, you may have to pay a lot in transaction fees every month. I did a calculation quickly. In fact, we do not have to buy the Tracker Fund of Hong Kong every month; we can save until we have a certain amount of money, and then make the purchase. For example, we buy once every one or two years. In two years, we can save $24,000, which when multiplied by 0.25% for management fee, is a transaction cost of only $60. From another angle, we can buy 1 000 shares, i.e. two board lots, and the cost is only $29,000, while the bank's handling fee and stamp duty amount to a little more than $100. Mr CHAN Kin-por suggests we make monthly purchases, but we never have to act like that, and I think only a stupid person would do that.

Deputy President, of course I accept Mr CHAN Kin-por's suggestion. He said that to serve as a Member, we must be accurate, fair, and tell the truth, in the long run, otherwise we "will not last long"―these are the words he used. He criticized me for three times―again I find that his criticisms aimed at my pigeon hole, and I think that he was criticizing me―but I have a piece of advice for him. I have also served as a representative for a functional constituency, and during the four years when I served as a representative for that functional constituency, I hoped and I also believed that, as a matter of fact, I had never been criticized of caring about only the interest of the sector I represented and ignoring public LEGISLATIVE COUNCIL ― 21 February 2019 6977 interest. I hope Mr CHAN Kin-por can draw reference from this, because I believe I need accuracy, fairness, and truth all the more to face the people, the voters, and my responsibility; what I face is a more serious consequence that does not have to be faced by the Members who sometimes need not contest in elections, such as Mr CHAN Kin-por.

Deputy President, the Chinese people are good at making savings. They know very well how to store up grain against a lean year, and among them perhaps less than 10% are careless and casual, who would not listen even if you ask them to do something to prepare for retirement. But more than 90% of the people would start making savings on their own, and make plans for themselves. The Chinese people are known for their filial piety; they will support their parents and do not need the Government to enact laws to compel them to do so. Therefore, I hope to strive for freedom and space for the people, so that they can have more choices, and that the majority of them do not have to sacrifice their freedom and choices and be forced to choose some "coercive funds" with high fees and low returns due to a handful of people or to the industry that is represented by a Member like Mr CHAN Kin-por.

Deputy President, I only wish to take this opportunity again to provide the people with a choice, and allow them the freedom of choice. We do not need to have mandatory regulations on everything, because society is already being subjected to more and more mandatory regulations, as is in our way of life. By the way, the Government says even electronic cigarettes would be banned. I think the Government should give the people as many opportunities as possible, and since the system itself is afflicted with all ills, the Government should drastically improve it, even though it cannot abolish it immediately. In fact, abolition is not impossible; Obamacare, if it really does not work, can be abolished at once after four years, so the situation is the same. The Government should not only consider the matter of face. Over the years, it has faced with so many criticisms, and it made calculations only in terms of the so-called elitist mentality, without considering the "wallets" of the people while forcing them to live with such a "broken" system. Even if it does not want to abolish MPF, it should at least drastically increase choices and freedom. Only by doing so can it really become responsible and face the public, instead of facing just the position of a Member representing an industry. Thank you, Deputy President.

6978 LEGISLATIVE COUNCIL ― 21 February 2019

UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): Deputy President, first of all I have to thank Dr Junius HO for moving the motion, and Mr CHAN Kin-por, Mr LUK Chung-hung, Mr WONG Ting-kwong, Dr KWOK Ka-ki, Dr Fernando CHEUNG and Mr Paul TSE for proposing the amendments. Since the introduction of the Mandatory Provident Fund ("MPF") System in 2000, the Government and the Mandatory Provident Fund Schemes Authority ("MPFA") have rolled out improvement measures from time to time to enhance the effectiveness of MPF in the overall retirement protection system in Hong Kong, and to strengthen retirement protection for the employed population. The motion and amendments from Members today give us a precious opportunity to exchange views on the function and development of the MPF System.

I will speak on three aspects, namely the purpose and performance of the MPF System, and the measures to improve it.

(a) Purpose

The purpose of the MPF System is to provide basic retirement protection to the employed population in Hong Kong. As a part of the retirement protection system in Hong Kong, the MPF System meets the requirement for a mandatory second pillar in the multi-pillar retirement protection system advocated by the World Bank, and makes retirement savings mandatory for the employed population in the territory. The MPF System and other retirement protection pillars, such as social welfare, shore up each other and constitute the whole retirement protection system. I therefore hope that Members and the general public do not equate the MPF System with Hong Kong's retirement protection system, because it is only part of it.

MPF is a long-term savings plan specifically for retirement, and therefore it has the preservation requirement. Except on specified statutory grounds, such as total incapacity and terminal illness, scheme members can withdraw accrued benefits only when they reach the age of 65. If scheme members were allowed to withdraw part of their accrued benefits at any time, to the extent that these benefits were drained from time to time, then the goal of providing retirement protection cannot be achieved.

If we wish to set up a multi-function savings plan, which would allow people to buy a property or receive health care other than saving up for retirement, then a reasonable arrangement would be a scheme with different LEGISLATIVE COUNCIL ― 21 February 2019 6979 accounts for specific purposes, while the account for retirement purpose keeps the preservation requirement so as to achieve the goal of long-term savings. Due to the need for multi-function savings, the contribution rate must be increased; otherwise we would not be able to have enough savings for different purposes.

Take Singapore's Central Provident Fund as an example, contributions will go to three different accounts, that is, (1) the Ordinary Account for homeownership, insurance, investment, and education; (2) the Special Account for retirement needs; and (3) the MediSave Account for paying medical bills. Meanwhile, the contribution rates prescribed for the three different accounts will change according to an employee's age. For an employee aged 35 and below, the total rate of contributions from the employer and employee is 37% of the wages, with 23% going to the account for homeownership, 6% to the account for retirement, and 8% to the account for paying medical bills.

(b) Performance of MPF

First of all, from the angle of coverage, nowadays 85% of the employed population enjoys varying degrees of retirement protection under MPF together with other retirement protection schemes, compared with one third of the employed population who had retirement protection before implementation of MPF.

From the angle of return, according to MPFA's data, MPF contributions together with investment returns had grown to $858.3 billion by September 2018. After deducting fees and charges, the net investment returns since establishment of the System was $245.2 billion, and the annualized internal rate of return was 4.1%. I have to reiterate that this is the return rate after deducting fees and charges, whereas the annualized Composite Consumer Price Index movement in the same period was 1.8%. We must stress that, making plans to provide for life after retirement is a long-term savings and investment undertaking, not a speculative activity. Therefore, we should look at the overall return in the long term, not individual classes of assets or short-term fluctuations in the investment market.

(c) Measures to improve the MPF System

I believe most people, faced with an ageing population, will agree that we need a mandatory savings system to help the working population to make 6980 LEGISLATIVE COUNCIL ― 21 February 2019 long-term savings arrangement for retirement, and the only consideration is whether this arrangement is value for money. Around the world, many discussions and studies on improving pension systems lay emphasis on how to make the systems value for money. The so-called "value for money" refers to cost and return. We cannot control investment returns, but we can control risk and minimize cost.

In order to make the MPF System keep abreast of the times, and to enable it to bring greater benefit to wage earners, the Government and MPFA have always sought refinement of various aspects of the MPF System. Let me cite several examples as follows:

For example, in response to the public concerns about "high fees, difficulty in making investment choices" in some MPF schemes, we introduced the fee-controlled Default Investment Strategy ("DIS") in April 2017. From April 2017 when it was implemented to September 2018, the annualized rates of return of the Core Accumulation Fund and the Age 65 Plus Fund were 7.3% and 2.4% respectively. In the period from May 2016, when the DIS law was enacted, to January 2019 the average fund expense ratio of MPF funds dropped from 1.57% to 1.52%, and 136 MPF funds in total cut fees, with the largest cut being 54.55%. From this we can see that DIS has brought pressure to bear on other MPF funds to make downward adjustment of fees. At present, DIS has a management fee ceiling of 0.75%, which should drop further in the long run. Within three years after the inception of DIS, we will review the cap level of its management fee, and further reduce it.

In addition, there has been an opinion in the community pointing to the scattered and complicated pattern of MPF's administrative work, and to the huge amount of transactions based on paper sheets resulting in high administrative fees. In view of this situation, we have planned to develop a central platform called the eMPF platform, to facilitate the MPF schemes in standardizing, streamlining, and automating their administrative work, so as to enhance operational effectiveness and occasion room for downward adjustment of fees, and also to create an MPF experience that is mainly scripless. In December last year, we briefed the Legislative Council Panel on Financial Affairs on the Government's proposal, and obtained the support of Members. Subject to funding approval by the Legislative Council, we aim at completing construction of the platform in 2022.

LEGISLATIVE COUNCIL ― 21 February 2019 6981

Deputy President, I will now continue to listen to the views of Members on the motion and amendments. When we come to the time for conclusion, I will again give an overall response to the motion and amendments, as well as the views of other Members.

Thank you, Deputy President.

DR PIERRE CHAN (in Cantonese): Deputy President, the public health care system is overstretched to the extent that the work pressure of the frontline health care personnel is on the verge of explosion. As a member of the health care system, I find Dr Junius HO's proposal of revitalizing the Mandatory Provident Fund ("MPF") by allowing scheme members flexibility and autonomy in using MPF to take out medical insurance very attractive. This is because in theory, an increasing number of people taking out medical insurance should be able to alleviate the burden of the public health care system―I am saying this is what should happen in theory.

As the saying goes, "If the name is not right, the arguments will not be tenable". The Government's original intent of setting up MPF was to respond to the public demand for retirement protection. It is currently popular to use the terms "original intention" or "original intent". If we return to the original intent, in as early as the colonial era, the Government had conducted many researches into the establishment of a Central Provident Fund system. While a Central Provident Fund system would have provided greater protection for employees, it would also have required the Government to bear the financial responsibility, exerting pressure on the Treasury in the long run. Due to the presence of controversies in society, the Government eventually decided to put in place a privately-operated MPF System in 1995. The System was then implemented by the end of 2000. With contributions from both employers and employees, the MPF schemes are managed by approved fund companies. The accumulated MPF benefits can be withdrawn in one go by an employee for retirement when he turns 65. As I am relatively young, I have been making contributions to MPF since I started to work.

However, MPF has been under strong criticisms since its inception. One of the subject of criticisms is the offsetting mechanism. At the outset, in order to reduce the opposition voices from the business sector, the Government permitted employers to use part of their contributions to offset the severance and 6982 LEGISLATIVE COUNCIL ― 21 February 2019 long service payments when they dismissed or laid off employees, thus significantly reducing the effectiveness of MPF. Thanks to the strong advocacy of the labour sector, the last-term Government finally decided to abolish the MPF offsetting mechanism before the expiry of its term. Despite the fact that the details and timetable of implementation remain to be finalized, the decision is still good news to employees. It also represents a major reform of MPF.

The MPF System has been implemented for over 18 years, but in the end, wage earners still have to suffer losses. One of the reasons for this is, as Dr HO has mentioned, the unsatisfactory return. Another reason is the administration and management fees. Regardless of whether a profit or a loss is recorded, management fees are regularly charged by fund companies. Money is deducted from my MPF account from time to time. This problem has all along been criticized by the labour sector. They have pointed out that profits gained by MPF investments are not enough to pay management fees, resulting in fund companies pocketing all the advantages. MPF has been criticized as the "Mandatory Deficit Fund".

In the previous term of the Legislative Council, TANG Ka-piu of the Hong Kong Federation of Trade Unions moved a motion on review of MPF, the contents of which were different from the motion today. Back then, a number of reforms were proposed in the motion. They included abolishing the offsetting mechanism of MPF mentioned just now, enacting legislation to set a ceiling for the fund expense ratio of MPF schemes, setting up a public trustee to be operated under the Government, a public body or a voluntary organization with lower administration fees, and studying the implementation of a universal integrated retirement protection system in addition to MPF, so as to make up for the inadequacies of the MPF System. All these reform proposals targeted at the inadequacies of protection provided by MPF. However, the motion was not passed in the end.

I agree very much that reforms and reviews should be conducted on MPF to strengthen the retirement protection for wage earners, rather than to change the usage of MPF. The reason is that the income of general wage earners in Hong Kong is relatively low, but their expenses on clothing, food, accommodation and transportation are high. Given that saving up money for support in the old age is extremely difficult, MPF has become an important source of retirement protection. Targeting the problem of contributions for retirement protection being eroded, the right cure to be administered is to reform MPF; or to ensure a LEGISLATIVE COUNCIL ― 21 February 2019 6983 greater responsibility to be undertaken by the Government in implementing a universal retirement system, instead of allowing MPF to be used to take out medical insurance.

At present, the amount of MPF contribution is capped at a monthly salary of $30,000. Both employers and employees have to each make a contribution of 5%, with the total maximum amount capped at $3,000. If the monthly salary of an employee is $10,000, the total amount of contribution is $1,000. If this amount of contribution is allowed to be used to take out medical insurance, given that the minimum amount of premium is several hundred or a thousand dollars, all of the monthly contribution can easily be spent. Besides, medical protection similarly faces the problem of excessive management fees. In addition, there are many items that are not covered, which results in a situation of an insured not being protected even after taking out an insurance policy. For instance, the insurance company will claim that the customer has not clearly revealed his personal health condition before taking out an insurance policy. In short, they have millions of ways to inform their customer that the item is not covered. For this reason, I worry that those who use MPF to take out medical insurance will end up "fallen between two stools".

Someone may point out that several accounts are included under the Central Provident Fund of Singapore to allow people to take out medical insurance, service their mortgages, and even pay the education fees of their children. However, Singapore's Central Provident Fund and Hong Kong's MPF are two entirely different matters. In Singapore, the monthly contribution of employees aged under 55 reaches 20% of their monthly salary, and the contribution of employers is 17%. The amount of contribution is much higher than that of Hong Kong. Meanwhile, in Singapore, the Fund is managed by fund companies set up by the Government which guarantees a return at an annual interest rate of 2.5% to 4%. We do not have anything like this in Hong Kong. Everything is determined by the market, which is monopolized by several large fund companies. In fact, comparisons are often made between Singapore and Hong Kong. However, Singapore is an independent country; Hong Kong is not. A population policy is in place in Singapore; such a policy is absent in Hong Kong. Hence, it is basically difficult to make a direct comparison.

I have mentioned in the Legislative Council more than once that Hong Kong is one of the richest cities in the world. The Government has a huge fiscal reserve. But the welfare and protection of the people, in terms of housing, 6984 LEGISLATIVE COUNCIL ― 21 February 2019 transport, retirement and medical insurance, lag far behind than those of other advanced economies. Everything is determined by the market. According to the Government, market intervention is inappropriate. As a matter of fact, this is to pave the way for consortia to make enormous profits. Take the Government's provision of tax deduction to encourage people to take out Voluntary Health Insurance Scheme ("VHIS") policies as an example. The Government once said that two minimum requirements, that is, the establishment of a high-risk pool and the provision of guaranteed acceptance would be put in place. But the Government has succumbed to the pressure of certain people, forgetting its original intent, and removed these two minimum requirements which are most important to high-risk individuals and elderly people, turning VHIS into a piece of "chicken rib".

Deputy President, although I do not agree to the views of Dr HO, I would like to thank him for proposing this motion which has given us an opportunity to examine the problem of unsatisfactory performance of MPF schemes. Last Thursday, the Financial Services Development Council released a report entitled "Mandatory Provident Fund System―The Way Forward" in which it proposes that the amount of contribution should be increased and tax deduction should be allowed for contributions. Nevertheless, it has not responded to the demand for reforms made by the labour sector. This has given rise to the worry that the larger the amount, the more contribution will be eroded. Whether the Government will return to its original intent, assume its responsibility, reform MPF in a targeted manner, and at the same time reconsider the implementation of a universal retirement protection system (The buzzer sounded) … will be most crucial. I so submit.

DEPUTY PRESIDENT (in Cantonese): Dr CHAN, your speaking time is up.

MR LEUNG YIU-CHUNG (in Cantonese): Deputy President, while the problem of an ageing population is growing increasingly serious in Hong Kong, the effectiveness of the Mandatory Provident Fund ("MPF") System, which plays the role of retirement protection, has all along been a cause of criticism. Wage earners work very hard to make contributions to MPF, which is viewed by many as a "forced investment". On the one hand, members of MPF schemes have to pay expensive administration fees, and on the other, the profits of their investments are continuously being eroded. In addition, when they commit LEGISLATIVE COUNCIL ― 21 February 2019 6985 themselves to this investment, they have to bear the market risks. As such, many wage earners hold grievances against MPF, thinking that the manner in which MPF is conducted is unreasonable and unjustifiable.

Deputy President, I know a lot of grass-roots wage earners who have found themselves contributing to MPF for almost 20 years, which is a very long period of time. They often tell me that after making contributions for such a long time, the amount of their savings will only be slightly over $1 million when they eventually retire. The amount of savings of the majority of people are just a few hundred thousand dollars. As everyone knows, the average life expectancy of Hong Kong people is over 80 years. May I ask, with such a small amount of savings after contributing to MPF for so many years, how can they use this sum of money to support their life after retirement? Moreover, we all know that our health gets worse as we grow older. It is inevitable that we will rely on health care services. In Hong Kong, members of the public rely not only on public health care services. Very often, they have to resort to private health care services which charge very expensive fees. Therefore, after retirement, wage earners have to face not only the problem of meeting their basic needs of living, but also the problem of medical expenses.

As I have just mentioned, since the existing MPF System is rife with loopholes, I hold that reforms must be carried out. But how can it be reformed? Reforms can be considered on two fronts. First, a comprehensive reform on the MPF System fraught with loopholes must be made, with the Government taking up the responsibilities of managing the System and underwriting it. Second, the MPF System should be abolished straight away and replaced by a universal retirement protection system requiring tripartite contributions from the Government, employers and employees.

Deputy President, I would talk about the first option first. To carry out a comprehensive reform of the MPF System, piecemeal measures with the purpose of making minor remedies must not be adopted. Genuine improvements of the inadequacies which are causes of criticisms must be introduced. For instance, the administration fees of MPF schemes are very high, with the average level reaching 1.52%. When compared to other overseas countries, the management fees of MPF schemes in Hong Kong are absolutely outrageous. They are continuously eroding the retirement funds of wage earners. The Government should draw reference from similar retirement fund schemes of other countries, in 6986 LEGISLATIVE COUNCIL ― 21 February 2019 which the Government or a non-profit-making organization assumes the role as a public trustee, pitching the management fee at a lower level so as to provide a higher return to members of the public. This is of paramount importance.

In this connection, we can draw reference from the voluntary workplace pension implemented in the United Kingdom since 2007. In practice, the National Employment Savings Trust was established by the Government to provide a retirement protection scheme which ensures low administration and management fees but high transparency in operation for employers and employees. Although the trustee corporation is managed by a non-profit-making organization, the start-up costs were funded by government loans and the operation is directly supervised by the Government, with a view to ensuring the contributions of wage earners under the retirement system will not suffer losses.

Moreover, an individual accounts system requiring mandatory contributions is implemented in Sweden. Under the system, employees are free to choose investment schemes operated by private companies. Meanwhile, in assuming the role of a public trustee, the Government has also set up a national pension system that charges low management fees but aims at providing long-term investment returns. People are free to make their own choices.

Deputy President, apart from European countries, we can also study examples in Asia. Some Honourable colleagues mentioned Singapore just now. The Central Provident Fund system of Singapore was established in 1955. With continued improvements over the years, the system has become a relatively comprehensive system of savings and social security. The contributors are given the choice to use their savings for property acquisition, medical services, further education, or living expenses in their twilight years. The crux of the Central Provident Fund system lies in the fact that it is managed by the Government with low management fees and the guarantee of a minimum interest of 2.5% per annum. In terms of providing retirement protection for the public, this system serves the purpose of underwriting. Furthermore, apart from allowing savings to be used as the down payment in property acquisition, part of the savings can also be used for monthly mortgage repayment. Of course, I have to emphasize that this system is premised on contributors making contributions on a voluntary basis, and at the same time, the Government undertakes the responsibility of protecting the livelihood needs of the public. Hence, members of the public are not required to use their retirement funds for property acquisition LEGISLATIVE COUNCIL ― 21 February 2019 6987 or health care purposes. Under these circumstances, the Government will be able to outsource other responsibilities, slow down the pace of implementing livelihood-related policies in such areas as health care, housing and education.

Regarding the aforesaid proposals, I can predict the Government will respond with its usual declaration that it is difficult to implement such initiatives. The final outcome is the adoption of a delaying tactic or even an attitude of inaction on the part of the Government. Hence, if the Government fails to conduct a comprehensive reform on the inherently defective MPF System, I hold that we should find another way out. This is what I have mentioned just now, and the option has been all along advocated by the community―a complete abolition of the MPF System, which can be replaced by a non-means-tested universal retirement protection system requiring tripartite contributions from the Government, employers and employees. As a matter of fact, one of the major shortcomings of MPF lies in the fact that it is pegged with employment, representing the exclusion of persons with disabilities, family carers and the unemployed. As for people of the low-income class, even if they are employed, the limited amounts of money they can save up render it difficult for them to cope with their future retirement life. Similarly, when investment returns are unsatisfactory, with more losses than gains, the problems they encounter at the time of retirement will be even more acute.

For these reasons, regardless of which solution the Government opts for, the most important premise is to ensure that every person in Hong Kong will enjoy a retirement life with the genuine provision of support and security (The buzzer sounded) …

DEPUTY PRESIDENT (in Cantonese): Mr LEUNG, your speaking time is up.

MR KENNETH LEUNG (in Cantonese): Deputy President, I have to make a declaration first of all, that I am a member of the Mandatory Provident Fund Schemes Advisory Committee. Nevertheless, I have a lot of views on the Mandatory Provident Fund ("MPF") System.

The MPF System was launched in 2000. The original intent of the System was to serve as the second pillar of retirement protection in the conceptual framework on pension put forth by the World Bank. Just now many 6988 LEGISLATIVE COUNCIL ― 21 February 2019

Honourable colleagues have queried about why members of the public are forced to make contributions to MPF. In fact, our savings are not limited to MPF. As we all know, under the present circumstances in Hong Kong, even if a member of the public has bank savings or an MPF amount of over $1 million, he may not be able to enjoy a comfortable and stable retirement life. There are other savings options, including investing in the Tracker Fund of Hong Kong or other funds. This can serve as another pillar of retirement protection. I hold that MPF and other investment options are not mutually exclusive.

Of course, it is a fact that fees of MPF are very expensive. The administration fees of MPF have been a cause of concern to the community for many years. The Mandatory Provident Fund Schemes Authority ("MPFA") and the sector have made continuous efforts to improve MPF, including introducing the Employee Choice Arrangement, implementing the Default Investment Strategy, and enhancing the flexibility about Withdrawal of Accrued Benefits (i.e. early Withdrawal of Accrued Benefits by scheme members struck by catastrophic illnesses was allowed and commenced two years ago). In spite of various improvements, the MPF System is still not perfect. As such, how about abolishing the MPF System as advocated by some people? I hold that this move will be even more complicated than Brexit. After all, members of the public have been making contributions to MPF for more than a decade. It will be very difficult to abolish the System all of a sudden. So what should be the way forward?

In fact, we need to continuously reform the MPF System. The Government has already devised a plan. The first initiative is to implement a centralized electronic administration platform of eMPF. It aims to digitize the existing procedures processed through paper forms, thereby lowering the administration fees of MPF. Under MPFA, a subsidiary specifically responsible for implementing the centralized platform of eMPF will also be set up. However, it will take at least five years to introduce the initiative concerned. By that time, we will be able to see how much in administration fees can actually be saved.

Apart from this centralized platform that handles administrative procedures, if we look farther, in eight or ten years' time, will there be a mechanism of central trustee which is welcomed by all? The issue of whether this role of a central trustee is to be played by the Government or a reputable and reliable corporation can be given more consideration in future. In any case, the LEGISLATIVE COUNCIL ― 21 February 2019 6989 operation of a single trustee model will be able to save a lot of fees. As for investment options, under the single trustee system, many different funds and fund managers are still available to offer investment options of various risks and types to the public. This idea is feasible.

The Financial Services Development Council ("FSDC") has recently made a number of recommendations, including substantially increasing the cap on the amount of tax deduction for employee's voluntary contributions, from the existing $60,000 proposed by the Government to 15% of an employee's salary. The cap on the amount of tax deduction for voluntary contributions includes the employee's voluntary contribution to MPF, as well as funds for joining other savings schemes, such as the Deferred Annuity Scheme. I hold that some members of the public are already dissatisfied with the high administration fees of the existing MPF System, it will be difficult for them to accept the proposal of increasing the contribution to 15% of their salary. As such, I hold that the Government should explore the feasibility and popularity of increasing the cap to $60,000 first, as well as evaluating the performance of funds, before considering other options.

FSDC has also proposed to increase and expand the categories of investment options, to include all products authorized by the Securities and Futures Commission as fund investment vehicles of MPF. However, we have to be cautious. Given that MPF is one of the important pillars of retirement protection, if MPF is allowed to invest in relatively high-risk products, losses incurred will also draw public criticisms. The existing investment products of MPF such as bonds and funds are relatively robust investments. Even if the investments are in securities funds, the investment targets are markets with more recognition and not very high risks.

Coming back to the motion and amendments proposed by various Honourable colleagues. The motion of Dr Junius HO has proposed to allow using MPF accrued benefits to take out medical insurance. If that being the case, I am afraid the entire amount of contributions each year will be spent on taking out medical insurance. Hence, I have reservations about this proposal. Mr Paul TSE has proposed to use MPF to pay the down payment of first home purchase. I hold that this is just a drop in the bucket. According to the current property price level, how much MPF has actually to be used in order to pay the down payment? If members of the public are allowed to do that, all of their MPF accrued benefits will be exhausted very soon―unless we follow the practice 6990 LEGISLATIVE COUNCIL ― 21 February 2019 of the Central Provident Fund of Singapore in increasing the rate of the employee's contribution to 20% of his salary. However, I hold that a consensus has yet to be reached on this issue in Hong Kong society.

Deputy President, I so submit.

MR TOMMY CHEUNG (in Cantonese): Deputy President, I would like to express my views regarding today's motion. First of all, I do not mind reiterating once again that I take issue with the Mandatory Provident Fund ("MPF") System. A few words can sum up its problem―"charging high fees but yielding low returns".

According to the data of the Mandatory Provident Fund Schemes Authority, it is estimated that since the inception of MPF, the total amount of management fees charged by fund companies has reached $100 billion, much higher than the $32 billion used by employers to offset long service payments and severance payments―a mechanism which has been hyped by the media.

The latest median monthly income of Hong Kong employees stands at $16,800. Take this amount as an example. If an employee starts to make contributions to MPF at the age of 22, the accrued benefits should reach about $2 million when he becomes 65. However, 40% of the accrued benefits falls into fund management fees and miscellaneous expenses. In the end, only $1.3 million is left.

Therefore, I often say that the only beneficiaries of the MPF System are the fund managers. Their expensive management fees and miscellaneous expenses are the real culprits that sweep away the retirement protection of wage earners. As a matter of fact, if the Administration wishes to ensure that members of the public are able to enjoy retirement protection, it should hold the fund managers responsible, instead of pointing the finger at the employers of micro, small, and medium enterprises.

I have all along advocated that the Administration must prescribe the right remedies to enhance the MPF System. Despite our repeated requests, it was only several years ago that the Administration started to amend the legislation through which the Default Investment Strategy and fee control mechanisms were LEGISLATIVE COUNCIL ― 21 February 2019 6991 introduced. Nevertheless, the attitude of procrastination adopted by the Government is really disappointing. Hence, I support in principle the enhancement initiatives proposed by today's amendments that demand further lowering of fees charged by MPF trustees and provision of more investment options for scheme members.

As to the question of whether we should revitalize the MPF System by allowing employees to use MPF contributions to take out medical insurance, as proposed in the original motion, I am worried that the only beneficiaries of this initiative are the insurance companies. Extra caution must be exercised in taking out medical insurance. How can it be ensured that the insured person will receive fair and reasonable protection when he falls sick? It is determined by the terms of the insurance policy, thus, the relevant policy support must not be neglected. Similarly, if MPF contributions are used to acquire properties or make the down payment for first home purchase, will this initiative be criticized as defeating the original intent of setting up MPF as a retirement protection? Will this in turn render it an excuse for the demand for abolishment of the MPF offsetting arrangement or increasing the contributions from employers? These are not the results I will be delighted to see.

In recent years, policies that increase the operational costs of enterprises have been introduced by the Government one after another, resulting in difficulties experienced by micro, small, and medium enterprises in business operation. I hope that the Government will not use enhancing various items of livelihood protection for the public as a pretext to turn a blind eye to the difficulties faced by the business sector once again. Such a move can be compared to beating and robbing a person.

Lastly, I wish to emphasize that the Government must not arbitrarily abolish the MPF offsetting arrangement before obtaining the consent of the business sector, consequently requiring employers to provide more retirement protection for employees. This is utterly "moving the goalposts". Requiring the business sector to bear the burden of double benefits will certainly give the business sector a feeling of being betrayed. The Government runs the great risk of wrecking its integrity. I hope the Administration will think twice about this. Deputy President, I so submit.

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MR TONY TSE (in Cantonese): Deputy President, Mr CHAN Kin-por and me are members of G6. We have very similar views on many issues. However, insofar as the Mandatory Provident Fund ("MPF") System is concerned, I am afraid our views are not entirely consistent. Nevertheless, we adopt a positive attitude in maintaining frequent communication and exchanging ideas, with a view to seeking common ground while reserving differences.

This motion is proposed by Dr Junius HO. However, I remember Mr Paul TSE has some time ago asked for the allocation of a slot to propose a motion similar to this with the title of "Abolishing the Mandatory Dupery Fund". Is the MPF System so awful to the extent that it has to be abolished? Should it be replaced by another system similar to the Central Provident Fund of Singapore, or a universal retirement protection scheme as proposed by some members of the public? I have no determined views yet. Nevertheless, just like many members of the public and wage earners in Hong Kong, as well as members of my sector, I hold that MPF is really dupery.

Many members of the public criticize the MPF trustees of charging excessively high fees. I hold that we are willing to accept high fees charged by trustees if their performance is satisfactory and offer excellent investment returns. However, under the majority of circumstances, I do not see a direct relationship between the level of fees charged by trustees and the MPF returns. The levels of MPF returns are generally affected by the overall market conditions of the stock and bond markets. Very often, the MPF returns rise when stock markets surge; and the MPF returns fall when stock markets tumble. As such, what actually have the trustees done for wage earners? Have they done anything to alleviate and even avoid the adverse impacts crashing markets inflict on our investment returns? If they cannot do that, why should we still pay additional fees to them for managing the retirement funds we trade our blood and sweat for?

One of the funds was known as Capital Preservation Funds in the past. It is now called Guaranteed Funds, which is a so-called low-risk investment portfolio. As far as my understanding goes, the capital, in fact, is not 100% preserved. Apart from the capital being eroded by inflation, administration fees have to be regularly paid. Why do we not introduce measures as proposed in some amendments which allow employers and wage earners to choose to directly use MPF contributions on subscription to the Tracker Fund of Hong Kong, invest their contributions in the Exchange Fund, or even as deposits with banks for term interests?

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On the premise that the MPF is dupery, the proposal of using MPF to take out medical insurance put forth by Dr Junius HO, and the proposals of allowing scheme members to use MPF to pay the down payment of first home purchase put forth by Mr Paul TSE and Mr WONG Ting-kwong are worthy of consideration. Nevertheless, a lot of details and issues concerning implementation need to be resolved. In this connection, I will focus on discussing the proposal of using MPF for home purchase.

The objective of setting up MPF is to provide partial retirement protection for wage earners, with the hope that a certain level of return can be earned so that wage earners will be able to have an amount of capital in hand when they retire at the age of 65. Insofar as past experiences and circumstances in Hong Kong are concerned, this objective can be achieved by property investments.

The question is, if wage earners are allowed to withdraw part or the whole of their MPF to acquire properties prior to their normal retirement age of 65, are they also allowed to realize the properties concerned before they reach the age of 65? If they are allowed to sell their properties for various reasons and exhaust all capital from property sales within a short time, will this violate the original intent of providing retirement protection by forcing them to commit to contributions and savings?

If it is provided that employees are not allowed to realize properties acquired by MPF funds before they reach the age of 65, will they be allowed to rent out the properties and collect rent? Are these properties required to be self-occupied? Are they required to be residential properties? Can the employees acquire shop spaces or car parking spaces? Can they use their MPF funds for "flat-for-flat" arrangements such as selling a small flat for a bigger one? Can the employees use the properties concerned to approach banks for arrangements of "top-up mortgage" loans to do business or acquire another flat? Furthermore, if wage earners withdraw all of their MPF funds to pay the down payment of home purchase, but unfortunately they subsequently become unable to repay the mortgages due to unemployment or other reasons, can the banks foreclose the properties concerned and turn them into "repossessed residential properties"? What should be done if these properties concerned unfortunately become negative equity assets? In fact, property prices are similar to MPF investments in that there is a potential downside risk for both of them.

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As wage earners in Singapore are allowed to use their Central Provident Fund savings to acquire properties, someone may query why are people in Hong Kong not allowed to do so? We must note that Singaporeans are only allowed to use MPF to buy Housing Development Board ("HDB") flats, which are similar to the Home Ownership Scheme ("HOS") flats in Hong Kong. Owners of HOS flats in Hong Kong are at liberty to resell their flats in the private market after paying the premium. I have always opposed this. As far as my understanding goes, such a measure of allowing HDB flats to be resold after paying premium is not in place in Singapore. Furthermore, in Singapore, the MPF contribution rate is as high as 37% of the employee's income. In Hong Kong, generally speaking, the total contribution rate from both employers and employees is 10% only. It is difficult to make direct comparisons between the two.

Deputy President, I have raised so many questions not because I wish to defend the existing MPF System. It is true that the existing System is plagued with problems and requires continuous improvements, which include further lowering of fees charged by trustees, enhancing return rates and increasing investment options. It is hoped that these improvements may be able to remove the negative image of MPF taking advantage of the public. However, to carry out fundamental reforms, in-depth studies and extensive consultations must be conducted before further decisions can be made.

Deputy President, I so submit,

MR HOLDEN CHOW (in Cantonese): Deputy President, first of all, I would like to thank Dr Junius HO for proposing today's motion on "Revitalizing the Mandatory Provident Fund". Today, I have heard many Honourable colleagues express their views on the Mandatory Provident Fund ("MPF") System, pointing out the inadequacies of the operation of MPF over the years. It is true that the general public hold that the administration fees of MPF schemes are too high. They think that while the performance of the schemes is not necessarily satisfactory, full administration fees are still charged. Just as a number of Members have mentioned just now, MPF gives people the impression of taking advantage of the public.

In 2017, the Mandatory Provident Fund Schemes Authority ("MPFA") officially launched the Core Accumulation Fund ("CAF") with the imposition of a cap of 1% on management fees. I believe this is an initiative to answer public LEGISLATIVE COUNCIL ― 21 February 2019 6995 aspirations in the hope of giving the public another option which does not entail high risks and at the same time minimizes administration and management expenses. Deputy President, in fact, prior to the launch of CAF, I had already proposed that if a default investment fund, i.e. the present CAF, was to be established, it should not be managed by the 15 MPF approved trustees, instead, it should be managed by the Government. Of course, this proposal was eventually not accepted by the Administration. The default investment fund (CAF) is managed by the group of approved trustees in the end. Members of the public hold that it is managed by the same group of trustees once again. Nevertheless, after the launch of CAF, members of the public at least have one more option. However, regarding CAF, a core issue was mentioned by many Honourable colleagues today, and that is, the inadequate transparency in terms of operation and determination of management and administration fees on the part of the existing 15 MPF scheme approved trustees. I once raised an oral question on this in the Legislative Council but got no definite reply. Furthermore, if the overall performance of an individual trustee is poor, does MPFA have the authority to remove it from the list of trustees? In fact, comparisons will facilitate healthy competition, which will certainly result in better protection for the public. Therefore, regarding individual trustees with poor performance and inability to meet the needs of the public, I hold that the Government should take punitive actions against them or remove them from the list. I hope that the authorities will give a further account of this and make appropriate arrangements.

The Chairman of MPFA, David WONG, has earlier revealed that the latest figure of the total amount of MPF assets is over $800 billion. This is a very enormous figure. In the course of discussing today's motion on "Revitalizing the Mandatory Provident Fund" proposed by Dr Junius HO, some Members have specially mentioned expanding the MPF usage, including using MPF funds for first-time home purchase or withdrawing MPF funds for medical purposes in times of illness. I hold that studies can be conducted on these two options. However, just as some Honourable colleagues have mentioned, it is necessary to impose appropriate restrictions if we decide to conduct studies in this direction. Of course, it is our wish that a balance can be struck, for after all, the original intent of MPF is to serve as a pillar of retirement protection. I hold that if MPF is used for first-time home purchase, it is necessary to impose appropriate restrictions or regulations.

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As for withdrawing MPF funds for medical purposes when scheme members fall ill, I understand that the public health care system is indeed overloaded. The Government has also planned to launch a voluntary health insurance arrangement, in the hope that this will serve to divert and encourage more people to use private health care services. I think that under the revitalization arrangement of MPF, if members of the public, particularly those suffering from serious illnesses, are allowed to use their MPF funds in a more flexible manner to pay medical expenses, it is a direction worthy of consideration. Similarly, we hope that appropriate regulations and restrictions will be imposed if this initiative is to be implemented.

All in all, I hold that members of the public will be delighted to see MPF revitalized and further improvements in the management of the MPF System.

Deputy President, I so submit.

MR ALVIN YEUNG (in Cantonese): Deputy President, first of all, I would like to thank Dr Junius HO for proposing this motion. Entitled "Revitalizing the Mandatory Provident Fund", this motion seems to be a very attractive subject. This is because the shortcomings of the Mandatory Provident Fund ("MPF") System have certainly generated many problems to the wage earners of Hong Kong since its inception in 2000. The original objective of MPF is to help the ageing employed population save up for their retirement life. We all know that it is mandatory for employees aged 18 to 65 to join schemes, which require contributions from both employers and employees. Generally speaking, employees are allowed to withdraw the contributions for their retirement only after they have reached the age of 65. Unfortunately, over the past 20 years, the majority of problems of MPF have not been resolved, and instead, more problems have been generated. They include high administration fees, low returns of funds, and MPF benefits being used by employers to offset severance payments, etc. I believe all Hong Kong people who have made contributions to schemes clearly understand and agree that MPF itself cannot serve as an effective means of retirement protection.

Today, Dr HO proposes to implement reforms and urges the Government to revitalize MPF. I believe his intention is good. However, I hold that the logic behind it is open to question. Deputy President, Dr HO urges the Government to allow scheme members to use MPF to take out medical insurance, LEGISLATIVE COUNCIL ― 21 February 2019 6997 claiming that this proposal not only protects the personal health of members of the public, but also relieves the pressure on the public health care system. In other words, the objective of the motion is not purely to resolve the existing problems of MPF. Instead, he is hoping that the Government will use a retirement protection scheme fraught with problems to resolve a public health care system also fraught with problems.

Let us discuss specifically where the problems lie. First of all, the public health care system is under pressure. This is a fact known to all. However, can this be resolved by allowing the public to use MPF to take out medical insurance? Deputy President, factors such as an expanding and ageing population, the wastage and shortage of medical manpower, and the escalation in medical costs are long-standing problems faced by Hong Kong's public health care system. I believe these problems cannot be resolved by the option proposed by Dr HO. In the long run, should Hong Kong take the road of implementing the NHS System of the United Kingdom and the medical insurance system of the United States; or adopting the social insurance system practised in Taiwan and Germany? I believe a detailed and comprehensive consideration of all these options is necessary. We must not take stopgap measures proposed by Dr HO in treating the head when it aches and treating the foot when it hurts; or even to the extent of administering the medicine for headache to cure the ache of the foot. Hong Kong is currently facing enormous pressure in the health care system. What we need is a comprehensive health care reform, instead of some patchy fixes that are redundant and unrealistic.

Second, in order to alleviate the burden on the public health care system, the Government must implement a number of supporting policies, including re-examining the population policy, and in particular, the issue of One-way Exit Permits mentioned by many of the health care personnel. In discussing this subject, we basically face not only the issue of health care services, but a broader issue of allocation of public resources that needs to be urgently addressed by the Government. It is necessary for the Government to explain to Hong Kong people the rationale behind the allocation of public resources so as to ensure that every member of the public in Hong Kong will be able to enjoy the basic and quality welfare benefits. If we continue to condone the expansion of population without understanding clearly the background of the new population intake and what they do upon arrival in Hong Kong, we can definitely not achieve an effective allocation of resources. As such, regardless of how we are going to reform MPF, we basically cannot resolve the aforesaid problem.

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Third, if we revitalize MPF in accordance with Dr HO's proposal to allow early withdrawal of MPF funds by members of the public to take out medical insurance, what will be the final outcome? Deputy President, I am worried that they will end up "fallen between two stools". Early withdrawal of MPF benefits by employees under the existing MPF System will result in an objective effect, and that is, their savings upon retirement may not be sufficient to maintain the basic quality of living, rendering the loss of basic protection in their retirement life. Meanwhile, will those who withdraw MPF early to take out medical insurance have sufficient money to take out medical insurance after their retirement in the future? It seems that they may not be able to do so. Objectively speaking, we all know clearly that the older we are, the more costly our medical expenses will be. This amount is originally intended for them to use after retirement for medical purposes or other living expenses, so what is the logic of allowing them to withdraw MPF early to purchase something they will also need to use in the future? Is the option proposed by Dr HO really able to resolve the existing problem? Our worry is the possibility that employees may eventually lose the due protection provided by MPF but at the same time fail to enjoy the advantages offered by medical insurance. Objectively speaking, the refusal of the Government to increase funding and carry out reforms, in addition to the unsatisfactory population policy, have resulted in the serious imbalance of the public health care system. In the end, members of the public have to use their retirement funds to "pay the bill". What kind of rationale is this? Of course, the only answer is―this is indeed irrational.

Deputy President, we must emphasize that we need to reform MPF. We also know very clearly that it will take a long time for us to resolve the problems brought forth by MPF. However, the notion of transferring the original function of the MPF System to other areas will not only fail to resolve the existing problems generated by MPF, instead, it will continue to generate more problems and more confusions. I believe this is what the "proactive" Carrie LAM Government should squarely address and make efforts to resolve. If we wished to conduct comprehensive and thorough reviews of the retirement protection system and the public health care system in Hong Kong, we would need to carry out both reviews simultaneously. However, we must not practise "passing from the left hand to the right", otherwise both hands will be tied together eventually and fail to genuinely achieve the desired effect.

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Therefore, I hope to deliver a most important message today, and that is, we must absolutely not administer the medicine for headache to cure the ache of the foot again. I believe every Member present has a clear understanding of this. We also hope that the SAR Government is capable of realizing thoroughly where the existing problems lie.

Deputy President, the Civic Party opposes the motion proposed by Dr HO. I so submit.

MR AU NOK-HIN (in Cantonese): Deputy President, the Mandatory Provident Fund ("MPF") System is certainly taking advantage of the public. The System has been implemented for many years, but the administration fee has been often a cause of criticisms. I strongly suspect that those who advocated the implementation of MPF back then were mindful of maintaining the livelihood of fund managers at the expense of risking the retirement protection of Hong Kong people. If we had put into implementation a universal retirement protection scheme much earlier, it would not have been necessary to implement the MPF System with such high administration fees. Nowadays, certain reforms have been made to MPF, but irrespective of the efforts made to revitalize it, MPF still has limitations.

Today, I have noted different amendments with different arguments. But I still have reservations about two aspects of these amendments. I will mainly talk about them.

In 1994, the World Bank proposed three pillars of the elderly retirement protection, and that is, the most basic social security system, the public income protection fund for the elderly, and the mandatory occupational or personal income protection scheme for the elderly. Let us look at the situation in Hong Kong. What are the three pillars we should have in the first place? They should include the sound Comprehensive Social Security Assistance ("CSSA") Scheme, a universal retirement protection scheme and the MPF System. In the end, among all three pillars, CSSA is often criticized for the absence of reviews, the universal retirement protection scheme is nowhere in sight, and the revitalization all along advocated for MPF is ineffective. Returning to the MPF System, it was passed in the later days of the British Hong Kong Government in 1995 and implemented in 2000. There have been a lot of controversies since its implementation. A number of amendments proposed by Members have 7000 LEGISLATIVE COUNCIL ― 21 February 2019 mentioned the limited investment options and the continual losses recorded by MPF schemes. In the end, the financial intermediaries are the biggest winners. We can describe this phenomenon of robbery by the Government and the business sector as the public being taken advantage of. What other description can we use other than this? The adjectives used by some people are even worse. They call it the "Mandatory Raping Fund". This is really very unpleasant to the ear. But we can see the hatred and criticism Hong Kong people held against MPF. They hold deep hatred of it.

We are talking about revitalizing the MPF System today. I have reservations about two directions of such revitalization. First, with regard to personal medical insurance, there is a chance that problems will arise if scheme members are allowed to use MPF accrued benefits to take out medical insurance. I understand that the existing health care system is very much stretched to the extent of explosion, leading to discontent and grievances among the health care personnel. The original motion of Dr Junius HO proposes to use the MPF contributions for medical insurance purposes, claiming this will not only protect the personal health of members of the public, but also relieve the pressure on the public health care system. I have doubts about this. According to the research brief entitled "Health insurance for individuals in Hong Kong" released in July 2018 by the Research Office of the Legislative Council, the total billed amount of medical claims for individuals was $5.3 billion in 2015. The premium revenue was $9 billion. The amount of medical claims was lower that of the premium revenue. The research brief also indicates that medical insurance has not reduced the burden of out-of-pocket health care spending of households. The absolute amount of such spending by households continued to increase steeply over the past eight years, with its relative share in total health care expenditure edging up from 35% to 36%. Medical insurance policies often covered inpatient care, but in fact, less than three fifths of the insured received such care in private hospitals. It is also mentioned in the research brief that the relevant situation reflected the limitations in existing health insurance products, such as a lack of premium transparency and budget certainty. An important point not to be neglected was the number of complaints lodged against medical insurance by the public. During the period from 2012 to 2017, complaints about medical insurance went up visibly by 55% to 204 cases. Among the complaints against insurance policies, medical insurance had continuously been the largest source of complaints, accounting for 50% of the overall caseload. We can thus see that insofar as medical insurance products are concerned, there is a lack of monitoring, and the service quality varies significantly. With insufficient LEGISLATIVE COUNCIL ― 21 February 2019 7001 transparency, it is also difficult for members of the public to take out suitable medical insurance. If members of the public casually invest their MPF funds in these medical insurance, they may find compensations cannot be claimed for items they thought were covered. Ultimately, they will stand to lose more than they gain.

The other issue is the proposal for universal mortgage servicing for security at old age. Some arguments in the amendments or some Members agree to using MPF accrued benefits for servicing mortgages or acquisition of properties. Pardon me for having reservations about this. The property price in Hong Kong is the highest in the world. Home purchase is difficult in Hong Kong. I hold that we should ask a question before all else. What actually should we address―the need for home purchase or the need for housing? From the perspective of public policies, and at least in the case of Hong Kong, I hold that meeting the housing need is the most basic issue. As for the need for home purchase, the current-term Government or some people are continuously encouraging people to acquire properties, turning a person's retirement protection into part of the need for home purchase. In the end, this may only promote speculation and fails to genuinely help the people.

According to the research brief entitled "Financial challenges faced by households in Hong Kong" published by the Legislative Council, after deducting household expenditure, tax payment and hidden spending, half of the families in Hong Kong do not have any savings, or even find themselves in a situation of negative savings. The research brief also mentions that the average MPF benefits held by scheme members is $140,000, which can meet less than two years of spending of a household of a retired couple. While they still have to service their mortgages, they are without the universal retirement protection, then how can they cope with retirement life? As we lack the ability to save up money, why do we still have to use the MPF accrued benefits for property acquisition? Therefore, I hold that under the circumstances that the 5% contribution ratio and the offsetting arrangement have yet to be abolished, the MPF System serves in some measure the temporary function of savings for retirement. We can draw reference from the experience of overseas countries. With regard to using the MPF System to resolve the health care problem as well as the housing problem, I hold that we cannot have the cake and eat it. Very often, it is more appropriate to use other means to address the health care and housing problems.

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For these reasons, I oppose the original motion and the amendments proposing to use the MPF contributions to take out medical insurance and to acquire properties. I support other amendments aimed at regulating MPF management and administration fees.

I so submit.

MR CHAN CHI-CHUEN (in Cantonese): Deputy President, today's motion proposes to revitalize the Mandatory Provident Fund ("MPF") System, with a view to allowing members of the public to use MPF contributions to take out medical insurance or for other purposes. We all know that MPF has another name, and that is, the "Mandatory Dupery Fund". After revitalization, a "Mandatory Dupery Fund" is still a "Mandatory Dupery Fund". Hence, if we wish to prescribe the right remedies, we should abolish MPF, thereby stopping the financial sector from "butchering" the public through the MPF System, and allowing the public to retrieve their MPF benefits. The Government should implement a universal retirement protection system so as to provide a comprehensive and effective retirement protection net for the people of Hong Kong.

I believe many members of the public who have to make MPF contributions feel resigned and discontented when they talk about MPF. They have to make a contribution at 5% to the banks or insurance companies every month, but these companies are completely not responsible for the return rate despite charging high service fees. Consequently, for many years the performance of the majority of MPF schemes has been poor, but the banks and insurance companies reap huge gains all the same. As the amount accumulated under MPF grows increasingly larger, the amount of service fees received by banks and insurance companies has also grown increasingly larger. If government jobs held by civil servants are "iron rice bowls", banks and insurance companies operating the "Mandatory Dupery Fund" are assured of "golden rice bowls". As members of the public have to make MPF contributions, some of them hold that MPF is a piece of "chicken rib". But I hold that it cannot even be likened to a piece of "chicken rib" because a piece of "chicken rib" is not good enough to get excited about, but not bad enough to forego without regret. Insofar as MPF is concerned, members of the public cannot even forego it. Members are not allowed to "severe the tie" with MPF, stop making contributions, withdraw from schemes or retrieve their contributions. They have to continue to make contributions.

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Despite the fact that the MPF System is fraught with problems and offers nothing to write home about, the financial sector and the Government which colludes with the financial sector hold that the amount of money "robbed" by these companies is not enough. They still wish to preserve and rationalize this "coercive fund". In February, the Financial Services Development Council ("FSDC") released a report in which it indicates that insofar as the majority of employees in Hong Kong are concerned, the existing level of contributions is clearly not sufficient to meet the needs of a reasonable retirement life. It has proposed to provide a tax concession for voluntary contributions made by employees, and cap the total amount of voluntary contributions and mandatory contributions at 15% of the employees' income. It is clear that FSDC completely ignores the fundamental defects of MPF. It has even proposed that the Government should provide a tax concession so as to attract more members of the public to entrust the management of their hard-earned money to the financial sector.

In fact, I hold that FSDC is absolutely unfit to―and should not―publish a report on MPF. Although FSDC is set up by the Government, its board is composed of professionals from the financial sector, with some of them being directly related to MPF. For instance, one of the board members is the Chief Executive Officer of the Value Partners Group Limited. This company is involved in helping a number of banks and insurance companies manage MPF schemes. Another board member is the Chief Executive of Hong Kong from the Hongkong and Shanghai Banking Corporation Limited ("HSBC"). We all know that the market share of HSBC in MPF reaches over 20%. It makes huge profits from managing a large number of MPF schemes. For this reason, I hope that the Government will tell us whether the proposal of FSDC represents the stance of the Government? Why did FSDC―an organization operating with public funds―publish such a report which completely loses touch with the public and harms public interest? Moreover, did members of FSDC who have close relationships with MPF participate in this study? Did they recuse themselves from handling the study to avoid causing suspicions?

From this we can see that even if the transfer of benefits to financial institutions through MPF was not the goal of the Government's major policy, it has become the final outcome. The Government even plans to transfer more benefits to the financial institutions. Members of the public, as always, can do nothing and they are completely helpless. Therefore, I resolutely oppose the 7004 LEGISLATIVE COUNCIL ― 21 February 2019 continual retention of MPF. After implementation for 20 years, MPF has been proved to be a failure. It can no longer achieve the effect of providing retirement protection. Hence, the Administration should abolish MPF, giving the public an option in deciding whether they should withdraw their MPF benefits, or continuously entrust the management of their precious assets to banks and insurance companies.

As a matter of fact, there are many existing investment tools which offer stable returns to the public and charge far lower administration fees than those of MPF schemes. Members of the public can use their MPF funds to improve their quality of living, be it to further their education, or take out medical insurance as Dr Junius HO suggested, or meet housing needs. If only the Administration will abolish the MPF System in a resolute manner, I believe members of the public have the wisdom to effectively use the funds they have saved, bringing the potentials of the amount of money into full play to achieve satisfactory effects. I believe if the MPF System can be abolished, the contribution of this enormous amount of $844 billion of accrued benefits to the economy will absolutely be far greater than that of the existing accrued benefits transferred to the banking and insurance sectors.

As such, Members may probably ask what mechanism or means can provide retirement protection to the public after the abolition of the MPF System. In fact, we have talked about this for many years. Public consultation exercises have also been conducted. We hold that we should set up a universal retirement protection system requiring tripartite contributions from the Government, employers and employees, with the Government managing the contributions. This system will be able to provide the most basic retirement protection for each member of the public at the time when he retires.

MPF has been creating painful memories for the public since its inception in 2000. We must stop the continued exploitation of the public by the financial sector and call a halt to this never-ending nightmare. It is imperative for the Government to abolish the MPF System and allow the public to retrieve their MPF contributions. And it is only through this that the hard-earned money of the public can be fully protected.

LEGISLATIVE COUNCIL ― 21 February 2019 7005

DR PRISCILLA LEUNG (in Cantonese): Deputy President, the title of today's motion is "Revitalizing the Mandatory Provident Fund". When we talk about the title of this motion in Cantonese―"活化強制性公積 金", there is this word "強" (with the pronunciation of "koeng" and the meaning of "force") in the name of the Mandatory Provident Fund ("MPF") System. There is this word "活" (with the pronunciation of "wut" and the meaning of "life") in the term "revitalizing". I believe no one will oppose efforts at revitalizing MPF.

Let us draw reference from the structure of the five pillars suggested by the World Bank. The second pillar is the mandatory personal or occupational retirement protection scheme with the objective of ensuring for members of the public with a relatively high income access to additional retirement funds apart from the most basic public retirement protection, thereby assuring maintenance of their retirement life at a certain living standard similar to the one before their retirement. In Hong Kong, the second pillar should mean MPF which aims at helping Hong Kong people accumulate savings for their retirement through joint contributions from employers and employees. However, can MPF achieve this objective now?

Wage earners―regardless of whether they earn a high income or an average income, or whether they work for public organizations―receive their MPF statements every month. I believe very few wage earners would read the monthly statements seriously. If they only read the figure at the end of the statement, they will dismiss it with a laugh and throw the statement away. If we have to rely on that figure for our retirement, MPF can be regarded as a big joke. Most of the wage earners do not believe that MPF will give them any sense of security in terms of retirement protection. Just as Mr CHAN Chi-chuen has mentioned just now, many people call this MPF the "Mandatory Dupery Fund".

It is mentioned in Mr CHAN Kin-por's amendment that "MPF's overall rate of return has been highly volatile, even though a 22.3% rate of return was recorded in 2017, the rate dropped to -8.83% in 2018". The general public will not complain when there are returns. But they will complain once a deficit is recorded. They hold that depositing money into banks as time deposits can yield better returns. However, the investment returns of most investments are not high these days. The interest rate is zero or 0.2%, which is not attractive at all. So what should we do with the money?

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In the course of discussing this motion, many Honourable colleagues have mentioned universal retirement protection, a subject which should be discussed separately. But the MPF System has been implemented for many years. At times of elections, there would be discussions on whether we should completely abolish MPF, or improve the existing System first. For instance, we can draw reference from the practice in Singapore, where the Central Provident Fund is implemented. It provides investment options of the exchange fund, the lazybones' fund, the Interest Fund, and an investment portfolio of high/medium/low risks. Full-portability of contributions is also allowed for wage earners. While the Fund is centrally managed by the Government at low administration fees, the market is also allowed to offer other options for wage earners to make their own choice. Of course, wage earners will think about what choice to make. They will invest more in the fund which offers the opportunity of more earning. Our problem is that we do not have options. We have to pay the so-called agency fee, which is excessively high. After deducting the overhead cost, administration fees, management fees and wages, little profit is left. This is basically putting the cart before the horse. The Government has listened to many views, among which I consider the model of a centrally managed MPF a must.

I do not blame certain Honourable colleagues for proposing a universal protection retirement system today. But frankly speaking, we have all along had reservations about universal retirement protection. The reason is―how broad do the scope of "universal" and "protection" cover? It is stipulated in the Basic Law that "one country, two systems" is to be implemented in Hong Kong; and that Hong Kong shall follow the principle of keeping the expenditure within the limits of revenues to avoid deficits. With the continual ageing of the population in Hong Kong, how much will be borne by our next generation in implementing universal retirement protection? As a matter of fact, if we implement universal retirement protection now or within the next decade, there is a possibility that we may become the beneficiaries. But how about our next generation? Should we open this gate and make our next generation bear the burden of universal retirement protection, with the consequence of lowering the competitiveness of our society and undermining our existing advantages? For this reason, I have great reservation about the so-called universal retirement protection, a subject we must treat with caution.

However, I absolutely hold that we should consider implementing a centrally managed MPF. First, this has nothing to do with whether it is a capitalist society or not. It is also implemented in Singapore, our greatest LEGISLATIVE COUNCIL ― 21 February 2019 7007 competitor. Second, members of the public will be able to save a substantial amount of management fees. Third, it allows more "full portability". So why do we not consider this? Moreover, when the retirement of the elderly is discussed, how can we call a person at the age of 60 an elderly person these days? Let us look at a recent television programme entitled "As long as you live". The episode of yesterday's programme is called "The Grandmother's Kitchen". The story is about a grandmother who lives alone. Having nothing to do at home, she became slow in her response to everything. So her grandchildren decided to organize the Grandmother's Kitchen for her and invited a number of grandfathers and grandmothers to participate. This kitchen is like our social enterprises. In the end, everyone has become smart and shrewd. Ranging from 60 to 70 years of age, these people have become very good at cooking.

Why did we have such a strong reaction when the Government indicated it would reduce the amount of the Comprehensive Social Security Assistance granted to those aged 60 to 64? It is not that we do not agree to the measure of encouraging employment among people aged 60 to 64, only that we should put in place comprehensive support measures to encourage those retirees aged over 60―who are strong and healthy, intelligent and capable―to seek jobs that give them satisfaction at work, and at the same time enable them to improve their retirement life. This is what the Government should do. The Future Fund and the employment of the silver-haired group represent part of the comprehensive support measures, including transport measures. I always hold that those aged 60 to 64 should be eligible for the $2 concessionary fare. It is only through this incentive that they will be encouraged to go out to work or engage in voluntary work.

Deputy President, we are discussing revitalization of MPF. I hold that we should not mix this up with other subjects. On this premise, be it the proposal to use MPF benefits for medical purposes or acquisition of properties, I remain open-minded and will render it my support. But I will not support proposals that mix this with other subjects, such as universal retirement protection. I hope that the Government will conduct a comprehensive review of the management fees of MPF, and launch a central provident fund scheme as soon as possible.

I so submit.

7008 LEGISLATIVE COUNCIL ― 21 February 2019

MR SHIU KA-CHUN (in Cantonese): Deputy President, the population in Hong Kong is ageing. This is an indisputable fact. The Hong Kong Government has yet to put in place a comprehensive retirement protection system, resulting in the retirement life of many members of the public being left unprotected. This is also an indisputable fact. Of course, just as many Members mentioned earlier, the Mandatory Provident Fund ("MPF") schemes charge high management fees but yield low returns, thus causing many complaints from the public. This is an indisputable fact, too.

Dr Priscilla LEUNG mentioned just now that the World Bank had suggested an income protection regime for the elderly in 2005. According to the World Bank, a comprehensive retirement protection system should be founded on five pillars, which include: zero pillar―a social security system providing the lowest income for the elderly in poverty, such as the Comprehensive Social Security Assistance ("CSSA") Scheme and the Old Age Living Allowance ("OALA"); the first pillar―a public income protection scheme for the elderly; the second pillar―a mandatory occupation-based or personal income protection scheme for the elderly, i.e. MPF; the third pillar―voluntary savings schemes; and the fourth pillar―unofficial support or other non-financial support, such as family support or public health care services.

At present, the first pillar is lacking in Hong Kong, that is, we do not have a public income protection scheme for the elderly that serves the purpose of risk sharing. The community has all along advocated a universal retirement protection system requiring tripartite contributions from the Government, employers and employees. This scheme will benefit all members of society, and is also proved by calculations of actuaries to be sustainable. Unfortunately, after a number of consultation exercises and studies, the Government continues to disregard public opinions and put off its implementation. As a result, there is still a huge loophole in Hong Kong's retirement protection system. Members of the public have to rely on other less sound pillars to cope with their livelihood needs upon retirement.

Deputy President, according to the "Hong Kong Poverty Situation Report 2017", the elderly poverty rate was more than twice the overall level. After recurrent cash intervention, that is, CSSA, OALA and the "fruit grant", the elderly poverty rate was still 30%. They were still living in a state of poverty. Of course, the Government claims that some of the elderly make a low income but hold huge assets. However, due to the lack of concrete figures, the LEGISLATIVE COUNCIL ― 21 February 2019 7009

Government's retirement protection policy is still ineffective, resulting in the elderly living in poverty upon retirement. This is another indisputable fact.

MPF is fraught with problems. While the optimum use of MPF is to provide retirement protection for salaried employees, it has all along been unable to provide protection for those who are not on payroll―including my mother, i.e. the family carers, with the majority of them being women―or members of the public rejected by the job market due to their physical condition or abilities, such as people with disabilities, and those working casual jobs on a long-term basis. Rejected by the MPF System, these members of the public will remain lacking any sense of support and security in their old age, thus, generating social problems such as women in poverty and elderly in poverty.

Moreover, the protection for grass-roots workers has all along been inadequate in Hong Kong society. Their low salaries result in very limited MPF contributions. It is doubtful whether these contributions will be able to cope with their livelihood needs in retirement. A large number of casual workers and various loopholes in the labour legislation have indirectly allow employers not to make MPF contributions for employees, thus evading the responsibility of providing for employees' retirement protection.

Deputy President, I teach social policies in the university. From the perspective of social policies, the concept behind the MPF System is personal responsibility, which means it requires an individual to plan for his own retirement life. MPF also requires employees to manage their own MPF accounts in order to make better returns. However, it must be noted that not all employees have sufficient knowledge and ability to take up this personal responsibility. Many people know nothing about funds, stocks and investments. They do not have a clue about making a rational choice among a large number of funds. This personal responsibility system requires an individual to bear investment risks. As it does not serve the function of redistribution of resources, it fails to advance social justice or a more equitable distribution.

In fact, what Hong Kong needs is a social insurance system that enables risk sharing by the community and administration through a public scheme which serves the function of redistribution of resources, thereby providing protection for old age and retirement to all members of the public, including family carers, people with disabilities and casual workers.

7010 LEGISLATIVE COUNCIL ― 21 February 2019

On the other hand, the proposal for using MPF accrued benefits to take out medical insurance is still unable to address the current issue of insufficient retirement protection for the grass roots. Instead, it will reduce their financial security upon retirement. Furthermore, the management fees of medical insurance are very expensive, whereas the charges of private health care services are expensive and non-transparent. It is very difficult to ensure that our retirement protection will not be eroded by medical insurance. Meanwhile, this approach of revitalization still fails to help the public in terms of risk sharing in case of illnesses. Based on a personal responsibility system, it still rejects members of the public who do not have MPF accounts. I hold that this proposal is undesirable.

Deputy President, I also have reservations about the proposal of allowing employees to use MPF accrued benefits to pay the down payment of first-time home purchase. For one thing, this proposal also undermines the retirement protection of employees. And for another, the commercialization of housing is very serious in Hong Kong. Investing money in the property market will continue to fuel the commercialization of housing, resulting in aggravating further the unaffordability of property acquisition. Furthermore, as the salary of some employees is low, their contribution to MPF is very limited. Under the circumstances of soaring property prices, the amount of MPF funds they use for down payment is just a drop in the bucket. This proposal for allowing more people of the sandwich class and those who do not have sufficient financial means for home acquisition to invest in the property market will also increase their risk of bankruptcy in the future. We must think twice about this.

As for the proposal of lowering the rate of administration fees, I agree with this. However, I must emphasize that the initiative of lowering the administration fees only is just a measure of relieving pain without resolving the problem of retirement protection faced by the public. I will continue to fight for universal retirement protection. I will fight for a retirement protection system which embodies the concept of responsibility shared by the community and the function of risk sharing, and also facilitates the redistribution of resources. I support universal retirement protection.

Thank you, Deputy President.

LEGISLATIVE COUNCIL ― 21 February 2019 7011

MR ANDREW WAN (in Cantonese): Deputy President, I would like to make some suggestions on the motion of "Revitalizing the Mandatory Provident Fund" moved by Dr Junius HO.

Deputy President, as we all know, the Mandatory Provident Fund ("MPF") System was established to protect the retirement life of employees. MPF is said to be the fourth, fifth, or sixth pillar of retirement protection. In any case, MPF is an important constituent of retirement protection, and most of the wage earners will use their accrued benefits to meet their living expenses in retirement life. If the Administration allows members of MPF schemes to withdraw part or all of their benefits to pay for their medical expenses or to take out medical insurance, or as proposed by another Member, to pay for the down payment for home purchase, it will defeat the original intent and function of MPF.

Deputy President, we all know that Hong Kong has a rather weak retirement system. Earlier in the debate, many Members mentioned universal retirement protection. Had universal retirement protection been implemented, I believe we would have more room for discussion today. Mr SHIU Ka-chun has also made relevant statements in his speech. He said if the universal retirement protection had been implemented, we might have more room for discussion on this motion.

Unfortunately, we all know that when the incumbent Chief Executive was the Chief Secretary for Administration, she commissioned Prof Nelson CHOW to conduct a research. It is also known that the results of the research published by Prof CHOW at that time were not accepted by the Government, leading to a war of words between Prof CHOW and the incumbent Chief Executive. They held different views and had argued for a long time. I regret to see that Prof CHOW has even become a victim of collateral damage today, as a new term "Nelson CHOW 2.0" has been coined and applied to this situation. If universal retirement protection had been implemented, the current situation would certainly be different. However, in the absence of universal retirement protection, I am not sure whether the proposal put forward by Members will revitalize or undermine MPF, and whether it will make retirement life more difficult for wage earners.

The motion moved by Dr Junius HO proposes that scheme members should be allowed to use their MPF benefits to take out medical insurance. The original intention is that when scheme members fall ill, besides seeking medical treatment 7012 LEGISLATIVE COUNCIL ― 21 February 2019 in the public health care system, they may also turn to private health care institutions in order to receive appropriate treatment expeditiously. As I can see Dr HO is present in the Chamber, I wish to point out to him that it is not wrong as an objective. However, I believe against the background and conditions I have just mentioned, the approach he suggested seems to be unsatisfactory and will incur greater risks. At present, medical resources are extremely inadequate. To address the issue, the ultimate and the most immediate solution is to improve our health care services, which is the responsibility of the Government. A responsible government should provide adequate health care services to every member of society. Unfortunately, we can see that health care workers are under tremendous pressure, and there have been widespread complaints and criticisms from those who seek public health care services. The shortage of manpower also leads to occurrence of many medical blunders. In fact, the root cause is that the Government is unwilling to commit more funds and resources to improving health care services. It is indeed a misery for an advanced city like Hong Kong. When making an address in the Chamber, the Chief Executive once proudly declared that Hong Kong might lack many things, but there was no shortage of money. If the Chief Executive is determined to improve the current situation, can she make more effort in this regard? However, the Government would rather spend $100 billion on reclamation, and give so much attention and thoughts to the development of the Greater Bay Area, than devoting more effort and committing more resources to improving the health care system in Hong Kong.

The issue observed by Dr HO does exist. However, I believe it should not be addressed in the way he suggested. Instead, all Honourable colleagues in the Legislative Council should unite together and press the Government to improve our health care services. It is much better than denting openings in the MPF System, which is intended for offering retirement protection, by allowing scheme members to withdraw their benefits in advance to take out medical insurance. Now with the irresponsible attitude of the Government, and the inadequacy in health care policies and services, what should the public rely on when they get old? Should all of them apply for the Comprehensive Social Security Assistance? If so, what kind of social controversies and problems will arise as a result? Therefore, I think we should give due and careful consideration in the discussion on this issue.

In addition, an amendment has been put forward to further propose to allow using MPF benefits for home purchase. I must say that property prices in Hong Kong are not only high or sky-high, but ridiculously high. It is completely LEGISLATIVE COUNCIL ― 21 February 2019 7013 beyond the affordability of the people of Hong Kong. General wage earners find it difficult to buy a home. The proposal may lead to a misunderstanding or an illusion. For example, some people may think that since they have accumulated about $500,000 in MPF benefits after working for some years, and therefore with a little bit personal savings, they will be able to afford the down payment. To put it colloquially, it is a proposal that will trick those who harbour such an illusion into a dead end, leading members of the general public to commit themselves to a private property market that they may not be able to afford. I think this is less than desirable. In the past, if a flat was offered for sale at $5 million, the words "Good News for the Poor" was shown on the relevant advertisement. Now, the price for "Good News for the Poor" has escalated to $8 million. I believe all Honourable colleagues in the Chamber will understand that this phenomenon is more than enough to reflect the madness of property prices in Hong Kong.

Therefore, even if the motion was moved out of good intentions and in an attempt to help the public to buy a home, the crux of the problem must be addressed. We need to find out the reason why there is such madness of property prices in Hong Kong, and why there is such a serious shortage of subsidized housing, including subsidized sale flats, in Hong Kong. I believe it is the responsibility of the Government to solve the problem, and we should not pull money out of the MPF System, otherwise MPF will eventually fail to play its proper role. Meanwhile, we agree to the proposal of reducing the management fees of MPF schemes, as suggested by an Honourable colleague.

Lastly, I hope we will have more discussions on how to improve the arrangements of early withdrawal of MPF accrued benefits in the future. According to the current regulations, a scheme member who suffers from a terminal illness that is likely to reduce his life expectancy to 12 months or less is allowed to withdraw the accrued benefits. Though an exception is in place, the threshold is too high and too inconsiderate. We hope that some objective criteria will be set and more discussions with the medical professionals will be conducted in the future. For instance, some criteria for early withdrawal of MPF benefits for scheme members suffering from stage 3 or stage 4 cancer may be set, so that the accrued benefits can be used for contingency needs. We are prepared to have more discussion on this.

Deputy President, I so submit. Thank you.

7014 LEGISLATIVE COUNCIL ― 21 February 2019

DEPUTY PRESIDENT (in Cantonese): Does any other Member wish to speak?

MR WU CHI-WAI (in Cantonese): Deputy President, the subject of debate today is the Mandatory Provident Fund ("MPF") System. The original intent of the establishment of MPF is to make it an important pillar of retirement protection. Therefore, if MPF is to be revitalized by allowing scheme members to withdraw their accrued benefits, we must consider whether MPF will be able to remain as an important pillar of retirement protection subsequently.

Both the original motion and an amendment today involve the use of MPF benefits in two directions, namely using part of the accrued benefits to take out medical insurance and to pay for the down payment of home purchase.

Let us first look at the idea of using MPF benefits to take out medical insurance. In our society today, we can see that not many people can afford taking out a medical insurance policy that covers serious diseases, such as rare diseases or cancer, which are not within the scope of coverage of general medical insurance plans. The majority only take out hospitalization insurance plans or some other miscellaneous medical insurance plans. What do these plans usually cover? They usually cover some screening procedures, such as magnetic resonance imaging ("MRI"), for diagnostic purposes. If the insured is diagnosed with certain diseases, they will usually turn to the public health care sector for medical treatment. From my observations, this is the case in general.

In this context, assuming that the proposal for using part of the MPF benefits to take out medical insurance is passed, and that many scheme members are attracted to take out medical insurance in this way, what will happen then? In that case, many people who would otherwise rely on other means to undergo medical examination and to detect diseases can now rely on the coverage offered by medical insurance. However, the public hospitals will be burdened further because more people will be able to understand their health condition and then turn to the public health care sector for medical treatment. I think this is precisely the crux of the issue. Now we are not focusing on pressing the SAR Government to carry out primary health care initiatives properly so that the public will learn that prevention is better than cure and be equipped with health care knowledge as a preventive measure. Instead, they are now encouraged to take out more medical insurance. I think it is putting the cart before the horse.

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Therefore, neither Mr Andrew WAN nor the Democratic Party agree with this approach because the core issue is how much importance the Government attaches to promoting primary health care at the community level, and whether the Government is willing to allocate more resources to this area so that the public will learn how to take care of their health condition in their daily life and at an early stage, such as undergoing medical examination, receiving computerized tomography or MRI scan when they have fallen ill, etc. It is about helping the public get to know their health condition and then decide their treatment options.

After diagnosis, if a patient considers different treatment options and needs resources … In this regard, I support the proposal of adjusting the definitions carried in the current list of serious diseases/terminal illnesses. When the patient has gained an understanding of his health condition, and if he is allowed to withdraw his MPF benefits, he can have the necessary resources to determine his treatment options. In my opinion, it is reasonable to allow him to withdraw his MPF benefits at this stage because he is making an informed decision. In the existing criterion under which terminal cancer is used as the qualifying condition, about hundreds of million dollars of MPF benefits were withdrawn in the past few years. It shows that once someone is diagnosed with a certain disease, he will be given the necessary resources to choose his treatment options in the face of a critical illness if he is allowed to withdraw his MPF benefits.

Similarly, there is this proposal for using MPF benefits for home purchase. Just now, Mr Andrew WAN mentioned that the crux lies in how the Administration looks at the housing problem in Hong Kong. Shall it be resolved by allowing the public to withdraw part of their MPF benefits to meet part of the cost of home purchase? I think we will lose focus if we go in this direction. We should not forget that MPF was established for a specific purpose, that is, to offer retirement protection. If it is used for other purposes, its original function will be affected. This is our first concern.

Second, why did so many Honourable colleagues criticize MPF? This is due to the performance and management fees of MPF schemes, which have not been effectively improved so far. Although the "semi-portability" arrangement and the "Default Investment Strategy" have been implemented to reduce management fees, in general, the problem of high management fees undermining the return on investment persists. Furthermore, when can the public provident fund become an alternative for the public? Other than telling the people to put money into the pockets of fund companies, is it possible to entrust the MPF benefits to the Exchange Fund of the Hong Kong Monetary Authority 7016 LEGISLATIVE COUNCIL ― 21 February 2019

("HKMA"), which is already representing the SAR Government, that is, representing the general public of Hong Kong, to manage an enormous amount of public resources. Is it possible to appoint HKMA as a fund manager and give the public another option? This is the core issue, and it is a way to preserve the original functions and purpose of the MPF System. However, if we do not address these issues and propose other options simply because of the unsatisfactory performance of MPF schemes, it is putting the cart before the horse.

Thank you, Deputy President.

MR LEUNG CHE-CHEUNG (in Cantonese): Deputy President, I am very grateful to Dr Junius HO for proposing the motion on "Revitalizing the Mandatory Provident Fund" today. I can tell Dr HO is a good man because he hopes that the Mandatory Provident Fund ("MPF") System can play its function better in society.

As we all know, the function of the MPF System is to provide some retirement protection for employees. We cannot say that it is a very comprehensive protection because the MPF System has many restrictions. Certainly, since the implementation of MPF in 2000, the Government and the legislature have been aware of many shortcomings of the system, including two major ones. Firstly, scheme members have to pay management fees to the relevant fund managers to handle their benefits. Secondly, scheme members may make profit or loss because investment returns fluctuate. MPF schemes in general showed the worst performance last year, and each scheme member suffered a lost of more than HK$20,000 in MPF benefits on average. Therefore, the poor performance of MPF schemes last year has led many people to question the MPF System and even lose confidence in it.

Therefore, in our debate on revitalizing MPF today, the general expectation differs from that of Dr Junius HO, who proposed to provide more flexibility and allow scheme members to use the MPF benefits to take out medical insurance. Instead, what is expected is a reduction in the management fees of MPF schemes and to ensure positive investment returns. I have listened to the speeches of many Honourable colleagues, including the five Members who proposed amendments and some other Members. They all criticized the excessively high management fees of MPF schemes and even the poor management by the fund managers.

LEGISLATIVE COUNCIL ― 21 February 2019 7017

In fact, is the MPF System that bad? The Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") has conducted an opinion survey on retirement protection. Respondents were asked if they would like to retain MPF if universal retirement protection is implemented. The results showed that the majority did not agree to abolishing MPF. Here lies a contradiction. On the one hand, another form of retirement protection system is proposed, and on the other, some members of the public do not agree to the abolishment of MPF. In my opinion, the reason is that MPF has certain merits. It allows scheme members to invest their contributions with flexibility. Of course, there are restrictions on such investments. Scheme members have to choose what types of funds they would like to invest in. However, upon retirement, scheme members can withdraw their accrued benefits in a lump sum. This is the general public's view of the merit of MPF.

The strong criticism of MPF is related to the attitude with which scheme members manage their own contributions. Indeed, how are the contributions managed? Let me share my personal experience. Every year, I will read the annual benefit statement of the MPF scheme to see how much I have gained or lost. If there is a loss, I would certainly be annoyed, but even if there is a positive return, I will not pay much attention to it because it is usually not a large amount. In fact, I can say that most people do not manage their MPF contributions actively, and such an attitude may have certain impact on the performance of their MPF schemes.

I understand that the Mandatory Provident Fund Schemes Authority ("MPFA") has conducted several reviews and reforms of MPF, including the recent "semi-portability" arrangement. According to the information provided by my colleagues, I found that MPFA has carried out four reforms, such as the development of "eMPF", tax deductions for MPF voluntary contributions as implemented by the Government, and the introduction of the Core Accumulation Fund. In my opinion, these reforms are justifiable. However, even more reforms of this sort were carried out continuously, they would still fail to resolve the two shortcomings that I have just mentioned, namely the high management fees and the investment loss that might be incurred, as shown by the poor performance of MPF schemes last year. What are we going to do then?

In my opinion, even a revitalization of MPF may not necessarily work. In fact, the direction of our discussion shall not only focus on whether scheme members should be allowed to withdraw their benefits before the age of 60, or 65 now. The revitalization of MPF should also enable wage earners to use and 7018 LEGISLATIVE COUNCIL ― 21 February 2019 invest their MPF benefits with more flexibility. I think this is important. Of course, it also includes the use of MPF benefits to take out medical insurance as proposed by Dr Junius HO because medical insurance is also some sort of protection. I agree to extending the scope of MPF to make it serve greater functions. In my opinion, when formulating relevant policies or laws, the Government does not have to limit scheme members to withdrawing their cash only after they have reached the retirement age of 65. Indeed, the Administration can allow them to acquire assets with potential of appreciation so that they will be able to realize their investments and receive more cash after retirement. I think this is the core of today's discussion.

In regard to the debate on revitalizing MPF today, I think other than further reviewing and improving the MPF System, the Government should also consider whether the original intent of its establishment in the first place should remain unchanged, that is, scheme members can withdraw their benefits only after reaching the age of 65. The Government should give this matter consideration as soon as possible. In addition, I also support the amendment proposed by Mr WONG Ting-kwong. I so submit.

MS CLAUDIA MO (in Cantonese): First of all, I laughed when I saw the word "revitalizing". The word "revitalize" in English applies to buildings. Buildings that are to be revitalized generally refer to existing buildings that are meaningful, worthy of conservation and preservation, and have historical significance. However, the Mandatory Provident Fund ("MPF") System in Hong Kong is basically a ruin. It is totally an awful mess. It is proposed that MPF should be revitalized, but the so-called "revitalizing" means allowing scheme members to use their MPF benefits with more flexibility to take out medical insurance or to pay for the down payment of home purchase. Such a proposal carries a completely wrong message and deviates from the original intent of the MPF System. However, I will not say lightly that the entire MPF System should be abolished because I am worried. If it is abolished, does that mean employers do not have to make any contributions to the future retirement protection of their employees? Therefore, I am somewhat worried. However, I am completely sure that the "offsetting" arrangement under MPF should be abolished, which is the consensus of society as a whole.

Nevertheless, the MPF System is not a "white elephant". It is not the same as the "white elephant" bred by the infrastructure projects introduced by the Government. It is an elephant that springs up in a small room suddenly. It LEGISLATIVE COUNCIL ― 21 February 2019 7019 sometimes takes a break and sits down. Everyone is watching it but no one knows how to deal with it. No one believes it is appropriate to kill the elephant or send it to the zoo. We simply do not know how to deal with the current situation.

As we all know, the administration fees of MPF schemes are excessively high. More than a decade ago, we were shocked when we received the annual benefit statements because we found that we were losing our benefits. It turned out that MPF was not offering protection but on the contrary, it made us lose money. The fact was appalling. In addition, with the excessively high administration fees, it is simply putting money into the pockets of banks, intermediaries, and insurance companies.

I have also heard many propose in passing universal retirement protection, which is certainly a good idea. Often, the arrangement of tripartite contributions is proposed, that is, other than employees and employers, the Government should also make contributions. However, we must give careful consideration to such a proposal. Involving the Government in making contributions is a good idea, but we should consider where the Government gets its money? The major source of its income is tax revenue, which is mainly derived from land sales. The Government has been upholding a high land price policy. Let us say there is a plot of land worth $30 billion at the beginning. If someone bids for it at $45 billion at a land auction, he will certainly win the bid and bring more revenue to the Treasury. Everyone is happy because we have sufficient money now.

However, if we encounter an economic recession in future, and no one comes to bid for our land, what will happen to our tax revenue? It will surely plummet. Therefore, I fear that the next generations will suffer because the Government will have no alternative but to increase taxes. If the implementation of universal retirement protection means increasing the burden of the next generations, we must give it second thoughts. Of course, it is good to start the discussion on this matter, but I am worried that when we start discussing universal retirement protection, it will lead to a dispute on the age of retirement. Shall it be set at 60 or 65? According to the existing regulations of MPF, the accrued benefits can be withdrawn only when the scheme member has reached the age of 65. However, a person is generally considered an elderly at the age of 60. Even if it is against their will, many are forced to retire at this age, and it is difficult for them to find another job. Previously, we had a dispute over the eligible age for elderly Comprehensive Social Security Assistance, and we all know what happened.

7020 LEGISLATIVE COUNCIL ― 21 February 2019

I hosted a radio phone-in programme 20 years ago. That was the first time I helped to introduce the MPF System to the public. At that time, most people thought MPF was good. However, when you look at the latest figures today, you will find that MPF is like an elephant standing in a small room. The elephant looks round to gaze at everyone, and we also stare at it in shock. Both sides have no idea how to settle this situation.

As at the end of August 2018, the total assets value of all MPF schemes amounted to about $850 billion. Actuarial calculation showed that each wage earner in Hong Kong lost an average of $30,000. Come on, this sounds totally unacceptable. Therefore, I still say that when the word "revitalize" is used in our discussion on what can be done to the MPF System, it is ridiculous.

The original motion proposed that MPF scheme members shall be allowed to use their MPF benefits to take out medical insurance so as to alleviate the pressure on the public health care system. It is putting the cart before the horse. The public health care system is overburdened not only by the need of local people. All citizens of Hong Kong, whether they are new or old immigrants, are treated equally. The Government has the obligation and responsibility to provide public health care services. But now it is telling the public to turn to the private health care services to alleviate the pressure on the public health care system. This is totally unreasonable. Moreover, it boils down to the root of the issue. Is it sufficient to discuss the figures only? To alleviate the pressure on the health care system, there should be a halt at the source, so that everyone can take a break. This is the message to be struck home.

It is even more baffling to see the proposal for using MPF benefits to make the down payment of home purchase. Many Members have pointed out that the more people buy properties, the greater the demand, and the higher the property prices will be. Prices will not only rise to the peak, but to a ridiculous level (The buzzer sounded) …

DEPUTY PRESIDENT (in Cantonese): Ms Claudia MO, your speaking time is up.

DEPUTY PRESIDENT (in Cantonese): Does any other Member wish to speak?

(No Member indicated a wish to speak)

LEGISLATIVE COUNCIL ― 21 February 2019 7021

DEPUTY PRESIDENT (in Cantonese): If no other Members wish to speak, Dr Junius HO, you may now speak on the amendments. The time limit is five minutes.

DR JUNIUS HO (in Cantonese): Deputy President, I thank the 20 Members who spoke on the motion on "Revitalizing the Mandatory Provident Fund" today. As the motion title suggests, the motion seeks to make it more flexible and improve the present rigid situation, so that people can have more options. However, some Members are so pedantic about the words, and thus consider the motion ridiculous. Do they have any constructive views?

Most Members hold that the Mandatory Provident Fund ("MPF") scheme has many shortcomings. I think we have no objection to that. These shortcomings are inextricably linked to the expensive management fees, fund retrieval only at age 65, etc. As to whether the returns are high or low, so far people's views differ. Some people may think that a 40% return is low, but some may consider that a 4% return is high. Given that the money is already in the MPF accounts, the time of money retrieval and the amount of returns have thus become the issues that views are most divided. But a common ground is that they all find the present MPF System very rigid. If so, is there any ways to improve it?

Today, I am not asking for a comprehensive review, or an abolition of the MPF System because such a drastic change will trigger much controversy. However, before a major change to the present system is introduced, what minor remedies we can take to improve the situation? We should not hesitate to make minor changes because of their small benefits. As the saying goes, "Do good deeds, minor as they may seem". If we have any means to improve the present system a little more, or remove some more obstacles, we should fight for every opportunity for discussion.

I raise a point in the motion. I wish to let Members have one more option, but it is not the only option. I am not asking for mandatorily adding a medical option into the system. Mr LEUNG Che-cheung's speech just now shows that he clearly understands the stance of my motion. I am only trying to give people an additional option. Apart from investing in stocks, can we invest in our health, or a future health protection? This does not contradict with the original purpose and the goal of retirement protection that I said in my opening remarks just now.

7022 LEGISLATIVE COUNCIL ― 21 February 2019

(THE PRESIDENT resumed the Chair)

So, despite the rigidity of the MPF System, the Government is gradually improving it. I know that the Government is not totally deaf to public views. If I ask the Government to scrap the MPF System right away, it will definitely be catastrophic. And the Government will not accept my proposal anyway. However, if we can widen the road ahead a little on top of the existing foundation and give people an additional option, I believe this can be acceptable to the Government and it is likely that the Government will prudently consider my proposal further. So, the purpose of my motion is to revitalize MPF, so that we can invest in our own health.

The Jewish Israelis believe that three things cannot be taken away. First, it is the food you have eaten; second, the knowledge you have learnt from school; and third, the dream in your heart. As for money, it can certainly be taken away. I will not describe the MPF System as the spilt water that cannot be retrieved. If we can retrieve a small part of the returns and invest them in our own health, we should strive to fight for it.

I so submit. Thank you, President.

UNDER SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, first of all, I would like to once again thank Dr Junius HO for his motion, a number of Members for their proposed amendments, and other Members for their valuable comments. When speaking at the beginning of the motion debate, I explained to Members the purpose of the Mandatory Provident Fund ("MPF") System, and touched on the performance of MPF and some enhancement measures. Now, I will respond to several aspects of Members' views expressed in the earlier discussion, taking each in turn as follows:

(a) Withdrawal of accrued benefits for non-retirement purposes

Dr Junius HO, Mr CHAN Kin-por, Mr WONG Ting-kwong, Dr KWOK Ka-ki, Mr Paul TSE, Mr Holden CHOW, Mr LEUNG Che-cheung and so on have mentioned their wish to add other reasons for early withdrawal of accrued benefits, such as the purchase of medical insurance and first-time home ownership.

LEGISLATIVE COUNCIL ― 21 February 2019 7023

I would like to explain once again here the original policy intent and some basic concepts. First of all, the ultimate goal of MPF is to require the employed population to save for retirement over a long period of time. In addition, there are preservation requirements to prevent savings from being drained before retirement. Secondly, given that the current employee contribution rate is only 5%, putting the MPF accrued benefits to other uses will only undermine its function as the second pillar, unless we significantly raise the contribution rate or set up a dedicated account other than that for retirement.

At present, legislation already allows scheme members to withdraw accrued benefits before the age of 65 under certain special circumstances, including early retirement at the age of 60, permanent departure from Hong Kong, total incapacity, terminal illness (i.e. with medical proof that the life expectancy has been reduced to 12 months or less), and small balance, underpinned by a declaration showing no intention of becoming employed or self-employed in future, as well as withdrawal by the personal representatives of any deceased scheme member.

In fact, similar preservation requirements are also prevalent in the retirement schemes of other regions. In some countries, for example the United States, the early withdrawal of retirement savings for medical or other purposes is even subject to payment of punitive taxes.

(b) Cost-effectiveness of the MPF System

The Government agrees with Mr CHAN Kin-por's suggestions such as streamlining administrative procedures, going paperless and launching the centralized electronic platform eMPF. As I mentioned in my opening speech, the preparatory and development work for eMPF is in full swing with a view to standardizing, streamlining and automating the administration of MPF schemes, so as to enhance operational efficiency and thus create room for fee reduction.

We hope to complete construction of the platform in 2022, and then, depending on the circumstances, introduce a variety of features in phases to ensure seamless transition. We should not underestimate the complexity and risk of this project, because the centralized platform is not just an information technology project, but it involves a renewed and comprehensive review of the administrative operations and processes of the MPF System, as well as the need to amend legislation, in order to reduce compliance cost and allow more room for 7024 LEGISLATIVE COUNCIL ― 21 February 2019 fee reduction. Moreover, we are not going to build a new system from scratch. Instead, we need to manage the data transfer process for the existing more than 4 million scheme members and more than 9 million accounts to ensure that the existing administrative systems of the 14 trustees are compatible with the centralized platform.

This platform will make it easier for MPF scheme members to switch between schemes, help promote market competition and facilitate the introduction of full portability, as mentioned by Mr LUK Chung-hung.

(c) MPF fee levels

Like Honourable Members, the Government is gravely concerned about the situation of MPF fees. Some Members hold the view that the fees of all MPF constituent funds should be capped. I hope Members understand that it is difficult to align the fees for all funds because different types of funds have different structures. We consider it more desirable to make use of the benchmarking effect of the fee caps under the Default Investment Strategy ("DIS") to put downward pressure on the fees of other funds. Since the implementation of DIS, we have seen a further reduction in MPF fees, and although DIS has been implemented for only over a year, $30.3 billion of accrued benefits has been accumulated.

At present, DIS has a total fee cap of 0.95%, namely the sum of the 0.75% cap on management fees and the 0.2% cap on recurrent out-of-pocket expenses. The Government undertook earlier to review and further lower the fee caps within three years of the implementation of DIS. Therefore, we expect to start discussion about new fee caps next year.

On the other hand, we will strive to enhance the transparency of the fees and costs of the MPF System, so as to increase competition in the market. Since as early as 2007, the Mandatory Provident Fund Schemes Authority ("MPFA") has set up the Fees Comparative Platform to provide major fees information of all MPF funds for the reference of scheme members. Through the platform, scheme members can have access to information on the fees charged by the funds they have chosen and compare their performance and fees with those of other funds, which will assist them in the making of choices that suit their needs.

LEGISLATIVE COUNCIL ― 21 February 2019 7025

MPFA will further compile the breakdowns of fees charged by MPF trustees in order to drive the fees down through open and transparent information channels. Upon implementation of the centralized platform eMPF in future, MPF fees will be more transparent and open.

(d) Fund options

Members also mentioned earlier some investment options at lower fees, such as the "low fee funds" mentioned by Mr LUK Chung-hung, which include index funds and guarantee funds. Besides, Mr WONG Ting-kwong mentioned bank deposit products that charge no management fees, as well as funds linked to inflation or the Exchange Fund ("EF"), etc.

First, I would like to explain that MPF fees are not purely investment management fees at the fund level. MPF trustees are required to perform a number of statutory administrative duties, such as handling contributions on behalf of scheme members, switching between funds, etc. They will also follow up on contributions or surcharges defaulted by employers, report arrears to MPFA for consideration of enforcement action, etc. The costs of these duties are included in the fees. Therefore, it is not advisable to make a direct comparison between MPF fees and the management fees of retail funds.

We agree with continuing to encourage the industry to introduce "low fee funds", namely funds with a management fee of no more than 1% or a fund expense ratio of no more than 1.3%. Since MPFA urged the trustees to introduce "low fee funds", the number of such funds has reached 234, representing about 54% of the total number of MPF funds available in the current MPF market, including 25 passive index-tracking funds and a guarantee fund. Therefore, there are in fact quite a large number of "low fee funds" for MPF schemes. However, data show that currently more scheme members prefer equity funds, so the overall return of MPF is more susceptible to stock market fluctuations. Under the Governance Principles for MPF Trustees issued by MPFA in November 2018, trustees should deliver value-for-money MPF schemes and services to their scheme members. MPFA will continue to take appropriate measures to enhance market competition and increase the room for fee reduction.

Some Members mentioned investing the contributions in EF. EF has the specific investment objectives of, among others, safeguarding the exchange value of Hong Kong dollar and the currency market, while MPF provides fund options 7026 LEGISLATIVE COUNCIL ― 21 February 2019 with different risks and investment periods for scheme members with different investment needs. Therefore, we should not make a direct comparison of performance between the two. In addition, EF mainly invests in foreign and local bonds, while MPF funds also have bond funds for scheme members to choose from.

Mr Paul TSE suggested that scheme members be allowed to buy general passive index funds, such as the Tracker Fund of Hong Kong, directly on their own without going through MPF trustees. With regard to this proposal, I hope Members understand the following facts:

First, if scheme members invest in funds through banks or securities firms, they still need to pay various service fees. It is not costless;

Secondly, MPF is a monthly savings scheme which pools small monthly contributions from individual members to amass a larger sum of money for investment. Therefore, compared with small personal monthly investment, the pooled investment model of MPF is more cost-effective;

Thirdly, as I mentioned earlier, MPF trustees are not fund managers. They are tasked with the administration of MPF schemes, such as collecting mandatory contributions from employers and employees, recovering outstanding contributions, reporting regularly to MPFA and scheme members, appointing investment managers to manage fund investments in the schemes, managing accrued benefits and assisting scheme members in the withdrawal of accrued benefits. If scheme members make direct investments, they also need to undertake the administrative work just mentioned and bear the relevant costs;

Fourth, if scheme members consider investment index funds to be a suitable long-term retirement investment strategy, there are now, as I mentioned earlier, 18 schemes that offer passive index-tracking funds, including 12 schemes that offer the Tracker Fund of Hong Kong as an investment option.

In addition, I have heard some other suggestions earlier on. For instance, Mr CHAN Kin-por proposed to increase the amount of tax deduction for voluntary MPF contributions. Depending on the public response, we will timely examine whether there is any room for further upward adjustment to the maximum annual tax deduction of $60,000. We also hope that the relevant Bill LEGISLATIVE COUNCIL ― 21 February 2019 7027 will be supported by Members when it is tabled before the Legislative Council for resumption of the Second Reading debate at the end of next month, so that members of the public will enjoy the relevant tax deduction.

I also acknowledge the importance of promoting financial management education and knowledge of MPF management among the general public. MPFA has been organizing public education and publicity activities to promote among scheme members the importance of retirement savings, as well as the basic characteristics of the MPF System and investment. Adopting a multi-pronged approach, MPFA not just conveys simple and direct information through mass media and online platforms, such as mobile phone applications and online social media, but also deepen the public's understanding of this topic through face-to-face activities, such as talks and workshops. In 2018-2019 alone, MPFA has organized 25 retirement planning workshops for different companies, more than 100 talks and briefing sessions for other organizations, and a public seminar. These publicity activities have effectively raised the awareness of the public and the wage earners on MPF and retirement financial planning.

Next, in light of the forthcoming tax deduction for the MPF Tax Deductible Voluntary Contributions and qualifying deferred annuity premiums, the Financial Services and the Treasury Bureau, together with the Investor and Financial Education Council, the Insurance Authority and MPFA, is preparing for publicity and public education activities to enable the public to understand these two tax deductible tools for retirement financial planning, as well as how to assess whether various retirement financial planning tools meet individual needs.

President, looking around the world, I believe it is very difficult to have a perfect retirement protection system. Each system will evolve in response to the unique circumstances and historical factors of the region, but what matters most is to ensure sustainability and, as I mentioned in my opening speech, value for money of the system, so that the scheme members can benefit from it. The Government and MPFA will continue to review the implementation of the MPF System in due course to ensure that it can keep up with the times, thereby bringing maximum protection to scheme members and giving full play to the functions of retirement savings.

Thank you, President.

7028 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): I now call upon Mr CHAN Kin-por to move an amendment.

MR CHAN KIN-POR (in Cantonese): President, I move that Dr Junius HO's motion be amended.

The amendment moved by Mr CHAN Kin-por (See the marked-up version at Annex 1)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr CHAN Kin-por's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Dr KWOK Ka-ki rose to claim a division.

PRESIDENT (in Cantonese): Dr KWOK Ka-ki has claimed a division. The division bell will ring for five minutes.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Mr Paul TSE, are you going to cast a vote?

(Mr Paul TSE cast his vote)

LEGISLATIVE COUNCIL ― 21 February 2019 7029

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr CHAN Kin-por, Mr YIU Si-wing, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr CHAN Chun-ying and Mr Tony TSE voted for the amendment.

Mr LEUNG Yiu-chung, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr HO Kai-ming, Mr SHIU Ka-chun, Mr LUK Chung-hung and Mr KWONG Chun-yu voted against the amendment.

Mr Tommy CHEUNG, Mr WONG Ting-kwong, Ms Starry LEE, Mr Steven HO, Mr Frankie YICK, Mr POON Siu-ping, Mr Holden CHOW and Mr SHIU Ka-fai abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr Paul TSE and Dr Junius HO voted for the amendment.

Mr WONG Kwok-kin, Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted against the amendment.

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mrs Regina IP, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Mr Wilson OR, Mr Vincent CHENG and Ms CHAN Hoi-yan abstained.

7030 LEGISLATIVE COUNCIL ― 21 February 2019

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 6 were in favour of the amendment, 8 against it and 8 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 2 were in favour of the amendment, 18 against it and 10 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

MS STARRY LEE (in Cantonese): President, I move that in the event of further divisions being claimed in respect of the motion on "Revitalizing the Mandatory Provident Fund" or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Ms Starry LEE be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

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.

I order that in the event of further divisions being claimed in respect of the motion concerned or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

LEGISLATIVE COUNCIL ― 21 February 2019 7031

PRESIDENT (in Cantonese): Mr LUK Chung-hung, you may move your amendment.

MR LUK CHUNG-HUNG (in Cantonese): President, I move that Dr Junius HO's motion be amended.

The amendment moved by Mr LUK Chung-hung (See the marked-up version at Annex 2)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr LUK Chung-hung's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr CHAN Hak-kan rose to claim a division.

PRESIDENT (in Cantonese): Mr CHAN Hak-kan has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

7032 LEGISLATIVE COUNCIL ― 21 February 2019

Functional Constituencies:

Mr LEUNG Yiu-chung, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr POON Siu-ping, Mr HO Kai-ming, Mr SHIU Ka-chun and Mr LUK Chung-hung voted for the amendment.

Mr Tommy CHEUNG, Mr CHAN Kin-por, Mr Frankie YICK, Mr YIU Si-wing, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr SHIU Ka-fai, Mr CHAN Chun-ying, Mr KWONG Chun-yu and Mr Tony TSE voted against the amendment.

Mr WONG Ting-kwong, Ms Starry LEE, Mr Steven HO and Mr Holden CHOW abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr WONG Kwok-kin, Ms Claudia MO, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Mr Alvin YEUNG, Ms Tanya CHAN, Mr Jeremy TAM and Ms CHAN Hoi-yan voted for the amendment.

Dr Priscilla LEUNG, Mr WU Chi-wai, Dr Helena WONG, Mr Andrew WAN, Dr Junius HO, Mr LAM Cheuk-ting and Dr CHENG Chung-tai voted against the amendment.

Mr CHAN Hak-kan, Mrs Regina IP, Mr Paul TSE, Mr CHAN Chi-chuen, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Mr CHU Hoi-dick, Mr Wilson OR, Mr Gary FAN, Mr AU Nok-hin and Mr Vincent CHENG abstained.

LEGISLATIVE COUNCIL ― 21 February 2019 7033

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 8 were in favour of the amendment, 10 against it and 4 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 10 were in favour of the amendment, 7 against it and 13 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Mr WONG Ting-kwong, you may move your amendment.

MR WONG TING-KWONG (in Cantonese): President, I move that Dr Junius HO's motion be amended.

The amendment moved by Mr WONG Ting-kwong (See the marked-up version at Annex 3)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr WONG Ting-kwong's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Dr KWOK Ka-ki rose to claim a division.

7034 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): Dr KWOK Ka-ki has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr WONG Ting-kwong, Ms Starry LEE, Mr Steven HO, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok and Mr Holden CHOW voted for the amendment.

Mr LEUNG Yiu-chung, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr HO Kai-ming, Mr SHIU Ka-chun, Mr LUK Chung-hung and Mr KWONG Chun-yu voted against the amendment.

Mr Tommy CHEUNG, Mr CHAN Kin-por, Mr Frankie YICK, Mr YIU Si-wing, Mr POON Siu-ping, Mr SHIU Ka-fai, Mr CHAN Chun-ying and Mr Tony TSE abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr Paul TSE, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Dr Junius HO, Mr Wilson OR and Mr Vincent CHENG voted for the amendment.

LEGISLATIVE COUNCIL ― 21 February 2019 7035

Mr WONG Kwok-kin, Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted against the amendment.

Mrs Regina IP and Ms CHAN Hoi-yan abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 6 were in favour of the amendment, 8 against it and 8 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 10 were in favour of the amendment, 18 against it and 2 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Dr KWOK Ka-ki, you may move your amendment.

DR KWOK KA-KI (in Cantonese): President, I move that Dr Junius HO's motion be amended.

The amendment moved by Dr KWOK Ka-ki (See the marked-up version at Annex 4)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Dr KWOK Ka-ki's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

7036 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Dr KWOK Ka-ki rose to claim a division.

PRESIDENT (in Cantonese): Dr KWOK Ka-ki has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr HO Kai-ming, Mr SHIU Ka-chun, Mr LUK Chung-hung and Mr KWONG Chun-yu voted for the amendment.

Mr Tommy CHEUNG, Mr WONG Ting-kwong, Mr CHAN Kin-por, Mr Frankie YICK, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok and Mr SHIU Ka-fai voted against the amendment.

Ms Starry LEE, Mr Steven HO, Mr YIU Si-wing, Mr POON Siu-ping, Mr Holden CHOW, Mr CHAN Chun-ying, Mr LAU Kwok-fan and Mr Tony TSE abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

LEGISLATIVE COUNCIL ― 21 February 2019 7037

Geographical Constituencies:

Mr WONG Kwok-kin, Mr Paul TSE, Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted for the amendment.

Dr Priscilla LEUNG and Dr Junius HO voted against the amendment.

Mr CHAN Hak-kan, Mrs Regina IP, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Mr Wilson OR, Mr Vincent CHENG and Ms CHAN Hoi-yan abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 9 were in favour of the amendment, 7 against it and 8 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 19 were in favour of the amendment, 2 against it and 9 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Dr Fernando CHEUNG, you may move your amendment.

DR FERNANDO CHEUNG (in Cantonese): President, I move that Dr Junius HO's motion be amended.

The amendment moved by Dr Fernando CHEUNG (See the marked-up version at Annex 5)

7038 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Dr Fernando CHEUNG's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr CHAN Hak-kan rose to claim a division.

PRESIDENT (in Cantonese): Mr CHAN Hak-kan has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr POON Siu-ping, Mr HO Kai-ming, Mr SHIU Ka-chun, Mr LUK Chung-hung and Mr KWONG Chun-yu voted for the amendment.

Mr CHAN Kin-por voted against the amendment.

LEGISLATIVE COUNCIL ― 21 February 2019 7039

Mr Tommy CHEUNG, Mr WONG Ting-kwong, Ms Starry LEE, Mr Steven HO, Mr Frankie YICK, Mr YIU Si-wing, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr Holden CHOW, Mr SHIU Ka-fai, Mr CHAN Chun-ying, Mr LAU Kwok-fan and Mr Tony TSE abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Dr Priscilla LEUNG, Mr WONG Kwok-kin, Mr Paul TSE, Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN, Mr AU Nok-hin and Ms CHAN Hoi-yan voted for the amendment.

Dr Junius HO voted against the amendment.

Mr CHAN Hak-kan, Mrs Regina IP, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Mr Wilson OR and Mr Vincent CHENG abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 10 were in favour of the amendment, 1 against it and 13 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 21 were in favour of the amendment, 1 against it and 8 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Mr Paul TSE, you may move your amendment.

7040 LEGISLATIVE COUNCIL ― 21 February 2019

MR PAUL TSE (in Cantonese): President, I move that Dr Junius HO's motion be amended.

The amendment moved by Mr Paul TSE (See the marked-up version at Annex 6)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr Paul TSE's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Dr KWOK Ka-ki rose to claim a division.

PRESIDENT (in Cantonese): Dr KWOK Ka-ki has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

LEGISLATIVE COUNCIL ― 21 February 2019 7041

Functional Constituencies:

Mr WONG Ting-kwong, Ms Starry LEE, Mr Steven HO, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr Holden CHOW and Mr LAU Kwok-fan voted for the amendment.

Mr James TO, Mr LEUNG Yiu-chung, Mr CHAN Kin-por, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr HO Kai-ming, Mr SHIU Ka-chun, Mr LUK Chung-hung and Mr KWONG Chun-yu voted against the amendment.

Mr Tommy CHEUNG, Mr Frankie YICK, Mr YIU Si-wing, Mr POON Siu-ping, Mr SHIU Ka-fai, Mr CHAN Chun-ying and Mr Tony TSE abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr Paul TSE, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Dr Junius HO, Mr Wilson OR and Mr Vincent CHENG voted for the amendment.

Mr WONG Kwok-kin, Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted against the amendment.

Mrs Regina IP and Ms CHAN Hoi-yan abstained.

7042 LEGISLATIVE COUNCIL ― 21 February 2019

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 7 were in favour of the amendment, 10 against it and 7 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 10 were in favour of the amendment, 18 against it and 2 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Dr Junius HO, you still have two minutes three seconds to reply. Then, the debate will come to a close.

DR JUNIUS HO (in Cantonese): President, I can tell from the present state of affairs that the motion is more likely to be voted down than otherwise. I hereby make an appeal to Members. While Members have remained critical of the Mandatory Provident Fund ("MPF")―well, this is also a fact―we must still move forward step by step before a comprehensive review is conducted because a journey of a thousand miles begins with a single step. If Members do not want to take even just this small step, the voting result today will only serve as our way forward regardless of how eloquent they sound in demanding the abolition of this or that.

Therefore, I wish to tell Members that I am merely striving for one more option. I will not make any other criticisms. My stance on Members' views is neutral, and they basically command my approval. This very step I have tried to take forward today is aimed to provide one more option. I think it will be regrettable if Members should think that the option I offer is a kind of alms to people. My proposal is not pointless, only that as a person with innovative thinking, I am willing to innovate and take a step forward instead of rejecting new ideas. This is also true in our frequent communication with one another. Even though I know very well that I am doing the impossible, I will not give up. I will remain undaunted. You people already give up even before the fight starts and reject communication when it is needed. So, you people are just like "'Mr Cleft' who tells his dog to come back to him but to no avail". Which of the two do Members want to be? This "Mr Cleft"? Or, that dog which goes even farther away from his owner "Mr Cleft" upon hearing his calls?

LEGISLATIVE COUNCIL ― 21 February 2019 7043

I still have 23 seconds left now. I hope Members can understand my intention at the last moment and take the first step because a step forward is better than remaining in the same spot. President, I so submit.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Dr Junius HO be passed. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr WU Chi-wai rose to claim a division.

PRESIDENT (in Cantonese): Mr WU Chi-wai has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr WONG Ting-kwong, Ms Starry LEE, Mr Steven HO, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr Holden CHOW, Mr LAU Kwok-fan and Mr Tony TSE voted for the motion.

7044 LEGISLATIVE COUNCIL ― 21 February 2019

Mr James TO, Mr LEUNG Yiu-chung, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr IP Kin-yuen, Mr HO Kai-ming, Mr SHIU Ka-chun, Mr LUK Chung-hung and Mr KWONG Chun-yu voted against the motion.

Mr Tommy CHEUNG, Mr CHAN Kin-por, Mr Frankie YICK, Mr YIU Si-wing, Mr POON Siu-ping, Mr SHIU Ka-fai and Mr CHAN Chun-ying abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr Paul TSE, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Elizabeth QUAT, Dr CHIANG Lai-wan, Dr Junius HO, Mr Wilson OR and Mr Vincent CHENG voted for the motion.

Mr WONG Kwok-kin, Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Ms Alice MAK, Dr KWOK Ka-ki, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted against the motion.

Mrs Regina IP and Ms CHAN Hoi-yan abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 8 were in favour of the motion, 9 against it and 7 abstained; while among the Members returned by geographical constituencies through direct elections, 30 were present, 10 were in favour of the motion, 18 against it and 2 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the motion was negatived.

LEGISLATIVE COUNCIL ― 21 February 2019 7045

PRESIDENT (in Cantonese): Debate on motion with no legislative effect.

Motion on "Increasing transitional housing supply".

Members who wish to speak please press the "Request to speak" button.

I call upon Mr Vincent CHENG to speak and move the motion.

MOTION ON "INCREASING TRANSITIONAL HOUSING SUPPLY"

MR VINCENT CHENG (in Cantonese): President, it has been only one year since I joined the Legislative Council, and this is already the third Members' motion on housing. The number of times a subject is discussed reflects its complexity, seriousness and urgency. Taking the subject of housing as an example, I am most aware of the needs of the grass-roots households. Kowloon West, the community I serve, is the region with the largest number of subdivided units. According to data provided by the Census and Statistics Department on the three districts in Kowloon West, there are 21 500 subdivided units in Yau Tsim Mong District, 15 400 in Sham Shui Po District and 9 000 in Kowloon City District. These 45 900 subdivided units are nearly half of the total number of subdivided units throughout Hong Kong.

However, if we read the reports of the Long Term Housing Strategy Steering Committee ("the Steering Committee"), we will find that there are more households living in inadequate housing conditions like subdivided units, numbering close to 116 600. My estimate of the actual number of such households is even greater than this, and the Secretary for Transport and Housing should probably know more about the official figures than me. I am not only concerned about numbers. I am more concerned about the trend of change. The Government announced its Long Term Housing Strategy ("LTHS") in 2014. There were then 105 600 households living in inadequate housing conditions in the whole of Hong Kong. These were mostly subdivided units.

After LTHS had been implemented for four years, what was the situation in 2018 like? In these four years, 100 000 households were allocated public rental housing. In theory, a substantial proportion of these households should have been those who used to live in subdivided units. However, the official figures also showed that the number of households living in inadequate housing conditions had not been reduced in these four years. On the contrary, it had 7046 LEGISLATIVE COUNCIL ― 21 February 2019 increased by 11 000. This figure is of course very disappointing. Although I believe that the Transport and Housing Bureau had already been working very hard, we all feel that the Government does not seem to have done anything. So, the Government should think hard to find out why there are more and more people living in subdivided units and why there are more and more people living in poverty.

On the other hand, the figures also indicated that it is not only true that building public rental housing ("PRH") takes time, but, even when PRH units are provided, reducing the number of households living in inadequate housing conditions also takes time. Therefore, the Democratic Alliance for the Betterment and Progress of Hong Kong ("DAB") is of the opinion that, in order to help families get out of their undesirable living condition in subdivided units, the Government must increase the supply of transitional housing. This is a short-term measure. The Government should also implement LTHS on a long-term basis. It must be proactive, as well as active, particularly when the waiting time for PRH is still long.

Of course, speeding up the building of PRH is most important. I am not satisfied with the current situation. The annual supply of PRH is lagging so far behind and failing to meet the target. However, there is a pressing need for PRH to be built and for short-term measures to be taken. President, it is not that the 2014 LTHS has not mentioned transitional housing, but the Government in office then said that all efforts should be focused on building permanent housing. According to the LTHS then, transitional housing was not feasible. As reflected by the figures cited by me, we may continue to build more PRH, but if the number of PRH units continues to fail to meet the target, the waiting time for PRH will continue to become longer and longer. The number of households forced to live in inadequate housing conditions in subdivided units will not decrease, but will continue to increase.

The current-term Government is aware of the problem mentioned above. In its Policy Address, it suggests that, thinking out of the box, transitional housing supply be increased by assisting and facilitating various short-term measures initiated and implemented by the community. However, transitional housing is still not considered a rung on the housing ladder in LTHS. Transitional housing is not supported by any long-term policy or any financial resources. There are no supply target and timetable.

LEGISLATIVE COUNCIL ― 21 February 2019 7047

Therefore, based on these considerations, part (1) of my motion proposes to include transitional housing in LTHS as the first rung on the housing ladder. I also propose that a target be set for the total supply of various kinds of housing in the next three years, which should not be less than 10 000 units. Secretary for Transport and Housing, why should our starting point be 10 000 units? We have considered this carefully. There are now about 110 000 households living in inadequate housing conditions like subdivided units. The average number of such households in the previous several years was about 100 000. If the community can provide within a short time (for example three years) 10 000 transitional housing units, households living in inadequate housing conditions will be able to move into them. As some of these units can be shared by two households under the Community Housing Movement, at least 1 out of 10 households will then have a chance to improve its living condition within a short time.

President, my motion proposes that transitional housing be included in LTHS. I mean not just nominal recognition, but real policy and financial support. The Government is always saying that it will work on the provision of transitional housing. However, besides a task force under the Transport and Housing Bureau to facilitate this, no executive bodies of the Government, are responsible for follow-up efforts. All efforts have been initiated by community organizations.

President, to start a new project, community organizations are indeed more flexible and it will be easier for them to introduce innovations. They have an advantage as executors of pilot schemes. DAB is also happy to see this and support community organizations in their efforts on transitional housing. However, community organizations do not have the human and material resources to take up the heavy burden of developing transitional housing on such a large scale, especially big projects like building transitional housing and converting whole industrial buildings. For example, the Hong Kong Council of Social Service ("HKCSS") is now undertaking the Modular Social Housing Scheme. For the construction projects, HKCSS is now relying on the assistance of some professional organizations and academic associations. For the capital investment, we all know that they rely on money raised by various fund organizations. The coordinated efforts of various parties are essential for them to successfully provide transitional housing.

7048 LEGISLATIVE COUNCIL ― 21 February 2019

President, a community organization may be able to develop two or three buildings for transitional housing, but it will not be able to develop several more. On the contrary, the Hong Kong Housing Authority ("HA") under the Transport and Housing Bureau, the Hong Kong Housing Society ("HKHS") and the Urban Renewal Authority ("URA") have abundant experience in the provision of housing. The Government implements its housing policy mainly through HA. HA has a large professional team. It is capable of dealing with everything concerning various types of housing projects, including planning, building and maintenance. If all of these three organizations are willing to participate in the provision of transitional housing, we will be able to do more with less effort. This will also show that the Government is committed to participating in the provision of transitional housing. Therefore, part (2) of my motion urges the Government to invite the above mentioned organizations to actively provide transitional housing.

Of course, besides manpower and executive organizations, funding support is even more important. The Financial Secretary earmarked $1 billion for organizations to make good use of idle government sites or vacant school premises, including, inter alia, organizations that plan to provide transitional housing. This subsidy will help organizations to pay basic project costs. However, nothing has come out of this so far. This fund is not solely for subsidizing the building of transitional housing. Project proposers have to compete with other organizations for this financial resource. In the worst circumstance, they may not be given any subsidy.

Therefore, DAB has always been urging the Government to set up, as a first step, a dedicated "Transitional Housing Fund". We suggest that this fund should be no less than $2 billion. I notice that other colleagues have different views on this. Their suggestions are, for example, $3 billion or $4 billion. Therefore, I would like to explain why we think that $2 billion is a suitable amount. As I say in part (1) of my motion, as a short-term target, we hope that 10 000 units will be provided within three years.

To provide transitional housing, besides building new modular social housing units, we may also renovate existing units or existing facilities, like the transitional housing units provided by HKHS at Yue Kwong Chuen or the units of the Community Housing Movement. In general, renovation costs are lower. At about $50,000 to $80,000 per unit, they can be borne by the proposing organization more easily. Higher-cost alternatives are mainly building modular social housing (using MIC) and converting industrial buildings. The modular LEGISLATIVE COUNCIL ― 21 February 2019 7049 social housing built by HKCSS on Nam Cheong Street, Sham Shui Po, costs about $400,000 per unit. Financial support by the Government is indeed necessary.

I assume that this type of modular social housing and converted industrial buildings will provide half of the targeted number of units. This will be 5 000 units. If each of these units requires $400,000, the subsidy will amount to $2 billion. Of course, I think the actual amount can be revised upwards. This is like launching "Operation Building Bright" in the past. When the first round proved to be not enough, we launched a second round. When we saw that the second round was good, we launched "Operation Building Bright 2.0". DAB believes that, as the Chief Executive has said, given its current financial resources, the Government will not lack the money to provide transitional housing. We believe that what we still lack is land and determination. Therefore, we think that the Government should set up a fund. It should be more appropriate that an adequate amount of money be allocated to the fund now and more be allocated in the future.

President, as I have just said, we lack land or housing units for the provision of transitional housing. Now, solely depending on idle lands and vacant facilities of the Government is not enough. I am grateful to the Secretariat of the Legislative Council for compiling a study report earlier. Queensland and Taiwan, for example, will consider renting private properties to provide transitional housing. In Hong Kong, the community organization "Light Be" also relies on renting or borrowing private properties―from individual owners or private enterprises―for its rental units. Therefore, I also hope that the Government will provide financial incentives, including reducing or waiving land premiums, rates and even property taxes, to encourage more private enterprises to rent their properties to government or community organizations for operating transitional housing. This will make more effective use of community resources to relieve the housing problems of the grass-roots population.

President, I want to continue and talk about part (5) of my motion. I urge the Administration to change the way it disseminates information. The Administration has certainly made more information publicly accessible. For example, all idle lands and information are available on the Internet. The problem is that organizations that are interested to know have to browse and assess the information on each piece of land on the official sites―I have done this myself. They will have to spend a lot of effort if they seriously put in the time 7050 LEGISLATIVE COUNCIL ― 21 February 2019 and energy to search. In case, after all of this, the applications they submit to the government departments concerned are not successful, a lot of efforts and time will be wasted.

Therefore, DAB is of the opinion that, as the Government is the owner of the lands and properties concerned, knowledge about uses and limitations of these lands and facilities on them are best to be obtained from within the Government. As the Administration genuinely wants to make these lands available, it should go one step further and provide assistance in their selection and initial assessment by compiling a list of lands and facilities that are really suitable for use as transitional housing. This will save organizations planning to initiate projects a lot of initial preparatory work. The time needed to plan an initiative will also be shortened. Secretary for Transport and Housing, I believe this will be a good thing for all of us. I hope the Secretary will agree with me.

Finally, I want to share several points with colleagues.

First, I believe the task force under the Transport and Housing Bureau―including the Secretary and the Under Secretary―is earnest. In the past, you worked very earnestly on the Yen Chow Street and Nam Cheong Street projects one after another. Everybody was eager to successfully complete these projects. However, in the process, I noticed that it is not possible to rely solely on social welfare organizations to take up the responsibility. Policy and technical support must be provided by the Government. Otherwise, it will be like a fireworks show. Everything will end with the completion of one or two projects. We will not be able to achieve our goal.

Second, this Council also has a subcommittee that has been working on this matter. I believe that we have cross-party consensus on increasing transitional housing. I know that many colleagues have moved amendments to my motion. I will listen carefully to your opinions. I hope we can put our heads together. I also hope that the Government will agree with our suggestions. Together, I hope we will do a good job and accomplish the task.

Third, President, as a frontline worker serving Sham Shui Po for more than 10 years, the general impression of my previous experience assisting families in subdivided units is that they are always paying more and more for homes that are becoming smaller and smaller. The landlords are always asking for more rents. They do not sign rental contracts with the tenants and kick them out after two LEGISLATIVE COUNCIL ― 21 February 2019 7051 months. I know the Secretary has also met these people. I understand that, for the time being, the Secretary is not able to deal with rental subsidy and rental control issues. What can the 4-member families sleeping on double-deck beds in subdivided units do? It is really necessary for us to help them. Therefore, I genuinely hope that resources can be available for this task as soon as possible. With the support of resources and policy, we will be able to work hard together to increase transitional housing supply. We will able to help these people solve their housing problems.

President, I so submit.

PRESIDENT (in Cantonese): Mr Vincent CHENG, you have not moved your motion, you may move it now.

MR VINCENT CHENG (in Cantonese): I move that the motion, "Increasing transitional housing supply", as printed on the Agenda, be passed.

Mr Vincent CHENG moved the following motion: (Translation)

"That, according to the projection in the Long Term Housing Strategy Annual Progress Report 2018, over 110 000 households in Hong Kong live in inadequate housing conditions; prior to the allocation of public housing units for such households, transitional housing is an important housing option for them; yet, the failure to include transitional housing in the Long Term Housing Strategy announced on 16 December 2014 and its subsequent annual reviews has resulted in a lack of policy and financial support for transitional housing and its supply stagnancy; in this connection, this Council urges the Government to adopt the following measures to substantially increase transitional housing supply, in a bid to improve the living environment of families living in inadequate housing conditions:

(1) to include transitional housing in the Long Term Housing Strategy, and formulate a supply target for transitional housing, including setting the target of its total supply within the next three years at no less than 10 000 units;

7052 LEGISLATIVE COUNCIL ― 21 February 2019

(2) to invite the Hong Kong Housing Authority, the Hong Kong Housing Society and the Urban Renewal Authority to actively increase the provision of transitional housing;

(3) to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing;

(4) to establish a transitional housing fund of no less than $2 billion, so as to take forward and support various transitional housing schemes; and

(5) to make public a list of idle government lands or facilities that are suitable for transitional housing purpose, including those lands or facilities with tenure or tenancies due to expire within one year, so as to enable the relevant organizations to study and prepare for any transitional housing programmes as early as possible."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr Vincent CHENG be passed.

PRESIDENT (in Cantonese): Seven Members will move amendments to this motion. This Council will conduct a joint debate on the motion and the amendments.

I will call upon Members who will move the amendments to speak in the following order: Mr Tony TSE, Ms Alice MAK, Mr SHIU Ka-chun, Mr Andrew WAN, Mr CHU Hoi-dick, Mr Jeremy TAM and Mr LEUNG Yiu-chung, but they may not move the amendments at this stage.

MR TONY TSE (in Cantonese): President, on the second day of the Chinese New Year, Mr Kenneth LAU, a Member of this Council and the Chairman of Heung Yee Kuk, went to Che Kung Temple in Sha Tin to draw oracle lot to ask about the fortune of Hong Kong in the year. He drew the stick for oracle text number 86, which, ranked in the middle section of the lots, was not a favourable result, though also not among the most undesirable. The text (in Chinese) was: LEGISLATIVE COUNCIL ― 21 February 2019 7053

"You are happy you have a stony field for inheritance. Cakes drawn on paper for the future give no savoury fragrance. Your field cannot be cultivated by a farmer. Your cakes will not satisfy your hunger." As the representative of my professional constituency, I will of course not encourage people to be superstitious, but the oracle text is indeed a good description of the current land and housing situation in Hong Kong.

The opposition always says that Hong Kong has plenty of land, and that there is no need to create land by reclamation. However, most of the lands that are not yet planned for development, like land used as country parks, and farmland located in far-way locations in the New Territories, and brownfield sites with changed land uses, are just like the uncultivable "stony field" in the oracle text. It is difficult to use these lands for large-scale, high-density housing development.

The Task Force on Land Supply suggests that priority should be given to studying and implementing eight options to increase land supply. Among these options, near-shore reclamation and the East Lantau Metropolis proposal will be able to provide the largest amount of land and the easiest to plan, but it may take more than 10 and up to 20 years for the first batch of residents to move in. Other so-called short- to medium-term supply options will also take 7 or even 10 years to build houses and for residents to move in. To the grass-roots citizens who are living in subdivided units now, these suggestions, to a certain extent, are like "drawing cakes" to satisfy one's hunger. These cakes give no savoury fragrance. They do not satisfy their hunger.

Therefore, I thank Mr Vincent CHENG for moving a motion on "increasing transitional housing supply" today and give the Legislative Council a chance to discuss this subject, which is both important and urgent. In fact, last month, I also moved an amendment to Mr James TO's motion on increasing housing supply in the short to and medium term. I suggested that the Government should make a full-fledged effort to build more transitional housing, so that a substantial quantity of transitional housing will be provided within two to three years.

The original motion made five suggestions to increase transitional housing supply. In principle, I support all of these suggestions. One of these suggestions is that transitional housing be included in LTHS and no less than 10 000 units be provided within three years. Some of us may ask, while 7054 LEGISLATIVE COUNCIL ― 21 February 2019 transitional housing projects that are in preparation for implementation can mostly provide only several hundred, one hundred upwards or even several dozen units, where can we find as many as 10 000 units.

This concern is real. If we rely solely on land donated by private owners and solely on non-governmental organizations to build and operate transitional housing, it would be acceptable for 1 000 to 2 000 units to be provided within three years. To massively increase transitional housing supply, the Government must take up the lead and public organizations like government departments or the Hong Kong Housing Authority must build transitional housing.

Besides suggesting that non-governmental organizations and the Government should be directly involved, the original motion also suggests that the Government should formulate policy to encourage private owners to change residential units or whole industrial buildings into transitional housing. As for the latter, the Government is in fact already working on this. Besides converting suitable private residential units and industrial buildings to transitional housing, I think some private farmland that cannot be used for developing high-density residential buildings in the near future can also be included for consideration. This is the first suggestion in my amendment.

It is estimated that Hong Kong has no less that 2 000 hectares of privately-owned farmlands. These are not, as most people think, all owned by big developers. In some cases, the land owners were originally interested in developing their farmlands into permanent, high-density residential projects. However, due to factors like inadequate existing ancillary transport facilities, complications like modification of lease conditions and premium assessment, long and complicated procedures involved in land use rezoning, difficulty in securing ownerships of lands on all sides of the sites, development will not be possible without a delay of many years. Rather than letting these farmlands continue to lay idle, it would be better to use them to develop transitional housing, make a contribution to society and help families living in subdivided units.

I fact, I have some such cases in my hands. There are owners who are willing to use their farmlands to build transitional housing according to the modular social housing model. If the Government formulates policy to provide assistance, including simplifying the approval procedures and relaxing planning, building and premium assessment requirements, I believe many owners will be LEGISLATIVE COUNCIL ― 21 February 2019 7055 willing to do this and accept the condition that they must rent the units concerned to citizens who need them at rents that are lower than the market levels. If facilitating government policy is lacking, some private farmlands may be converted to other illegal uses to obtain higher rental returns. Then, the Government may need to use a lot of human and material resources to enforce the law and stop such practices.

The second suggestion in my amendment is that the Government should speed up approval procedures for applications for rezoning for transitional housing use and the construction projects concerned. Under the premise of not affecting building and fire service safety, the Government should suitably relax, for transitional housing, the standard requirements for ventilation, natural lighting or kitchen and toilet facilities. The transitional housing project of the Hong Kong Council of Social Service has been in progress for a long time, but nothing concrete has come out of it. I hear that one of the reasons for this is that the Government has many regulations and restrictions. Its strict requirements have caused the production cost of the units to go up all the time. As transitional housing is temporary and transitional in nature, requirements for ventilation and natural lighting should be slightly relaxed and approval procedures should be faster and more flexible.

The Government may be worried that it would probably be criticized if the requirements and standards for transitional housing are relaxed too much, like not even requiring a separate kitchen. However, to residents of subdivided unit in extremely poor conditions, who are living in extremely small units and paying per-square-foot rents and utilities charges at a level even higher than that for luxurious hill-top residences, their general living condition will still be substantially improved even if transitional housing are built for them using lower standards. Most important is that transitional housing will be built quickly to provide more residential units and that rents will be lower.

My last suggestion is that Government lands that have been planned for long-term development be made available for building transitional housing, provided that there will be no grave consequences even if the plans concerned are not implemented for five years. Many people often criticize the Government for letting land resources that can otherwise be used for good purposes lie idle. I have discussed this problem on different occasions. A typical example is vacant school premises.

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As a first step, the Education Bureau will have to decide whether these vacant school premises are to be kept for educational purposes. Only when it has been confirmed that there is no need for this and that nobody needs to use the premises concerned after going through a consultation process, will examination by the Planning Department be started to find out whether there are other development uses for the premises or whether there are other departments applying to use them. After a lengthy selection process, and when it is confirmed that no departments will use the premises, data on the premises will be uploaded to the web page of the Lands Department for community organizations to apply to use them for other purposes. This process often takes three years, five years or even seven years. An extreme case took 15 years.

There are some government departments that say they have long-term development plans for the lands, though we can only see weeds or even tall trees on the sites. We cannot see signs of any works being in process. Therefore, I suggests that a negative approach be adopted and government departments be required to prove that there will be grave consequences if idle lands and premises under their management are not developed within five years. If they cannot prove this, they will have to surrender the lands or premises concerned and study will then be carried out to find out whether the lands or premises can be used for developing transitional housing. If the departments concerned choose to continue to keep these lands and premises, but do not do anything about them in five years, they will have to be accountable to the citizens.

President, I so submit. I urge Members to support my amendment.

MS ALICE MAK (in Cantonese): President, first of all, I wish to thank Mr Vincent CHENG for moving this motion today, so that we can have a discussion on the development of transitional housing. In fact, transitional housing is nothing new. Starting in 1950s, the Government already built resettlement buildings and temporary housing for grass-roots families to ease the overcrowded and poor living conditions at that time. These housing units had gradually developed into today's public housing. In recent years, with soaring property prices and insufficient land supply, the Government once again proposes to develop transitional housing. Frankly speaking, the proposal of transitional housing is not initiated by the current-term Government. We had discussed the proposal many times in the last-term Government. There are also many community groups making the same suggestion of building and developing transitional housing in response to the increasingly acute housing problem. LEGISLATIVE COUNCIL ― 21 February 2019 7057

Certainly the current-term Administration has finally implemented this initiative. We know that some kind of work on transitional housing has been set off by Secretary Frank CHAN and his team.

I believe that all the political parties and groupings and the public agree to use transitional housing to solve the housing difficulties faced by the grass-roots people. However, Secretary, although the current-term Government is willing to take forward transitional housing, the initiative has been proposed for two years and it seems that the Government has not taken any practical move. According to the Government, the community should be mobilized and that the transitional housing schemes should be taken up by NGOs. Nevertheless, no funding will be provided and there will only be assistance for them to apply for funding support. Nevertheless, we all know that money is the most important thing for housing development in Hong Kong. Therefore, after two years of development, only 540 transitional housing units are ready for lease; and by 2020, only 1 240 units even if all the projects can then be really completed, which is only about 1% of the units needed when compared to the 94 000 households living in inadequate housing conditions such as subdivided units.

If we rely solely on the community, we actually cannot do the job, Secretary. We have seen modular housing in some neighbouring places. The design is like building a housing unit using various boxes and is featured by its connection to sewage facilities to handle sewage. In the development of transitional housing on temporary sites in Hong Kong, a major problem we need to tackle is installation of sewage facilities and connecting pipes, etc. Yet, those modular housing units have these facilities and apply sewage technology to disintegrate the sewage and so on. However, if we want to introduce these new techniques into Hong Kong, I do not think that we can just rely on the Hong Kong Council of Social Service ("HKCSS") or other community organizations to get the job done. The Government must take the lead and play a coordinating role. It does not mean that community organizations are not able to introduce the new techniques into Hong Kong. In fact, they can do it if they have enormous financial strength. If we really rely on the private groups to introduce the techniques into Hong Kong, what comes out may be those financially powerful groups introducing the techniques into Hong Kong and making a profit. If we do not want this to happen and want to introduce and use these techniques to develop modular housing or transitional housing, we must rely on the Government in this respect. If we rely on community organizations and NGOs, it is impossible to find many new techniques to help develop more transitional housing units.

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In addition, Mr CHENG also mentioned that the Legislative Council Secretariat has prepared for us a fact sheet of transitional housing in other places. It can be seen that in different places such as Canada, Australia and Taiwan, resources are provided by their Governments to help the development of transitional housing. If there is a need to develop transitional housing on a large scale, the Government needs to do more and input more, that is, as I just mentioned, money, technology, and assistance to these organizations to undertake development of transitional housing. In addition, one of the proposals in my amendment is that we have to increase the size and functions of the Task Force on Transitional Housing under the Transport and Housing Bureau. Secretary, I also know two members of the Task Force on Transitional Housing sitting next to you and I know that they are very capable civil servants. But, imagine with such small Task Force, how much can be done?

Moreover, I am quite perplexed why the Government did not think about building transitional housing on its own when it first considered transitional housing. In fact, back in the 1990s, as I have mentioned, there were a lot of temporary housing at the time. Certainly, we are not suggesting that the transitional housing we develop should be something akin to the temporary housing back then as the conditions and public security in temporary housing estates at that time might be relatively poor. However, at that time, the Government also developed temporary housing in response to housing problems. Why does the current-term Government refuse to build transitional housing on its own? The then Government also built temporary housing on its own. I do not know for what reasons the current-term Government is not developing transitional housing on its own. Is it a matter of face? Is it because Chris PATTEN had said during that time that all the temporary houses would be demolished, now the Government must not construct such kind of housing again? Why can't transitional housing be developed by the Government itself? In fact, it will be the best arrangement for the Government to develop transitional housing. It will be the best arrangement to have a department under the Transport and Housing Bureau to identify the sites, introduce and develop techniques, and to build and manage them with public funds.

Why is management an issue? It is because transitional housing projects are currently undertaken by a multiple of community organizations, and these organizations and groups may also have designed different projects in accordance with their goals and objectives. These projects are all good, but they may have different schemes. For example, the application threshold for the transitional housing of the Hong Kong Housing Society in Yue Kwong Chuen is families LEGISLATIVE COUNCIL ― 21 February 2019 7059 which have awaited public housing for three years or above; for Lok Sin Tong Social Housing Scheme of the Lok Sin Tong Benevolent Society Kowloon, the applicants must be families living in inadequate conditions or in urgent need of support, on top of the requirement of having awaited public housing for three years or above; and for Light Home & Light Housing, the target beneficiaries are low-income single-parent families; and also for some other projects, the target beneficiaries are rehabilitated persons or singletons. In short, different projects target different users. This is a good thing in itself, but there are too many schemes. Even for people like us who study housing policies or care about housing policies, when a member of the public asks me what projects he can apply for, I need to go online to check these projects one by one to see which projects this member of public is eligible for.

Therefore, if this can be centrally processed by the Government, the problems of the public and the needy not knowing which organizations to apply for or whether they should seek referral by social workers will be solved. Hence, this will be more helpful to those in need. We hope that the Government: first, to consider taking up these projects itself which is the best. If the Government does not wish to develop on its own, then at least you should increase the size and functions of the Task Force on Transitional Housing. In addition, there should also be a consolidated platform for various "Light Home" or transitional housing programmes such as Lok Sin Tong Social Housing Scheme currently provided by NGOs. Therefore, I also mentioned in my amendment that a platform should be set up to allow unified receipt of applications in respect of transitional housing programmes under various organizations from the needy, as well as inviting applications from eligible families at regular intervals. As some families or people sometimes do not even know whether they are eligible, it is very important to double our efforts in publicity and dissemination of information.

Moreover, we know that land resource is very important for transitional housing development. We therefore consider that the Government should provide a list of Government lands for the development of transitional housing. I support this suggestion of providing a list of Government lands in the original motion. But we think that it is not enough to use Government land alone, the Government should also consider making use of private wasteland or temporary land. The Task Force on Land Supply has noted that private developers now have nearly 1 000 hectares of private land reserve. If we can provide some incentives to encourage private owners to lend the lands for development of transitional housing, some larger projects and projects with more units could be developed.

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Besides, the acquisition processes of units by developers in urban district are sometimes very lengthy. Then, in the meanwhile, could they lend these units out temporarily for the purpose of transitional housing? We note that the original motion and various amendments have referred to the Urban Renewal Authority ("URA"). I need to declare here that I am a non-executive director of URA. In participating in the work of URA, I know that the entire acquisition process is very long, and some projects took eight to nine years to complete the acquisition process. During the acquisition process, if these units could be lent temporarily as transitional housing, it would be a good thing. Undoubtedly, the Government should also reassure the developers that after lending the units, they can successfully recover them in the future without affecting their development plans. It is also very important.

In general, the Hong Kong Federation of Trade Unions agrees to the original motion and various amendments. However, as the amendments of Mr CHU Hoi-dick and Mr Jeremy TAM have deleted part of the original motion that we agree to, including the formulation of a supply target for transitional housing and the inclusion of transitional housing in the Long Term Housing Strategy, we cannot support the two Members' amendments. However, we will support the original motion and other amendments.

President, I so submit.

MR SHIU KA-CHUN (in Cantonese): President, first of all, I wish to thank Mr Vincent CHENG for moving this Motion on "Increasing transitional housing supply". In principle, I support this motion moved by Mr Vincent CHENG, but still I have to make some amendments hoping to enrich the contents of the motion.

There are mainly four suggestions in my amendment. I will elaborate them in a minute. However, before I do so, I would like to say something about the current Hong Kong housing policy. In brief, there are "three nos" in this transitional housing issue: policy implementation not led by the Government, no policy objectives and planning, and no input of resources to support the issue. Perhaps the Government thinks that when the time comes, there will be a solution to the housing problem.

Numbers do not lie. The housing problem faced by Hong Kong currently is like that: the waiting time for public rental housing maintained at a historical high of 5.5 years, the number of applications is 267 000, more than 210 000 LEGISLATIVE COUNCIL ― 21 February 2019 7061 people living in subdivided units, the median per capita floor area of accommodation is 5.3 sq m. These may be "ice-cold" figures to the Government, but they are actually made up by the grass roots and everyone of them is leading a difficult life. When we look at these numbers seriously, we will be like peeling onion and tears will flow out unconsciously. However, the Government, which has become numb to these statistics, always seems to be satisfied with its "relaxed attitude" in doing jobs. While the community is putting forward transitional housing initiatives, the Government is still taking its "relaxed attitude" in dealing with housing issues. Sometimes we blame some people who "only make a move after being given a kick" for being very passive and showing no zeal at all. However, the Government actually "does not make any move even when being given a kick".

President, the main contents of my amendment are: First, the present transitional housing policy is neither fish nor fowl; nor is it can be regarded as a policy or a measure. So in my suggestion, I ask the Government to formulate a policy for transitional housing as soon as possible, to include it in the Long Term Housing Strategy, and to implement the transitional housing policy under the Government's lead, rather than just be an assistant or facilitator or solely assisting with and facilitating those short-term measures led and implemented by the community. The Government should make reforms and should never again regard transitional housing policy as "doing good things by people with a kind heart". It should come up with policy objectives, directions, indicators, timelines, and construction quantities with regard to the policy and spend public money as soon as possible to take forward the development of transitional housing

Returning to the earlier meeting of the Subcommittee to Follow Up Issues Related to Inadequate Housing and Relevant Housing Policies under the Panel on Housing held the day before yesterday, the Under Secretary for Transport and Housing seemed to have eaten an "honest bean paste bun" and said that the community is the leading party and the Government is only a supporter, a helper, a facilitator. He sounded very sincere, but for me, I feel that the Government really lacks commitment and refuses to take responsibility. It only plans to pass its responsibility to HKCSS and other community organizations. It is really disappointing.

Secondly, I urge the Government to consider HKCSS's proposal of establishing a "transitional housing fund" of no less than $4 billion. The cost of modular housing (in the case of modular housing in Sham Shui Po, the 7062 LEGISLATIVE COUNCIL ― 21 February 2019 construction cost is around $400,000 for one unit) together with the cost for providing supportive social services will account for 90% of the fund, and the balance will be used for refurbishing units in the Community Housing Movement. It is estimated that 10 000 housing units can be provided in the next three years which will benefit 3 000 grass-roots families who can receive relevant community support services as well.

According to government information, presently there are about 540 transitional housing units in Hong Kong, and the number is expected to increase to 1 240 units in the near future. However, the Secretary should know better than me that how can just 540 transitional housing units be sufficient? In the community, a lot of conscientious property owners told us that many old buildings are over 50 years old. It is difficult to carry out even the basic refurbishments with limited refurbishment subsidies. Unless the Government can provide support and tax concessions to the owners as incentives to increase the number of various types of rental units, as well as providing sufficient refurbishment subsidies for renovating the dilapidated units, it would be difficult to significantly increase the number of transitional housing units in a short time.

In addition, some organizations and social enterprises have also relayed to me from time to time that they want to participate in the promotion of social housing. However, they hold back because of the lack of resources. Under the constraints of capital and resources, it is really very difficult for community bodies to take forward such initiatives themselves. Consequently, it is necessary to set up this $4 billion "transitional housing fund".

Thirdly, community bodies often said that it is difficult to identify idle sites. They do not know where to look for them and do not know which department is steering and coordinating the work. Moreover, the departments are passing the buck to each other. As a result, although the community bodies would like to develop transitional housing, they cannot find the way out. The Government should formulate a central coordination mechanism for vacant buildings and lands, make public a list of idle Government lands and buildings (including vacant school premises) that are suitable for transitional housing purpose, including those lands and buildings with tenure or tenancies due to expire within one year.

According to a conservative estimate in the research report "Missing Option: Research on Temporary Use and Vacant Government Land in Hong Kong" prepared by Liber Research Community, there are over 250 hectares of LEGISLATIVE COUNCIL ― 21 February 2019 7063 temporary and vacant land owned by the Government currently in the neighbouring urban areas and extended urban areas, including short-term tenancy sites and temporary Government land allocation, with a total area equivalent to 13 Victoria Parks. In the foreseeable future, if the Government can make available these idle sites for building modular housing by social service organizations or social enterprises, the supply of transitional housing can be increased substantially. Thus, I request the Government to make public the list and the data as soon as possible. At the same time, the Government can also examine the existing idle lands and buildings, entrust the Lands Department with the management of those idle Government lands and buildings which are not expected to be planned for any use within the next two years, or delegate to the Lands Department the power to recover those vacant buildings from departments which are holding the buildings, so as to expeditiously utilize the relevant resources for constructing transitional housing.

Interim housing ("IH") is one form of transitional housing, and it is used to provide accommodation for people affected by natural disasters, emergency situations and other government actions. Now we have only Po Tin IH and Shek Lei IH left. It is regrettable that in recent years the Government has tightened the criteria for moving into the Shek Lei IH to stop people from moving in, making the only IH in urban area disappear. In recent years, the Government has also taken more and more enforcement actions against those residents in inadequate houses. From 2012 to 2017, 137 buildings had been inspected by the Buildings Department and 304 court orders had been issued in five years. On the grounds of fire safety risks, the Government sweeps away subdivided units in industrial buildings, leaving the grass roots having nowhere to go. The evicted people are facing increasing risk of becoming homeless and thus they have an increasing demand for interim housing.

However, as there is no interim housing in urban area, the evicted people can only stay temporarily in Po Tin IH or transit centres which are extremely inconvenient for them. On 18 July 2017 and 11 August 2017, I together with Mr CHU Hoi-dick visited these evicted kaifongs in Po Tin. A kaifong told us that he had to go to work in San Po Kong at 8:00 am and then he had to get up at 5:00 am. It took about four to five hours travelling back and forth plus the time being stuck in traffic jam. May I ask the Secretary that who would like to live in an industrial building, a rooftop house or a squatter shack if one can choose? I suggest the Government to reserve some transitional housing units to 7064 LEGISLATIVE COUNCIL ― 21 February 2019 accommodate residents who are affected by the Government's enforcement actions and to construct IHs in the three districts of New Territories, Kowloon and Hong Kong Island so as to improve the rehousing policy as soon as possible.

President, with respect to policy objectives and planning, the Transport and Housing Bureau has said more than once that it is difficult to formulate a supply target for transitional housing because each separate project comes with many uncertainties and it is difficult to announce the projects at an immature stage. Regarding transitional housing policy, we have no policy objectives, no policy direction, no road map, no timeline, no planning, and even do not know the number of transitional housing units to be built in the next five years. As such, is it a policy? Is it something that the Government muddles through so as to pacify the public?

A person who pretends to fall asleep is the most difficult to be waken up. Whether it is because the Government is too lazy to care much about or we are too anxious about addressing people's pressing needs? There is a saying of LAO Zi meaning that it is good to know about your inadequacies; however it will be dangerous if you do not know about your inadequacies but fake to know about them. Only by facing up to your own inadequacies and improving them that you can avoid the inadequacies. On the housing issue, I urge the Government to reflect on their failings and not to say all the time that "there is not enough land for housing development" or "the most effective solution to housing problem is trying to find lands for public housing development" and use these as reasons or excuses to evade the core of the matter.

In regard to the transitional housing policy, I sincerely hope that Members of the pro-establishment camp and the democratic camp can joint hands regardless of their standpoints and urge the Government to be "involved" in the issue by taking the lead in policy formulation and devoting more resources.

President, I speak in support of Mr Vincent CHENG's original motion and all the amendments.

MR ANDREW WAN (in Cantonese): President, first of all, I am grateful to Mr Vincent CHENG for moving this motion on "Increasing transitional housing supply". As Members have already spoken, housing issue, in particular transitional housing, should be a less controversial issue that a consensus can be LEGISLATIVE COUNCIL ― 21 February 2019 7065 reached across the political spectrum in the Legislative Council. I hope that because we can reach a consensus on the motion, we can force the Government to make greater efforts in this respect.

Why we have consistent positions? It is because that the issue is an objective fact and something not controversial. Let me state briefly some statistics just referred to by Mr SHIU Ka-chun. There are 270 000 households registered on the Waiting List ("WL") for public rental housing ("PRH"), among them, 150 000 households are ordinary families and more than 110 000 applicants are singletons. That means about 600 000 people are waiting for PRH with an average waiting time of 5.5 years. We often hear complaints in the districts. I know that the Secretary has also visited some districts and he should have also heard complaints by subdivided units households or kaifongs who are waiting for PRH always saying that they have been waiting for eight or nine years to get public housing. According to information released by the Government, there are altogether 210 000 people in about 100 000 households living in subdivided units. Based on this government figure alone, there are already 800 000 people. Yet, the hidden numbers of people living in other inadequate conditions such as industrial buildings have not been counted. That means there are at least 800 000 people or even more than 1 million people living in very poor conditions in Hong Kong. The Government is not able to rehouse them in public housing. Then you said that after 2024, there will be a swing down of the supply of public rental housing and home ownership units with the supply of all subsidized housing lagging far behind the demand. Hence, why does the Government not doing some work. Therefore, this is the reason why a consensus can be reached by various parties in the Legislative Council.

Unfortunately, even for transitional housing, if you are not able to tackle the problem at source, at least you should treat the symptoms. Am I right, President? What are the measures for treating the symptoms? These include rent subsidies and rent control proposed by Members from all the political parties and groupings. The majority of Members agree to these proposals. Although some Members from the industrial and commercial sectors do not agree, it seems that the directly-elected Members can understand the voices of people at the district level. However, the Government does not implement rent subsidies and rent control. What can the Government do then? Undoubtedly, we can say that transitional housing maybe something that the current-term Government was willing to do by the end of 2017. Nonetheless, I hope that this something … I know that Secretary Frank CHAN may not want to do it just in the form of window dressing, but he does work in a manner which is similar to a dragonfly 7066 LEGISLATIVE COUNCIL ― 21 February 2019 skimming the water surface. If the discussion continues, it is certain that we all understand that there will be many restrictions. However, are we not able to break through these restrictions? I think that the Government has not been putting in enough efforts to achieve the breakthrough.

A few colleagues like Ms Alice MAK have just mentioned the temporary housing areas ("THAs"). This is correct. Probably the younger generation may not know what it is about. Although Ms MAK is very young, she is aware that THAs did exist. THAs were some less satisfactory accommodations in the past which were built by using materials including galvanized iron and wood. Let me tell you the approximate locations of THAs. For example, MegaBox in Kowloon Bay today used to be a site for Kowloon Bay THA in the old days, and then the Kowloon Bay Park Cycling Ground nowadays is located at the site of Kai Lok THA in the past. Why am I so familiar with these places? It is because I had worked in those areas and those THAs were my working places when I was working as a social worker in those years. At the final stage of demolition and redevelopment of THAs, that is, in 2001 … in 1995, Chris PATTEN visited the area and he was surrounded by a group of kaifongs and social workers. When somebody presented to him a rat, he was so hugely embarrassed that he finally did something. After the reunification, Mr TUNG implemented the decision to remove all THAs in 2001.

For this reason, I have very deep feelings about this issue. I hope that the community will move forward, but I also hope that the Government will cast aside this burden and should not consider building temporary housing or transitional housing again is something like a bad thing, a shame upon us, a big regression. This is not necessarily the case. As I said earlier, if the Government use the same structure of THA or the same materials of galvanized sheet iron and wood to build transitional housing, it is certainly unacceptable. Mr Vincent CHENG and I will certainly not let the Government get away with this. However, at present, we have many options of modern transitional housing and many techniques which facilitate the building of transitional housing. I visited several locations in the United Kingdom and the Netherlands in 2017 and earlier. After returning to Hong Kong, I also joined the Hong Kong Council of Social Service ("HKCSS") and many bodies to put forward initiatives. I am very grateful to the Secretary for listening to these voices and saying that they will introduce transitional housing at the end of the year. However, the Administration has always been working with minimal effort. The transitional houses in the Netherlands are more famous. I had visited one of their places LEGISLATIVE COUNCIL ― 21 February 2019 7067 called Keetwonen: this is actually the name of their transitional housing areas which is shelter in English or means transitional housing. They have been very successful and HKCSS is actually moving in a similar direction too.

Overall speaking, there are five different models for transitional housing development in foreign countries. First, the Government alone takes up the responsibility to find land, construct and manage the units. Second, the Government is responsible for finding the land and also building the transitional housing units while the voluntary agencies will operate for the Government. Third, the Government will get the land and voluntary agencies will undertake building, operation and running of the scheme. Fourth, private developers or property developers will develop transitional housing on their own, and then voluntary agencies will be invited to run and operate them. Finally, developers will cooperate with the non-profit-making organizations or groups and the latter will be managing the schemes eventually and these are leasing projects. Indeed, these are quite similar to the Modular Social Housing Scheme in Sham Shui Po currently operated by HKCSS in cooperation with property developer.

When you hear me reading out these five models in one go, you may think about the differences among them. It is the extent of government involvement. We have the highest degree of government involvement in the first model in which the Government will do all the work on its own including finding land, construction and management. Its input will become less and less until on the other extreme, the Government will not be playing any role. I find it odd that the Hong Kong Government has chosen the minimum level of participation, that is, no role. In fact, the Government should be the best player with the greatest capability, responsibility, financial resources and experiences. Who built and operated THAs in the past? As mentioned just now, it was the Housing Department ("HD") and the Hong Kong Housing Authority ("HA"). They are the most experienced. HA, with the Secretary also serving as its Chairman, and HD, which is under his Bureau, are the most experienced. However, why has the Government always been unwilling to take an active role? In various meetings, it described itself as a proponent, a promoter or a helper again and again. Just now, a colleague also teased the Government, saying that he could hardly hear any governments around the world describe themselves like this. I find it very odd that the Government is acting as a proponent and the private sector has become the government with Mr CHUA Hoi-wai of HKCSS serving as the Chief Executive. Is it like this? I think this is a very odd thing.

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When the Democratic Party met with the Financial Secretary earlier, we had already asked him to set aside $3 billion for setting up a fund for building transitional housing. Regarding this matter, I heard Mr Vincent CHENG mention about the calculation method. I do not object to what Mr CHENG has said, including the suggestion made by Mr SHIU Ka-chun just now. To be frank, if the Government eventually announces to set aside $5 billion, I think Mr CHENG will give it a big hand. We only expect a minimum amount and why we expect this amount? It is because everyone has a very low expectation about the Government and thus dare not ask too much. Nevertheless, we have done some calculations. I calculate in a way similar to that of Mr CHENG, except that the resulting estimated amount is different. The building cost of $400,000 as mentioned by him is correct which is probably the latest price for building a modular housing unit compared to the amount of $300,000 last year. The later it is being built, the more expensive it would be. It will cost $2 billion to build one half of the 10 000 units. The remaining half may comprise all forms of old housing units in the community and industrial buildings needed to be renovated or altered. I estimate that $100,000 to $200,000 will be needed for renovation of each of such units. Then, these remaining 5 000 units will cost about $1 billion. Although these are our estimates, they are underpinned by facts. I hope that my colleagues will not stick to the figures. I also believe that we want to do better and have a better arrangement. If the Government's final proposed amount is greater than what is suggested by Mr SHIU Ka-chun and if it proposes the establishment of a $8 billion fund, I will not object to it.

President, now the Government adopts a "bottom-up" approach and sets up a task force. It says that it is ready to receive ideas about anything from the community in such a bottom-up manner, whereas the Government will help them to remove barriers. However, we notice that the "walls" and the "ropes" used for bundling are still firmly fixed. President, as I mentioned earlier, the Government is best equipped to take forward the work including the use of land. The Democratic Party suggests the Government to consider the site reserved for the second phase development of the Hong Kong Disneyland. This has been discussed for several years, but the Government says no, saying that there are no infrastructures such as water, electricity, pipeline and drainage facilities. However, all of a sudden, we saw that the Government was going to develop a flower-themed garden there last year. That means the problem with the lack of water, electricity, pipeline and drainage facilities has been solved. We are not demanding too much and we just ask the Government to consider the 60 hectares of land there. Can you discuss with the Walt Disney Company?

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With regard to this point, some colleagues told me that I had been moving very fast and had skipped one step. I had not. I know that some colleagues from the industrial and commercial sectors have said that we should respect the spirit of contract, therefore, I also respect the spirit of contract. But can the Government discuss with the Walt Disney Company? It is just to study. Maybe they will care much about their corporate image and is willing to discuss with the Government. In the past, they did make some changes to the terms in respect to the height issue. Can the Government do some work? I hope the Secretary will respond to me later.

In addition, there are other lands including those available in the form of short-term tenancies. The Government has 2 450 hectares of land on 5 300 short-term tenancies. Of course, in reality, the situation that all the lands are not in use will not happen. However, if you squeeze out some water, then just one tenth of the total can provide more than 500 pieces of land. Previously, some local research institutions pointed out that there were about a few hundred pieces of land in Hong Kong which had no clear illustration. Transparency is very low. I wonder whether the Administration can raise the transparency and let us know which lands are available for use.

Besides, vacant school premises and even the temporary lands made available after the completion of large-scale construction projects including the Shatin to Central Link ("SCL") and the Hong Kong Section of Guangzhou-Shenzhen-Hong Kong Express Rail Link ("XRL"), there are a total of 97 such sites. SCL and XRL provide 700 000 sq m and 600 000 sq m of temporary lands, respectively. These former worksites are now made available again. Then, will the Government make full use of them?

Therefore, in this amendment proposed by me, I have amended several parts of Mr Vincent CHENG's motion. I hope that my colleagues will strongly support my amendment and the original motion, so that the people of Hong Kong who are staying in such a poor environment can get adequate housing. Even if we do not have a cure for the core of the problem, we can address the symptoms. Even though we do not have a long-term solution to the housing issue, at least we have got something to tide over the hardship in the interim as the Government fails to fulfil its promise of "allocating a public housing flat within three years", so that the people still waiting for public rental housing can have a little breathing space.

I so submit. Thank you, President.

7070 LEGISLATIVE COUNCIL ― 21 February 2019

MR CHU HOI-DICK (in Cantonese): President, first of all, I want to clarify to Ms Alice MAK that in my amendment, I have not deleted the wording in item (1) of the original motion, that is "to include transitional housing in the Long Term Housing Strategy". In fact, in my amendment, I set an even higher goal, that is, providing sufficient transitional housing for all households living in inadequate housing conditions. In other words, there should be more than 10 000 units. May I ask Ms Alice MAK to reconsider giving her support for my amendment.

As regards the issue of transitional housing, it seems that there is a consensus among Members. But in fact, I notice that we focus on different things and also Members have not set clear priorities on the measures they emphasize so as to let the Government understand the positions of the Council.

First of all, it is a question of who should be held responsible. This is actually related to how serious this problem is. For grass-roots citizens living in subdivided units and those seeking refuge in McDonald's, Internet cafés or the streets, I think the housing problem facing them is catastrophic from a humanitarian point of view. Let us imagine that when a natural disaster occurs in other part of the world, who will be responsible for providing aids? Definitely, the community will not rely solely on the Red Cross or other NGOs to collect materials instantly to provide relief for the victims. This kind of organizations can certainly help with disaster relief, but definitely it is not their basic responsibility. Rather, the government or even the military has a basic responsibility for disaster relief.

Members who have an understanding of the housing problem in Hong Kong will realize that the housing problem facing the 110 000 people living in inadequate units and who are unable to afford the rent of subdivided units is catastrophic. Such being the case, could the Government continue to let the NGOs take up the responsibility? Could the Government continue to act as a supporter? As the Government cannot solve the problem of meeting the target number of public rental housing ("PRH") units to be built, the actual completions for every year are lower than expected. Because this problem of supply shortfall is accumulating, we see many children have their childhood years being ruined as a result.

In this connection, I hope that NGOs that are now working hard on the matter, such as HKCSS mentioned by many Members … sometimes I want to tell them not to do anything more and just go on a strike. At present, there are only LEGISLATIVE COUNCIL ― 21 February 2019 7071

540 transitional housing units and they will only increase to more than 1 000 in the future. However, as long as the organizations are working very hard, this will send a message to the community that somebody is following up on it already. The Government can then dare to say "the Government has allocated $1 billion in support". This gives people the impression that NGOs (such as HKCSS) and the welfare agencies have the heart to do something but lacks the strength. Therefore, I really hope to call upon them to go on a strike. The Council and the welfare agencies should also join hands and ask the Government to find out who should be responsible for the matter. Welfare agencies can participate, but the Government needs to take the lead and is primarily responsible for the matter.

I will not object to the idea of establishing a fund as proposed by Mr Vincent CHENG and other Members. However, when the issue of who should be held responsible is clarified, the Government should delegate the work to the Housing Authority and allocate resources through the annual budgetary process in response to needs for each year. The Government should not simply establish a fund and then outsource the work to private sector or NGOs.

Second, where can we get the land? If Members agree that the problem is catastrophic, then I would like to ask you to support my amendment item (5) in particular, that is, "to request the Beijing Government to release the military sites in Hong Kong for transitional housing purpose". In the event of a disaster, we need to provide relief and which totally depends on the efforts made by the Government and the military troops. The People's Liberation Army ("PLA") garrisoned in Hong Kong can now play a very important role in helping the people of Hong Kong to cope with problems. In the past, when we had the Big Debate on land supply, garrison site was not included as one of the 18 options in the end. The reason is that military land has a defense purpose and cannot be set aside for permanent housing. In view of this, we have no alternative but to settle for the second best by requesting the Government to set aside the sites for transitional housing to relieve disaster rather than permanent housing

In different districts, let me focus on the urban areas, there are always dozens or nearly 100 hectares of military sites available. So how can these nearly 100 hectares of land translate into the number of transitional housing units? Based on the current experience, 1 hectare of land can produce roughly 1 000 units. Therefore, if the Government is bold enough to say that it will look 7072 LEGISLATIVE COUNCIL ― 21 February 2019 after those 110 000 households, some 100 hectares of land is indeed enough. Definitely, it will be more than sufficient if some 100 hectares are being set aside from the military sites not much used by the People's Liberation Army Hong Kong Garrison ("HK Garrison").

Apart from the military sites occupied by HK Garrison, there are idle Government lands and Government lands leased under short-term tenancies as mentioned by a number of Members which is around 300 hectares in area altogether. I cannot imagine any reason for which the Government has refused to use them. Also, I do not understand why all such sites have some other uses and cannot be made available so as to address this serious housing crisis currently. If nothing can be done with the HK Garrison military sites and idle Government lands, then the community should turn to other options such as giving developers "sweeteners" and so on. Therefore, I think basically the matter can be dealt with through the use of HK Garrison military sites and idle Government lands and this is the responsibility of the Government. The question is whether the Government is willing to implement it.

I will support the original motion and most of the amendments, except Mr Tony TSE's amendment because in item (4) of his amendment, he suggests "encouraging private land owners to use their idle agricultural lands … for constructing transitional housing". Perhaps in the eyes of Mr TSE, these idle agricultural lands will only nourish weeds and are of no use. However, he has neglected the ecological diversity of agricultural lands and the surrounding natural environment. If the Government introduces policies casually to allow agricultural land owners to build transitional housing, the first result would be that concrete is being poured on these agricultural sites so that these sites would become barren for building transitional housing later. His idea is actually based on the approach of "to destroy first and build later". Then they would go through the statutory procedures to force the approval for rezonings from the Town Planning Board.

I think that with the options I have just proposed, it should be undoubtedly sufficient to solve the problem. There will be no need to use idle agricultural lands. Therefore, apart from Mr TSE's amendment, I will support all other amendments.

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MR JEREMY TAM (in Cantonese): President, first of all, I am grateful to Mr Vincent CHENG for moving this motion today, so that we can express to the Government our great dissatisfaction about the current shortage of housing supply in Hong Kong.

I support the Government and NGOs to provide more transitional housing. I also understand that Mr CHENG has proposed to include transitional housing in the Long Term Housing Strategy ("LTHS") to increase the supply of transitional housing. But I cannot agree with this approach. I hope my colleagues will think about whether including transitional housing in LTHS to increase supply is an appropriate approach. If this is done, will there be some undesirable consequences created as a result? It is because if it is included in LTHS, it means that we must come up with a supply target and the Government has to meet the target. Then, let us say that a three-year supply target for transitional housing is now set at no less than 10 000 units. Probably because of the need to catch up with this target of building 10 000 transitional housing units, those vacant lands originally assigned for building public rental housing ("PRH") may not be used to build PRH. Does it mean that the housing output for PRH will then be decreased and the waiting time for PRH will be lengthened as a result?

Another question is that I am not clear about how this figure of 10 000 units is arrived. Why is it 10 000 units, but not 5 000, 3 000, 2 000 or 1 000? Is this target of 10 000 units today sufficient to meet the demand? I wonder whether this figure come from these surveys. Yet, there were some surveys mentioned that there were about 11 600 households in Hong Kong currently living in inadequate housing conditions; I do not know whether it is because of … sorry, I am wrong, it should be 116 000 households living in inadequate housing units. Then, if the Government only provides 10 000 units, it will not be enough. At least 110 000 units should be provided. Therefore, I do not understand how can you arrive at this figure of 10 000 units.

As I mentioned earlier, the biggest issue is whether the production of PRH will be delayed in case the Government trying to achieve the target of 10 000 transitional housing units? In fact, we must understand that transitional housing is indeed transitional and should not be there forever. Once a target is set today, it means that the target is here to be met all the time, and that may hinder the normal supply of PRH units.

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Moreover, are people willing to move in these temporary housing units or transitional housing units? They may not be willing to do so. Many tenants staying in subdivided units say that they are living in very cramped conditions together with other residents, and so they do not want to talk to the neighbours at all. Some of them find their living space suffocating and they even worry that the selected sites are located in remote areas, travel expenses are costly, and they do not have a car to drive themselves. Then what should they do? Consequently, the selection of sites is very important. However, if the Government picks a site which is convenient and spacious, then it should have been used to build PRH units. However, if it is in more distant location, are people who need transitional housing really willing to move in?

It is certainly better to have a shelter than nothing, and that is true. However, if we formalizes this matter with the Government introducing transitional housing and even including it in LTHS, then will the Government think that since these people have already been accommodated, it does not have to worry too much about them for they already have a place to live, and thus it will slow down the pace of building PRH as I said earlier? Therefore, I believe that I am the only Member who has deleted item (1) of the original motion. My speech above explains the reason. I believe that transitional housing should not be included in LTHS. It should only be a short-term measure. Hong Kong people deserve better living.

Besides, I would also like to point out that I have also mentioned industrial buildings in my amendment. One of the important things is that we cannot put up with the so-called "dark rooms" which are substandard living spaces without ventilation and without windows even if we do not have any place to live. Do Hong Kong people deserve better living? For that reason, I add a suggestion in my amendment proposing that only on the premise of not compromising the fire safety (it must be the most important), natural lighting and ventilation (that is, we should not allow for "dark rooms" as I said earlier) of transitional housing and also the activity space of existing industrial building users, then the industrial buildings can be converted for residential purposes.

We have also mentioned that we cannot simply let people move into the converted industrial buildings. We need to provide relevant support facilities when converting the whole blocks of industrial buildings into transitional housing. For instance, with more tenants moving in, they need laundry service. It is because the unit size is too small and there may be no tap water supply in the LEGISLATIVE COUNCIL ― 21 February 2019 7075 units but only a common water connection, so the residents cannot place the washing machines in their homes and they can only go to the laundry shop. But will there be a laundry shop in the streets where an industrial building is located? Hence, when we talk about wholesale conversion of industrial buildings for transitional housing purpose, we must reserve such spaces for providing services such as a laundry rooms, catering facilities to those people living in a crowded environment to meet their daily living needs.

In addition, "dark rooms" will come out based on his request. Why will there be "dark rooms"? It is because the footprint of an industrial building is usually large, so it will not be a problem for those units neighbouring the windows, but for those "landlocked" units, it will not be fine unless you allow for "dark rooms". Nonetheless, as I said earlier, I do not want to have "dark rooms". So what can we do? We may consider drilling through the "landlocked" areas as long as the specifications and structure of the building allow doing so. By drilling through some areas in the middle of a floor to allow for ventilation, the floor areas will be reduced as a result. On the other hand, the foundation of some industrial buildings will allow for several floors to be added. Then in this case, you are allowed to have one or two extra storeys to be built on top to compensate for the loss in floor areas in the middle of the floor which is being drilled through. It is not something invented by me nor an idea originated from me. I receive some opinions about this and actually there are some architects flowing out the idea which is feasible and we can try this.

However, we must also face up to the fact that there are already many subdivided units in these industrial buildings. There should not be people living in, but these buildings are already accommodating people. Now, if we allow wholesale conversion of industrial buildings, will many people already living there have to be evicted? Therefore, we have to consider this aspect as well.

In addition, I added to my amendment the wording of "after analysing the land use zonings in all vacant government lands and their actual site conditions including topography, technical constraints or infrastructural facilities required, and consolidating the relevant information", they will be available for application by NGOs. Why do I raise this point?

The GeoInfo Map of the Lands Department provides by district the basic information of a total of 850 vacant government sites. But if you just look at these basic information, you will not know whether the sites are suitable. When 7076 LEGISLATIVE COUNCIL ― 21 February 2019 we look closely at these basic information, we find a big problem that we need to take a lot of effort to find out the location of these vacant sites. The general reply of the Government is that it is not the responsibility of the Government. The organizations should consolidate these information themselves and then make their own decisions. Therefore, in this respect, I feel that the Government is half-hearted in its effort. Since the Government has resources in this area, it is better for the Government to first make an assessment of the sites, select several suitable sites and then ask the NGOs whether they are interested in the sites. It should not be done the other way round by asking the NGOs to select from these 850 vacant sites. They will get confused and do not know which sites are suitable. I think these can be done.

Therefore, I hope that Members who support the original motion, especially item (1), will note that I personally do not accept this item. I so submit.

MR LEUNG YIU-CHUNG (in Cantonese): President, the housing problem in Hong Kong is acute. Although the Government has repeatedly said that it places great importance on the issue, it always gives people the feeling that it is not doing what it preaches. In fact, the Chief Executive Carrie LAM has been in the office for more than two years. To what extent she has resolved the housing problem, I think the outcome is there for everybody to see. The annual housing production in Hong Kong should reach about 28 000 in order to meet the 10-year housing supply target as set out in the Long Term Housing Strategy ("LTHS"). But unfortunately, taking 2022-2023 as an example, we see that the housing production is only 14 400 units, which is less than half of the amount stated in the LTHS. This shows that the housing production level is very unsatisfactory. Many colleagues have also mentioned that we see that currently there are some 270 000 applicants on the PRH Waiting List. The waiting time is nearly six years and currently it is more than five years. This really give us the impression that after the new Government has come into operation, these figures continue to set record highs.

President, the most difficult thing facing those grass-roots people who are still waiting for housing is that rentals are expensive and living conditions are poor. The Chief Executive has always said that she is very concerned about the lives of grass-roots people. But unfortunately, her Policy Address is disappointing. The policies such as providing modular housing and revitalizing LEGISLATIVE COUNCIL ― 21 February 2019 7077 industrial buildings proposed by her have made very slow progress and no results can be seen so far. Meanwhile, returning to the issue of transitional housing, even though the Government says that it is working on it, it just works in a manner which is similar to a dragonfly skimming the water surface, or just like using a cup of water to put out the fire of a cartload of firewood. The scale is just too small and cannot solve the problem. It is really very disappointing.

Earlier in the Policy Address, the Chief Executive has pointed out that the Government will take forward transitional housing with a strong effort. However, the so-called "strong effort" being made now is only pushing the development of Community Housing Movement led by the community and the supply is extremely limited with only a few hundreds of units. Compared with the several hundreds of thousands or even a million of people who are living in inadequate housing, it would not in any way be useful. Everyone knows that the right to housing is a human right and it is the responsibility of the Government to provide a decent living environment for the public. But unfortunately, what the Government is doing now is just "outsourcing" the work of providing transitional housing units to social service agencies on the high-sounding pretext of encouraging community participation. Indeed, our impression is that the Government is shedding its responsibility and it is really outrageous.

I definitely do not object to community participation in the provision of transitional housing, but we must first meet two preconditions. First, the Government must provide sufficient matching policy measures and support; second, the Government should also take part in the provision of transitional housing rather than leaving it entirely in the hands of the community bodies. The Government should have its own roles and responsibilities.

The Government has disappointed us because it is not doing well in relation to these two matters. First of all, the Government is asking the NGOs to lead in taking forward the schemes, but I regret to say that the Government is not assisting them at all. First, the Government does not provide a dedicated fund to help them; and second, the Government only tries to find some public officers to provide support. However, if we have not got the land or money, how can we implement the community housing projects. Therefore, in this respect, I think that the Government must also provide resource support in addition to deploying more staff members to assist the NGOs.

7078 LEGISLATIVE COUNCIL ― 21 February 2019

As many colleagues have just said, a dedicated fund must be established to help implement transitional housing schemes and the size of the fund should not be too limited. There is news saying that in the Budget to be published next week, a sum of money probably of the size between $2 billion and $3 billion will be allocated for establishing a fund. We certainly hope that there will be such a fund. However, unfortunately, past experience tells us that even if there is a sum of money, it may not be easy to apply for the money under the fund. As the devil is in the details, I doubt whether it is easy to get the money? I am afraid that this measure is only "loud thunder but small raindrops". Though it sounds great, the actual effect is doubtful.

I turn to the commitment and responsibility of the Government on the other hand. I have urged Secretary Frank CHAN to consider reviving the temporary housing area policy before the reunification. The Secretary has responded to me many times. Not only he himself, but also the Under Secretary, have said that manpower, material resources and resources will all be spent on permanent public housing development and no resources will be put in to revive the so-called temporary housing previously, which is the transitional housing we are discussing. President, I think this is outrageous. The Government is putting the cart before the horse.

We certainly will not object to deploying more resources and more manpower by the Government for building permanent public housing. However, this does not mean that the Government cannot take on other responsibilities. I have mentioned many times that if manpower is insufficient, the Government may increase manpower and no one will oppose it. Moreover, the Government now also says that there will be at least two staff members to help community bodies to develop transitional housing. Then why does the Government not assign these two persons to take up the specific task of running the transitional housing built by the Government? Why is the Government not doing this? If manpower is not enough, it is fine to add extra positions. I have said that many times and I believe many colleagues have also said that. If the Government seeks the approval of the Legislative Council, no one will oppose it. But why does the Government continue to use these two excuses to refuse the provision of temporary housing?

In fact, a lot of our colleagues have already said that transitional housing in the past was really too bad no matter in terms of living quality or environment. What is more, although they were called temporary housing, they were there for more than 10 years and people were still staying there without being rehoused in LEGISLATIVE COUNCIL ― 21 February 2019 7079 permanent housing and it become an international laughing stock. However, I think that the Government may refine the past policy, enhance the quality of the building materials, set the eligibility criteria and allocate the transitional housing units to those who are on the Waiting List and may soon be rehoused in permanent housing. Then it can quicken the turnover and people do not need to wait for more than 10 years to get a flat in public housing. The Government certainly can get these optimization measures done, but unfortunately, the Government refuses to do it and keeps saying that it should be placed in the hands of the community.

President, a number of colleagues have mentioned that we actually do not object to allowing the community to take forward the work and we are in favour of it. However, can we walk on two legs? On the one hand, the community is working on it, and at the same time, is the Government also working on it? If not, I will go the other way and support the proposal of Mr CHU Hoi-dick. If the Government does not get involved and just leaves it entirely in the hands of the community, I would rather persuade the community not to do so. Why? As you can see, the number of units that can be provided by the community is very limited which is only a few hundred or even 1 000 units. It really does not make any big difference when compared with such a large number of people waiting for public housing and such a large number of people living in inadequate housing conditions. If this is the case, it is better for the community to give back this important responsibility to the Government, and see whether the Government will take any action to rescue the dying or just ignore them. Otherwise, as Mr CHU Hoi-dick said, when the community is working on it, the Government will hide behind on the pretext that it has already put in place resources and manpower to help the community to do the work. It seems that it is already an answer to the community. I am not sure what sort of attitude I should apply to describe the Government and would it be shameful of the Government to pass the buck to the community. In fact, we know that the Government has the land and the resources. Why not do it? The Government even has the manpower, but it only use some invalid excuses to shed its responsibility. Hence, after the discussions today, I hope that the Government will consider to shoulder its due responsibility and role again.

President, I hope that the Government will listen to our views humbly, then consider seriously and study carefully. I hope that the Government will stop insisting that the current rigid and unreasonable policies be continued.

President, I so submit.

7080 LEGISLATIVE COUNCIL ― 21 February 2019

SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, I thank Mr Vincent CHENG for moving the motion today and the seven Members for moving their amendments. We have jotted down different views of Members in our notebooks and will conduct a review after the meeting.

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

The crux of the housing problem in Hong Kong lies in the long-term imbalance between supply and demand. The incumbent Government is determined and will try our very best to resolve the present housing problem faced by the community through providing proper and affordable housing to assist the public in living with security and improving their living environment.

In accordance with the supply-led and flexible principles of the Long Term Housing Strategy ("LTHS"), we will continue to work hard in identifying land, adopt a multi-pronged approach in supplying more public and private housing and rebuild the housing ladder. We update the long-term housing demand projection annually, so that the Government can have early planning for land and housing development on a sustained basis, with a view to satisfying the long-term housing needs.

The motion suggests including transitional housing in LTHS, and we would like to take this opportunity to explain some details of LTHS. Under the framework of LTHS, the Government updates the long-term housing demand projection annually and presents a rolling ten-year housing supply target to capture the latest social, economic and market changes, and make timely adjustments where necessary. One of the demand factors to be considered during the annual update of long-term housing demand projection is inadequately housed households, which cover households living in the units made up of temporary structures (e.g. huts, squatters and roof-top structures); units located in a non-residential building (e.g. commercial and industrial buildings); units shared with other households (e.g. rooms, cubicles, bedspaces and cocklofts in private permanent buildings); and subdivided units. The aggregate housing supply target set by the Government in LTHS has already considered the housing demand from inadequately housed households. Besides, since transitional housing is temporary in nature, the time and quantity of supply are not stable and may vary in different periods of time. It is thus inappropriate to include this kind of housing into the housing supply target for the coming decade.

LEGISLATIVE COUNCIL ― 21 February 2019 7081

In terms of land planning for long-term housing purpose, the current policy is to construct permanent public and private housing for residential purpose. In regard to short-term idle sites and building clusters, we will try our very best to maximize the usage by providing transitional housing for inadequately housed households.

The Government will continue to adopt a multi-pronged approach to increase land supply in the short, medium and long term through measures like rezoning exercises, increasing development intensity, developing new development areas, etc. Apart from putting efforts to increase housing supply, the Government has been adopting various measures, including increasing the supply of transitional housing, to alleviate the hardship of families on the public rental housing Waiting List and the inadequately housed.

As mentioned in the 2017 and 2018 Policy Addresses of the Chief Executive, since it takes time to identify land for housing construction, the Government will support and facilitate the implementation of various short-term initiatives put forward and carried out by the community on top of the Government's long-term housing policy and measures to increase the supply of transitional housing. With these short-term measures, forces and social resources outside the Government can be introduced to provide alleviation in a flexible and diversified manner.

Therefore, on 29 June 2018, the Chief Executive announced that a task force would be set up under the Transport and Housing Bureau to provide one-stop coordinated support to facilitate the implementation of such community initiatives on transitional housing. The task force is led by the Under Secretary for Transport and Housing. Following consultation with relevant bureaux and departments, it will provide necessary support to the projects concerned and will offer advice on the related administrative or statutory procedures, as well as assistance in applying for funding. In order to cope with the relevant work, the Transport and Housing Bureau has created five additional posts, including two project directors. The Government will review the establishment and the operation of the task force from time to time and take follow-up actions when necessary.

Since establishment, the task force has conducted three interdepartmental meetings to explore ways to overcome obstacles related to the prevailing policies encountered by community proponents. For example, the Buildings Department 7082 LEGISLATIVE COUNCIL ― 21 February 2019

("BD") promulgated the Guidelines on Applications for Special Modification or Exemption for Transitional Housing Initiatives in Domestic Buildings in October 2018. The Town Planning Board also announced in November 2018 a measure that such transitional housing projects coordinated by the task force in permanent buildings in the urban and new town areas would be regarded a temporary use always permitted under the relevant Outline Zoning Plan if they are for a period of five years or less.

To support the promotion of transitional housing, BD will grant modification or exemption regarding the applicability of the Buildings Ordinance to eligible transitional housing projects in these buildings in order to facilitate the implementation of such transitional housing projects. For example, the Buildings (Planning) Regulations ("the Regulations") require the provision of windows in living areas to provide natural ventilation and lighting. If there are eligible transitional housing projects facing difficulties in fully complying with the requirements under the Regulations because of the building design, BD will consider granting exemptions from part of the requirements, but will, at the same time, require the project proponents to provide artificial lighting and mechanical ventilation systems, as well as communal living areas that meet the relevant natural ventilation and lighting requirements, and to ensure that the compensation measures will continue to be operated effectively.

The task force is currently assisting and facilitating more than 10 projects, with different specific details, advocated by various non-governmental organizations ("NGOs"). The responsible organizations are making use of the community resources flexibly. While providing transitional housing, they also offer appropriate support to suit households' needs. For example, the Modular Social Housing Scheme on Nam Cheong Street and Yen Chow Street in Sham Shui Po initiated by the Hong Kong Council of Social Service ("HKCSS") has provided about 300 housing units. Besides, a number of projects, with the provision of over 600 units, have been introduced under the Community Housing Movement operated by HKCSS and other NGOs, and they also provide various social services, such as employment support and emotional counselling, to the households. The task force will continue to examine the feasibility of other proposals, and closely communicate, study and provide assistance with the proponents. The details of the projects will be announced by the proponents in due course.

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In fact, various transitional housing measures are led and implemented by different NGOs. They seek to alleviate the housing problem with joint community efforts and resources. Due to the short-term nature of transitional housing and the different objective conditions of the projects, the number of units provided or the number of people benefited in each project will depend on its specific details and implementation conditions. Nevertheless, we will continue to play the supporting and facilitating role, explore ways to overcome obstacles related to the prevailing policies and expedite the provision of transitional housing.

As regards site selection for transitional housing, the GeoInfo Map web of the Lands Department ("LandsD") publishes, on a district basis, a list of about 850 vacant government sites and their basic information for consideration of NGOs to apply for community purposes, including transitional housing, on a short-term basis. To determine if an individual site is suitable for transitional housing purpose, further consideration has to be carried out on the land use zonings, the actual site conditions including topography, various technical constraints or infrastructural facilities required. As observed from the currently proposed projects, at the initial stage of site identification, the proponents would identify potential sites with mature infrastructural facilities in the vicinity for construction of transitional housing. If a proposed project is found suitable, the task force will provide appropriate assistance to the proponent.

Earlier on, a Member mentioned the setting up of a platform to provide information of the sites available for use. The task force and LandsD are currently coordinating and studying with the relevant departments about the suitability of the shortlisted sites for the construction of transitional housing, including the period available for use and the basic constraints of these sites. Concerning the application for land allocation and other arrangements, the task force will coordinate with the relevant bureaux and departments, and will come up with flexible and appropriate arrangements according to the specific details and needs of different cases.

Besides, the Government reactivated the revitalization scheme for industrial buildings last year. One of the measures under the new scheme is that if these transitional housing projects supported by the task force are to take place in industrial buildings, the Government will exercise flexibility in handling applications under planning, land lease and building design requirements, including charging a nil waiver fee for the specific use of transitional housing. 7084 LEGISLATIVE COUNCIL ― 21 February 2019

There are also other policy incentive measures. For instance, the Building Professionals may exercise their powers under the Buildings Ordinance to exempt transitional housing units provided through wholesale conversion of industrial buildings from certain domestic building requirements in relation to site coverage, plot ratio, open space, service lane, natural ventilation and lighting, etc., so long as undertakings are secured from the NGOs or social enterprises to ensure proper management and implementation of other compensatory measures; and waiver fees would be exempted for special waivers to be issued in connection with such transitional housing projects in wholesale-converted industrial buildings.

In regard to the proposal from some Members and stakeholders of setting up a dedicated fund for transitional housing, the Finance Committee of the Legislative Council endorsed a government proposal in January 2019 to set up a $1 billion fund to support NGOs in their projects of formation of idle Government land and renovation of vacant school premises for short-term uses. Although the fund is not dedicated for transitional housing projects, it is given policy support by the task force. Besides, projects providing transitional housing on vacant Government land can also apply for funding.

Moreover, since the service targets, specific details and service nature are varied in different transitional housing projects initiated by community organizations, the task force will continue to offer advice on funding application in accordance with the needs of different cases. For instance, in terms of funding needs, the operating cost of the Community Housing Movement operated by HKCSS has been supported by the Community Chest of Hong Kong and the Social Innovation and Entrepreneurship Development Fund, while the Modular Social Housing Scheme on the private land on Nam Cheong Street in Sham Shui Po also has the funding support of the Community Care Fund. Given the opinion from the community that the Government should enhance support to promote transitional housing, including policy, technology and resources, the Government is actively considering the proposal concerned.

I would like to appeal to Members and various political parties again that if you have any suggestion concerning the suitable sites available for transitional housing, please contact our task force. If a project is feasible, the Government will surely support and facilitate the proponent's implementation of the project.

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As a thousand-mile journey must always begin with the first step, I hope that Members can continue to give us support so that our concerted efforts can be contributed towards the benefits of the inadequately housed.

Deputy President, this is my response to the issues related to the motion of "Increasing transitional housing supply". We will humbly listen to the following debate by Members with an open mind, and will give supplementary information and further response in due course. Thank you, Deputy President.

DEPUTY PRESIDENT (in Cantonese): Does any other Member wish to speak?

MS CLAUDIA MO (in Cantonese): Deputy President, on hearing such words from the Secretary, although he was beating about the bush, he also admitted that our housing problem in fact stemmed from a long-term imbalance in supply and demand, therefore, now it seems that―he did not use such words, but he admitted that―there existed a mess. You will see how elaborated he spoke, swirling around, saying that this non-governmental organization ("NGO") had undertaken a certain project in a certain place and so hundreds of units would be supplied, and also saying that that NGO had carried out another project thus providing hundreds of units. You told me 300 or 600 units would be supplied, but the number of those who are currently living in subdivided units or inadequate housing amounted to tens of thousands. Relative to the number of tens of thousands of people, Secretary, can you say that several hundred units are adequate? The Government said that the housing problem would be solved, but such remarks had been made since the TUNG Chee-hwa era―the "85 000" mentioned then, until they no longer existed―it has been said up till the present moment, so we all become indifferent on hearing it. After all, the Secretary was willing to say that the Government had the heart to do it and would be working on it, somehow, it is better than none. Nevertheless, on hearing the words of the Secretary, I still do not understand too well about his stance on the proposal for the establishment of a fund. He may intend to put up a show and will give a brief response perfunctorily only after we spoke.

Firstly, I would like to respond to Mr Tony TSE. He spoke on his amendment a moment ago, I think that he really considered something disgusting funny. Firstly, he quoted the fortune stick ritual obtained by Mr Kenneth LAU, Chairman of the New Territories Heung Yee Kuk during the lunar new year for 7086 LEGISLATIVE COUNCIL ― 21 February 2019 telling the fortune of Hong Kong in the coming year in a tone which was similar to reciting poetry. However, when I got back to his amendment, I was almost scared to death, was it exactly talking about "stone field"? He said the problem could be solved by using all farmland for constructing housing. If that is the case, are we going to have all farmland covered with cement first? In that way, the farmland will really become "stone field". As for ecology, is there no need for consideration? Secondly, he always based his arguments on the shortage in land supply and further mentioned the Lantao area, e.g. the construction of artificial island through reclamation at Kau Yi Chau. We are discussing "transitional housing" currently but he strayed far from the subject, it is indeed totally inappropriate.

He mentioned issues such as artificial islands, reclamation, so I also follow him and talk about the fortune stick ritual. Regarding the project on construction of artificial islands, even Carrie LAM herself admitted that moving in would not take place until 2032. So I think his so-called $1,000-billion reclamation plan is likewise "unable to smell its aroma" and "unable to fill up one's stomach" as well. Actually, what he was talking about? We are now discussing "transitional housing".

In respect of transitional housing, I do not know whether the Government shares my view. I consider it unnecessary to add "性" to the term "過渡" (transitional) (for Chinese term only). "Transitional" is "transitional", i.e. some sort of hindrance exists between the beginning and the end and so a bit of transition is required, but this so-called "transitional" is equal to "interim hostel", which is not considered something good by the general public. It is something for temporary purpose, a makeshift measure, "pocketing it first" for the time being. The Secretary repeated his words incessantly. He meant a short-term nature, a short-term supply. Generally speaking … since it is transitional, it cannot exceed five years, otherwise, will it not be turned into "permanent transitional", buddy? Do you want to formally turn "transitional housing" into part of the regular housing supply for Hong Kong? This is unacceptable.

Hence, even though Secretary Frank CHAN is only responsible for the housing and transport portfolios, I also hope that he could go back and tell Carrie LAM, the problems in local housing, property price and property market mainly stem from two major reasons.

LEGISLATIVE COUNCIL ― 21 February 2019 7087

Firstly, it is the policy of high land premium which is a legacy passed on to the present day since the British colonial era. The Government sold the land at the highest price but the property developers are not doing charitable businesses. Buying land at such an exorbitant price, they will surely sell the housing at high price. This can be said to be a vicious circle and property price will just increase continuously. During the past two decades―I want to say 40 years originally―property prices multiplied but not so for our salaries. The whole community was in a state of insanity, relying on property price for support, ended up with some Hong Kong people being homeless nowadays.

Secondly, it is definitely our population policy. Even for our generation, when I learnt social studies in primary school, it was mentioned in the textbook that Hong Kong was a tiny place with a large population, but that was the situation in 1960s. In the past we always knew that Hong Kong had a shortage of land and a dense population but the current government just keeps on saying that it is a land problem. Are they unaware of such a situation? However, the Government tells us that it got related figures, for example, Hong Kong's population increased by about 60 000 in 2018, among them, over 40 000 people were new arrivals from the Mainland. We are not rejecting or discriminating against these new arrivals at all, but these people certainly have demand for housing when they come to Hong Kong. I wish to tell the Secretary, can the Government introduce alleviation measure for the future population policy, pause for a while so as to let us catch our breath. Secretary, can you provide some figures indicating that the local demand for housing is totally unrelated to the one-way permit daily quota of 150 new arrivals? If you can convince me, I will shut up immediately.

In addition, I also hope that the People's Liberation Army … would Beijing please listen, what Mr CHU Hoi-dick requested in the amendment now is transitional housing but not permanent housing, can the military land―that may very likely be 100 hectares―be used for housing purpose, just transitionally, for as short as one year and as long as five years. At present, we often talk about integration of China and Hong Kong, can Beijing give help to save the Hong Kong people from the housing tragedy?

Thank you.

MR WILSON OR (in Cantonese): Deputy President, before I speak, I wish to respond to the issue raised by Mr Jeremy TAM. His amendment removed the target of transitional housing, I wonder if it is necessary for Mr TAM to further 7088 LEGISLATIVE COUNCIL ― 21 February 2019 understand the definition of transitional housing. Regarding transitional housing, my understanding is that it includes the aforementioned flats in Yue Kwong Chuen and Mei Tung Estate which were made available earlier for renting again to residents residing in inadequate housing, the premium-free Home Ownership Scheme estates under the Hong Kong Housing Society and Hong Kong Housing Authority ("HA") are also regarded as a form of transitional housing. He worried if the target was incorporated in the Long Term Housing Strategy, would the existing supply of public housing be affected.

I always emphasize that if land is available, priority should be accorded to building public housing. However, we see a lot of idle sites lying in different corners of Hong Kong at present, these sites cannot be used for building public housing basically. Take Yen Chow Street in Sham Shui Po as an example, there is a large nullah in the lower portion thereat, it is simply impossible to build public housing in whatever way but the Government seems not having any policy to incorporate the target into the guidelines. Hence, I think we should pinpoint specifically some idle sites to formulate a supply target. If the use of land is not optimized, it will be a wasteful act. I, therefore, wish to take the opportunity to share my view on this point.

Deputy President, actually I consider the original motion today very meaningful because the living environment of many people now is deteriorating. With property price remaining high, people are unable to afford the exorbitant rents. They are even deprived of the basic living space, let alone buying property. The developers in the market are very clever, through adjustment in their own way, the area of flats they built are becoming smaller and smaller, container flats, subdivided units, nano rooms and "coffin cubicles" emerged as a result. As a matter of fact, these residences have very narrow spaces with potential safety hazards, some may even fail to comply with the existing legislation, we commonly call this kind of accommodation "inadequate housing". Such circumstances are unhealthy to the community and the people.

The previous and current terms of Government often emphasized "finding land for housing development", the views of different stakeholders on "finding land for housing development" are diverged, this is quite normal. However, if relying on such a "turtle speed" of the Government in "finding land for housing development", I believe for a long while the target cannot be reached. Moreover, I see that there are a lot of idle sites lying in different corners of Hong Kong, so DAB also stressed and requested the Government to make optimal use of these idle sites, draw up the guiding policies to solve the current situation of LEGISLATIVE COUNCIL ― 21 February 2019 7089 people living in a poor environment. The current term of Government has pointed out that transitional housing has to be promoted proactively, unfortunately it is just "boasting" and only "talking" without directly taking up a leading role to help, only seeking non-government organizations to shoulder the responsibility while the Government serves solely as a promoter. I consider it totally unacceptable. Frankly speaking, with such a huge reserve and resources available, the Government just shifts its responsibility to the non-government organizations, I think it is far from convincing.

Deputy President, concerning transitional housing, it will require substantial input of fund and professional support from its design, conversion, organization, management to its maintenance. Candidly, sole reliance on NGOs is not feasible as on one hand, they will have to take care of the operation of their organization and on the other hand, they will have to find solution to the problems on transitional housing. Simply constructing these hard wares would have made them restless. Therefore, I think the Government should find ways to take up more responsibilities, shouldering vital roles actively to give support. Honesty speaking, I do not see any actual involvement of the Government at the present moment. The Government has fund, land and also manpower, however, it only tells us that it will play the role of a promoter, I think this is entirely unacceptable.

Deputy President, let us take a look at overseas experiences. Take Canada, Queensland in Australia and the United Kingdom as an example, the governments in these places actually also play a quite important leading roles, so we always emphasized, is it necessary for the Hong Kong Government to consider setting up a "transitional housing fund"? The fund at least has the advantage of offering help to our non-government organizations. When the Government is not prepared to contribute its effort while the non-government organizations want to help but are short of fund and resources, how can it be resolved? The fund can help to meet their urgent needs. When the hardware issues are solved, other problems can then be handled more easily. Hence, DAB suggested the establishment of a "transitional housing fund" of no less than $2 billion and also hoped that the Bureau would not turn a deaf ear to the suggestion and do nothing upon hearing the views. Instead, it should seriously find ways to help the NGOs handle the problems concerned.

Deputy President, the original intention of transitional housing is to provide most appropriate housing for the grass-roots citizens within the shortest period. I always say the most important things are being "prompt, smooth and effective". 7090 LEGISLATIVE COUNCIL ― 21 February 2019

However, honestly speaking, we see the way the Task Force on Transitional Housing ("Task Force") handles the job, and the Secretary just now even boasted that everything ran smooth and just holding three meetings could have solved many problems. I can tell the public who are watching the live coverage of the meeting that I do not expect these three meetings to have any effect. The most important is the willingness of the Government to help and examine how to remove the barriers and relax the restrictions for its policies. We see at present that the authority has a lot of frameworks, approval by various departments takes time and manpower is wasted on handling the papers but finally it has ended up with nothing. Therefore, I hope that the colleagues in the Transport and Housing Bureau, especially the Under Secretary Dr Raymond SO―He is so remarkable, this time he is assigned with an easy job, i.e. taking charge of the Task Force―I hope that he could provide adequate support, remove the barriers and relax the restrictions, simplify its administrative procedures and help to solve the "lengthy and demanding" procedures. Anyway, it will be better than having NGOs making requests to several departments but just in vain.

Deputy President, I want to point out the long process for housing development. When I see people residing in inadequate housing, I feel that they are very poor, so I hope that the Government could allow concurrently the 250 000 Home Ownership Scheme flats which still have premium unpaid to be rented out to help the public, not just holding discussions, or else, it will be even worse. In addition, the Government should play the role of an intermediary to foster rent control and offer support.

Deputy President, the grass-roots citizens are living in plight, their living environment desperately needs improvements, so I hope that the Government could stop pondering over this issue, expedite its pace and adopt a positive thinking to forge ahead proactively in face of difficulties to increase housing supply. After all, if the Government is unwilling to make an effort, no matter what the non-government organizations do, there will still be the feeling of incapability. Deputy President, this time I will support the original motion of Mr Vincent CHENG and also hope that we will exert pressure on the Government in respect of this motion to let the Government see the needs of the community. I so submit.

MR FRANKIE YICK (in Cantonese): Deputy President, the problems of housing supply has plagued Hong Kong for a while, the housing supply problems has reached a critical point at the present moment. No matter it is property prices or rents, they keep surging high, the average waiting time for "allocation of LEGISLATIVE COUNCIL ― 21 February 2019 7091 public housing" has set new record, reaching 5.5 years currently which has far exceeded the target of around 3 years as set by the Government. The Liberal Party supported in principle the increase in transitional housing as a temporary measure to provide additional supply of medium- and short-term housing to relieve the imminent needs of the grass-roots citizens. As early as in 2017, the Government had put forth five proposals to promote transitional housing. It was a pity that the number of flats provided was limited while their distributions were quite scattered, the effect was insignificant. The community really needs more dynamic short- and medium-term housing measures.

As a matter of fact, the Government has set aside $1 billion in the budget for the current year to enable non-governmental organizations using vacant Government land to apply for subsidies in infrastructure project costs in accordance with the project needs. The Liberal Party proposed that the establishment of a dedicated "transitional housing fund" in accordance with the proposal in the original motion be considered, besides, the authorities could also consider extending this project to other non-government properties which include industrial buildings to enable them to be developed into transitional housing, assisting the property owners to carry out conversions through formulation of framework and funding allocation standard, and reducing the administrative red tape to attract more property owners to participate so as to expand the development scale and provide more flats.

However, care must be taken in handling conversion of industrial buildings. The Government previously introduced the policy on revitalization of industrial buildings to convert them into residential buildings or shopping malls through exemption of land premium or payment of premium for what you have built. The policy has forged the reduction of vacancies in industrial buildings, but at the same time, the small and medium enterprises engaging in the freight and logistic businesses are turned into victims of the industrial building revitalization scheme because when industrial buildings are rebuilt or converted into other purposes, they are forced to relocate. Moreover, as the number of industrial buildings has reduced, their rents have soared thus imposing a heavy burden on the operating costs of the small and medium enterprises engaging in the freight and logistic businesses. Therefore, if the Government is going to resume the industrial building revitalization scheme or even allow conversion of the whole block of industrial buildings into transitional housing, before putting the scheme into implementation, it must take into account the needs of the trades and reserve the industrial buildings in part of the areas as storage facilities for use by the freight and logistic sectors to avoid repeating the mistakes.

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Deputy President, similar circumstances also occur in developing brownfield sites for construction of residential buildings. However, when facing the imminent needs of the people for housing, the Liberal Party does not object to the consolidation of existing scattered brownfield sites or even construction of housing on the brownfield sites. However, I must stress again that brownfield sites are not idle sites. Actually, many brownfield sites have economic operations providing logistic support to the various sectors in Hong Kong. For example, the container yard supports the ports operation, vehicle maintenance supports the transport sector while the storage of heavy mechanical equipment supports the construction sector. These businesses are indispensable to the whole community. Hence, if the brownfield sites are to be developed, the existing operations on them must be properly relocated. We cannot rely solely on providing compensation, instead, it is necessary to find alternative sites for the trades while their rentals must be affordable by the operators to enable operators who intend to continue their businesses to carry on with the operation.

Deputy President, transitional housing is only temporary in nature, so even if the Liberal Party gives its support, in order to solve the housing needs of the people, the fundamental solution is to increase the number of flats to be built. In the long run, the Government should increase the number of flats through development of farmland and appropriate relaxation of building height for small houses.

Having listened to the proposals raised by the Liberal Party over the years, the Government subsequently combined them into the Starter Homes Scheme to provide qualified people with a 90% mortgage plan, the Liberal Party greatly welcomes it. However, with the property prices soaring high, properties under $4 million that are able to get a 90% mortgage loan accounted for less than 20% of the whole market. To cater for the practical needs of the market so as to allow the potential starters to obtain mortgage loan from banks more easily, the Liberal Party suggested that the Government should consider adjusting upward the ceiling of loan-to-value ratio.

In respect of families living in rented private premises, the rent expenses are a cause for concern. In the face of high property prices, there are still many middle-class families which are neither qualified for applying public housing nor capable of acquiring properties. The rent expenses can be said to be a heavy burden for this type of middle-class citizens. Therefore, the Liberal Party has LEGISLATIVE COUNCIL ― 21 February 2019 7093 been asking the Government for providing a rental exemption which lasted for five years with an annual ceiling of $100,000 so as to relieve the difficulties faced by the middle class hiring their flats

Deputy President, Hong Kong is small but with a huge population. Although housing problem is the focus of the community, if all lands (including brownfield sites and land held under short-term tenancy) are used for housing development unilaterally while omitting the land required for supporting economic activities, it will hinder the economic development of Hong Kong as we will fail to pay due attention to all things. At the end, the people will have a house to live but without a job and inevitably another more serious social problem will be generated. Therefore, in making use of the land for housing development, the Government has to take into account the need to strike a balance in the overall developments of Hong Kong.

Deputy President, I so submit.

DR PRISCILLA LEUNG (in Cantonese): Deputy President, Mr Vincent CHENG put forth the motion on transitional housing today. At present, Hong Kong has a shortage in housing and a pressing need in this area. Under such circumstances, we do not object to the major direction of including transitional housing as one of the stepping stones in the Long Term Housing Strategy. However, if we extend time and again the transitional housing policy for three years, we will have concern over the role to be played by transitional housing in the overall housing policy. We also cannot draw a blank cheque unconditionally and agree to put transitional housing in too high a position.

Why do I say so? According to my faint memory, I often went to visit my relatives in a temporary housing area in Tsuen Wan when I was young. My impression at that time was: many people lived in a steel hut. Of course, having a steel hut was still better than none. However, the steel hut remained there for years, we worry that once … the Government … for example, our colleague requested the setting up of a 2-billion fund to assist the non-government organizations, just like the Hong Kong Council of Social Service ("HKCSS") has done a lot of work in this area. So in the future, firstly, how many years will the people have to live in transitional housing? Will they be strictly required to move out after residing there for three full years? Is it really transitional for those families? Secondly, the area should not become a permanent temporary housing area. For instance, for some sites which had been discussed, such as an 7094 LEGISLATIVE COUNCIL ― 21 February 2019 area in Sham Shui Po, some people may propose to expedite the construction of transitional housing. Nevertheless, how many years will such a good site be used for providing transitional housing?

I think transitional housing can only be transitional because the area should have better future planning, or it is currently affecting the nearby residents in certain respect, or if it is not used for developing transitional housing, will it be developed into better, permanent public housing or sitting out area in the future? Furthermore, what will be the transport arrangements? Sham Shui Po is quite a popular place right now, we all know that the flats often cost more than $10,000 per square feet. Hence, when we consider finding land for building temporary housing, I feel most worried that after the Government has built the transitional housing, when a group of temporary housing residents has moved out therefrom, there will be another group of residents moving in and everyone stops making progress. Therefore, unless we promise that it is genuine temporary housing which will definitely have its use changed after being temporarily used for three or five years, otherwise, in seeking sites for temporary housing, I think great care is needed.

Deputy President, it is not that I distrust the Government but I have seen too many cases where something of a temporary nature ended up remaining for a long period of time. I prefer a time limit to be given by the Government each time when it has to build something of a temporary nature; the land must be surrendered for formal housing planning in the future, there is no other alternatives. I submitted a lot of suggestions to the Government, e.g. the public housing estate in Shek Kip Mei―I recall I brought Secretary Frank CHAN to the place and we ate something there, he said he grew up in the vicinity―can the plot ratio there be changed by means of the tactics of "ants moving home"? This practice is quite popular now, i.e. letting the residents in the oldest blocks move out first, just as the Pak Tin Estate and then build a new housing estate. In respect of redevelopment for old buildings, an important point is how to remove the barriers and relax the restrictions to raise the plot ratio.

I have a well acquainted relative. I must point out that he worked in the Housing Department for a long time and have retired now. He proposed at an early time when the Task Force on Land Supply solicited public opinions that so long as the restrictions in legislations could be relaxed, the building height in areas being approved for public housing development could be raised significantly; with a higher plot ratio, the number of flats could be instantly increased and it might not be necessary to provide several temporary housing LEGISLATIVE COUNCIL ― 21 February 2019 7095 areas to occupy the sites. I therefore reiterate that temporary housing areas must be really temporary with time limit being fixed. Moreover, HKCSS undertakes currently the conversion of flats donated by private developers as residence for people. They are also very nice and are willing to shoulder the responsibility. But I know that, be they the developers, i.e. those whole lend the flats or the sites, or the nearby residents, actually they also have concerns which have led to failure for large scale expansion of the current plan.

What do they worry about? It may be about fire services, who will move in after conversion, or whether public security will become complicated when there are several flats on each floor, how many families can the basic facilities support, many complicated factors are related to the software problems. Therefore, I hope that the Government will take into account the views of the community when considering our numerous proposals, including the development of the country park outskirts which had not been mentioned by the Task Force on Land Supply. While we support the broad direction of this motion, we think the related (The buzzer sounded) … details are worth our attention.

Deputy President, I so submit.

DEPUTY PRESIDENT (in Cantonese): Dr LEUNG, your speaking time is up.

MR KWONG CHUN-YU (in Cantonese): Firstly, I am grateful for our colleague in moving this motion on transitional housing. The current situation is really dire but my impression is that the Government is indifferent to others' troubles, allowing non-government organizations to handle on their own while the Government just assists in relaxing the restrictions which should have been its responsibility. In respect of the Transport and Housing Bureau, not much has been done in terms of transport, but somehow there should be something to be done for housing. The problem is so imminent, just the waiting time for public housing is 5.5 years, we just request the provision of accommodation for people on Waiting List during the interim period now, even this cannot be achieved, no wonder the Government has repeatedly let the Hong Kong people down.

Hence, the major issues we are going to discuss today is how to realize the provision of transitional housing, how to expedite the related procedures which include whether the land premium or government rent can be waived so as to 7096 LEGISLATIVE COUNCIL ― 21 February 2019 enable the non-governmental organizations ("NGOs") to find land promptly without having to look for it all over the place and pay the land premium because looking for land alone is in fact very difficult. Secondly, a major consensus for the community is for the Government to set up a dedicated fund to handle the provision of transitional housing. The fund does not descend from heaven as the Government had set up last year the fund for disposal of idle sites, allocating $1 billion for renovation of abandoned school premises. Notwithstanding that no concrete arrangement was available a year ago, the Development Bureau had set up a fund shortly within one year and there are at least small achievements in current year which enable some abandoned school premises to be renovated for use by cultural bodies or animal rescue organizations.

The processes involved are definitely not simple, for instance, we are helping several organizations in making applications but the difficulties are also great. We have to consider which sites are available for application while some abandoned school premises are already taken possession by certain Policy Bureaux and cannot be used. Among the 183 abandoned school premises, only 21 of them are available for application. However, unlike the current problem of transitional housing which is a sheer hollow, these problems still have their solutions. In the past we had made use of the Community Care Fund, but on the other hand, we now request for the setting up of a similar fund of $1 billion for related organizations to develop transitional housing, this is not impracticable, yet the problem of acute inadequacy exists.

The imminent problem is whether a dedicated fund can be established specifically for building transitional housing? It is quite miserable that there are nearly 200 000 people living in inadequate subdivided units, meanwhile they have to wait for years without being able to see the future. I have a story which deeply struck me for sharing with the Secretary. That was a case seeking for help at the time when I served as a District Council member. A lady went to my office and told me that she would part with her fiancé, but even so, help should not be sought from the office of District Council member, right?

The story was liked that: She and her fiancé lived separately in the public housing flats held under the names of their respective parents. They wanted to get married all along but their total income exceeded the limit for applying public housing, however, they could neither find suitable Home Ownership Scheme flats nor afford the rents of private housing. Therefore, they continued living in their parents' home and it dragged on for years without finding a solution or seeing their future, at the end they separated. Quite ironically, the housing policy in LEGISLATIVE COUNCIL ― 21 February 2019 7097

Hong Kong has become the intruder in their relationship. The story is indeed sad. Their request is very simple, we talk about "cultivation of moral character, settlement of one's family affairs, proper governing of the country and maintenance of universal peace". When people fail to cultivate his moral character and settle his family affairs, how can they face the future?

Such a humble request is simply hoping that a principle-based strategy for transitional housing could be formulated and incorporated at least into the long-term housing plan to give it a place officially. The waiting time for public housing is already miserably long, reaching 5.5 years or even longer, so during that period, could the people be given a hope and a residence while waiting? In this regard, we can make best use of the existing 800 idle sites, or try to explore how to make adjustments for land which has not been put into use so as to provide them with residence.

Is this really so difficult? There are a lot of talks but no action from the beginning when it was proposed. I still remember Mr Frank CHAN said while sobbing that community housing had to be introduced when he paid a visit to the families living in subdivided units at the beginning? Up to now it still remains at the argument stage, the housing policy of Hong Kong is always like this, often all thunder but no rain. Even for the youth hostel, only several dozen places can be provided this year. The largest project being carried out in Yuen Long will not be implemented until 2021 to provide over 1 000 units. People can only rely on these assistance schemes and continue sighing in despair. As I said a moment ago, there is not much the Transport and Housing Bureau has done but please provide housing for the people.

Therefore, the immediate problem today is for the Government to step up its effort to take up more responsibilities, directly proposing the establishment of a fund while taking concrete action to provide more land proactively and take the lead to provide flats. NGOs are certainly willing to handle as per the Government's request, but examining the list on available sites is already a headache for them. Moreover, some landforms are strange, it is even impossible to put a container on them, let alone building houses. The actual complete land information is in the hands of the Government. If the Government considers transitional housing as a practicable policy, it should be able to step up its effort to do more.

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Take a look at Singapore, the housing policy in Singapore has been copied from the public housing policy of Hong Kong but the former has outperformed the latter, really achieving the possession of a piece of land in Singapore for every Singaporean to increase the sense of belonging among the Singaporean towards their country.

How about Hong Kong? The requests of Hong Kong people are quite humble. When many people are living in plight, the government officials should make an effort to implement some visible work rather than watching the fire over the other side of the river. The number cannot be small because providing just a few hundreds flats a year is meaningless. The Secretary should try to think about how to satisfy the requests in this respect through a series of work. This is because when the cross parties agreed that transitional housing should be provided, you actually have a lot to do and no one will stop it. For many administrative issues, including the issues of government rent and land premium that I mentioned initially, the Government should act boldly and simplify procedures to reduce the red tape that has made people step back. After all, it all depends on the determination of the Government. I hope that the Government could give us a definite response.

I so submit.

MR YIU SI-WING (in Cantonese): Deputy President, thanks Mr Vincent CHENG for moving this motion. The Council debated earlier about the motion on increasing housing supply. The current motion on transitional housing also springs from the shortage in public housing. According to the government statistic, as at the end of 2018, there are about 150 000 general applications for public housing, the average waiting time for the applicants is 5.5 years, setting a record high over past 18 years. Many households waiting for public housing are forced to live in subdivided units temporarily due to low income. According to the figures of the Census and Statistics Department, there are about 92 700 subdivided units in the Territory at present. Their mid-point rent is about $4,500 with an average living space of just 62.4 sq ft for each person, which is far below the 161 sq ft for general households in the Territory.

Subdivided units are small and poorly equipped but the rents are expensive, it causes great torture to the body and soul of both the young and old in a family undoubtedly. Hong Kong is a renowned and developed world city, the living environment of the people is incompatible with its international image, this is an LEGISLATIVE COUNCIL ― 21 February 2019 7099 extremely unreasonable phenomenon. Since it is impossible to shorten the waiting time for public housing in the short run, to improve the living environment or reduce their rental expenses for people waiting for public housing through provision of transitional housing is undoubtedly a means when there is no way out.

I agree in principle to the proposal on increasing transitional housing, but to a certain extent, increasing the supply of short-term transitional housing is more difficult than increasing land supply. In order to provide short-term transitional housing, it is either constructing modular housing on idle sites which can be demolished and relocated at any time, or making use of suitable vacant flats, both of which are temporary measures which make use of every inch of land available. In terms of operation, there are certain limitations and constraints and is hard to form a scale.

The proposal in part (1) of the original motion is to incorporate transitional housing into the Long Term Housing Strategy to formulate the supply target for transitional housing, I think we have to handle with care. At present, the crux of the housing supply problem in Hong Kong lies in the shortage of land, the focus of the Long Term Housing Strategy should be on how to develop the land resources, formulate corresponding housing supply target in accordance with the population growth and urban development. Transitional housing is simply a transitional measure, its major function is to reduce the rent burden of residents waiting for public housing to prevent them from living in the subdivided units which have poor environment. Hence, moving to transitional housing is not equivalent to solving the long-term living problem. If transitional housing is incorporated into the Long Term Housing Strategy, it will be equal to a long-term occupation of certain land resources by this type of housing, this will on the contrary make it more difficult for the Government to find land.

Moreover, the original motion proposed the formulation of a supply target of not less than 10 000 units within three years, I think it lacks justification. In formulating target, it will require a clear definition and scientific data in order to determine the actual number required. If this job is to be carried out, the Government should draw up the policy and pass it to a dedicated team for coordination, work together with some charitable organizations or social workers to conduct survey on the demand and work out the specific information and a list on families in need that have actual needs, draw up short- and medium-term strategies according to the circumstances and introduce transitional housing in varying quantity at different periods to provide support for the families in need to lessen their living pressure during the period of waiting.

7100 LEGISLATIVE COUNCIL ― 21 February 2019

As for how to increase the supply of transitional housing, I propose the following three ways: firstly the revitalization of industrial buildings. As many industrial buildings are located in the urban areas, it is convenient to travel for work, the demand will surely be bigger. However, the restrictions in land lease make residential use impossible. The Government can take into account the characteristics of the industrial buildings and accede to the conversion of units within the industrial buildings in compliance with the related ordinances to meet the residential needs.

Secondly, to identify temporary sites for building modular housing while at the same time mobilizing local power. Part (5) of the original motion urged the Government to make public the lists on idle government sites or facilities which are suitable for development of transitional housing so that the relevant organizations can examine and prepare the plans on transitional housing as early as possible. I give my support to it. The local communities are particularly familiar with the local environment, they can put forth proposals in accordance with the selected sites on the list, or they may provide better suggestions. I know that Mr Vincent CHENG had proposed to build temporary modular housing on a vacant site at Yen Chow Street in Sham Shui Po and got Government's approval already, the relevant work is under preparation. If it is met with success, I hope that the Government could continue promoting such practice and the cooperation with the local communities in similar manner, this will be much more effective.

Thirdly, to enhance the cooperation with non-profit making organizations, provide fund for conversion and revitalization of idle units. With their social networks, the non-profit making organizations should be able to understand timely the situation of idle sites and flats, assist in persuading the relevant stakeholders to put out for rent at affordable prices. The Government can then provide fund for conversion into transitional housing for occupation by families in need at low rent. I think this is a practical way. The number of flats provided by programmes like the Light Home, SOUK housing units and SoCo Room for Rent that have come into operation recently is not too significant but many a little makes a mickle, the Government should encourage and support such social power, enhance their contributions in the area of transitional housing.

Deputy President, I so submit.

LEGISLATIVE COUNCIL ― 21 February 2019 7101

PROF JOSEPH LEE (in Cantonese): Deputy President, regarding the motion on "increasing transitional housing supply" moved by Mr Vincent CHENG today, some Members have touched upon the definition of the word "transitional" just now. I would like to put forward my personal views on this. According to what some Members have just said, "transitional" may mean temporary or other forms of housing, and its inhabitants would move out in a short time.

Let us suppose this is a policy discussion. The Government must also clearly understand the meaning of "transitional" before implementing the policy. For me, transitional is transitional. It may sound like nothing has been explained. So, what exactly is "transitional"? Those who meet the criteria for applying public rental housing ("PRH") might have to wait for a long period of time. According to the information given to me by my colleagues, the average waiting time is 5.5 years or above. Elderly applicants may be better, but it would still take them 2.9 years. Even if you are interested in purchasing a Home Ownership Scheme ("HOS") flat, the number of applications is over 40 times more than the units available for sale. For those on the waiting list who have to live in less desirable private residential units due to limited affordability, the provision of transitional housing would allow them an opportunity to improve their living conditions during the transitional period of awaiting PRH allocation. This is the meaning of transitional, neither temporary nor interim.

Nonetheless, please do not forget that there is a group of people who are not eligible to apply for PRH. They are not even eligible to purchase HOS flats while the property prices are rocket high. According to recent statistics, Hong Kong has become the most unaffordable city for housing in the world for eight consecutive years. 19.4 times the median annual household income are needed to stand a chance of buying a home which involves a huge sum of money. These people are ineligible for PRH but they still have a housing problem to solve, yet the property prices are so high. According to today's news report, the property price of a certain place in the New Territories West has exceeded the level of $10,000 per square foot. The above mentioned group simply cannot "buy their own homes". Can the Government make transitional arrangements for this group of people as well? A responsible Government should face up to this problem.

Therefore, for me, transitional housing is not merely for people who are waiting for PRH, which used to be called temporary housing ("TH"). In the years when I was growing up, the Government had already started to provide TH 7102 LEGISLATIVE COUNCIL ― 21 February 2019 by identifying suitable sites or through other means. This was a policy initiative to provide transitional housing for applicants on the Waiting List to allow them to enjoy housing before they were allocated PRH flats. Similarly, for the other group of people who are not eligible to apply for PRH units or purchase HOS flats, the Government can also accommodate them at a reasonable rent level before they purchase their own properties. This can also be the function of transitional housing.

Two years ago, I proposed the concept of right to housing in this Council. This concept was not invented by me, I was just offering other's idea. According to international standards and definitions, everyone should be entitled to the right to housing. This refers not only to "having a roof", but also to the basic standards of sanitation, air quality, facilities and other aspects in the living environment. For this purpose, the transitional housing policy should move in this direction. As a responsible Government, it should not only take care of a specific category of people, but also take care of the majority.

The Under Secretary is also present. He should know very well that there are two major categories of people waiting to realize a better version of the right to housing. According to the Long Term Housing Strategy Annual Progress Report 2018, about 110 000 households in Hong Kong were living in unfit dwellings during the year. It is 2019 now. A few more months from then, I believe that this number must have increased because the situation has not improved. The property prices are even higher, the number of people waiting for PRH is increasing and the living environment is still bad as before. Isn't it necessary for the Government to consider introducing a guiding policy to enable these people to enjoy the right to housing before having a permanent residence, i.e. before they have been allocated PRH units or purchased their own properties? Provision of transitional housing is one of the answers.

Just now, some colleagues have asked how transitional housing can be provided and questioned whether this would lead to competition for land for PRH or private housing. But in fact, it is not where the problem lies. The Secretary or the Under Secretary can go back and look up the information. The Government indeed has a lot of sites to use. Even if we do not dispute whether we should take back the golf course, there are actually a lot of idle public places, such as industrial buildings and school premises. The Administration should know the relevant figures very well without me providing the information. Can the Government revitalize these idle places to make them more suitable for LEGISLATIVE COUNCIL ― 21 February 2019 7103 accommodation? In addition to taking the lead in revitalization, the Government may also consider financing the revitalization work of these places in collaboration with non-governmental organizations ("NGOs") so that the above two categories of people can be accommodated as soon as possible. In this respect, of course, there are also criteria to be set for eligible tenants.

This is better than living in subdivided units. It is also better for those higher-income earners spending half or more of their monthly salary on renting a costly better flat. In the absence of a rent control policy, people with a monthly salary of $20,000 to $30,000 may have no alternative but live in flats with high rent. Since they lack the funds to acquire a property, they also need government assistance to arrange them to stay in transitional housing. Therefore, those waiting for public housing are not the only group of people who have such need. Should the Government consider revitalizing the industrial buildings?

(THE PRESIDENT resumed the Chair)

It is said that in the forthcoming Budget, the Government might allocate $2 billion to $3 billion to set up a fund for the implementation of transitional housing provision. This is a good thing, but the Government should not only care for a certain class but have to balance all sides. As for the Government to take the lead in revitalizing industrial buildings, it was mentioned as early as the era of Eva CHENG. I have been serving as a Member of the Legislative Council for more than 10 years, and I am still discussing this issue today. If the Government can consider accepting this proposal, idle places such as industrial buildings and school premises could be released for use. I reiterate that I am talking about places rather than land. As long as alteration works are done and the Fire Services Ordinance is amended, a better living environment could be provided to rehouse the people who are waiting for acquisition of private properties or accommodation in PRH units, so that they can enjoy a decent living environment at a lower rent while waiting for "moving into PRH or buying their own homes"

The second point is related to the Urban Renewal Authority ("URA"). I hereby declare that I am a non-executive director of the URA. Nowadays, the URA is often accused of profiteering, but indeed the URA has its social responsibilities to fulfil. After resumption of the old buildings, the URA can, 7104 LEGISLATIVE COUNCIL ― 21 February 2019 where appropriate, allocate them for transitional housing purpose for accommodation by those higher income group waiting to realize their plan of buying private properties but temporarily unable to so due to the high property prices. As long as the Government takes the lead and with the collaboration of the URA, assistance to this group of people is possible.

All in all, as long as transitional housing can be defined policy-wise in terms of the above two categories of people, with the Government taking the lead and collaboration from NGOs and other agencies, idle residential flats, institutions, school premises and industrial buildings can be released to provide assistance as soon as possible. If the Government does not take proactive actions, transitional housing will always remain an empty talk―a temporary measure that will achieve no real effect. I hope that after today's discussion, the Government can take the lead to remove all kinds of restrictions and assist these two categories of people with transitional housing (The buzzer sounded) … Thank you, President.

PRESIDENT (in Cantonese): Prof LEE, please stop speaking.

MR CHAN CHUN-YING (in Cantonese): President, first of all, I would like to thank Mr Vincent CHENG for moving this motion today to allow Members to express their views on this subject for the Government's consideration. Hong Kong initiated the New Town Development Programme in 1973 to cope with the projected population growth. At that time, there were nine new towns with a total population of 3.5 million. Among these nine new towns, six (including Tsuen Wan, Sha Tin, Tuen Mun, Tai Po, Tseung Kwan O and Tung Chung) were obtained from reclamation and the reclaimed land had provided extensive development sites for large public housing estates. However, in recent years, land reclamation has often attracted great controversy. Large-scale public housing development projects have become few and far between, something that is hard to come by.

Yesterday, the Government formally accepted the report submitted by the Task Force on Land Supply to give priority to the development of eight medium-to-long term land options for the production of about 3 000 hectares of land. Yet the reality is that for the housing needs of the grass roots, the Hong Kong Housing Authority still has to constantly identify land for development. LEGISLATIVE COUNCIL ― 21 February 2019 7105

In recent years, most buildings in the new public housing sites are densely constructed without much planning. On the other hand, the number of PRH applications has already reached 260 000. Therefore, in order to alleviate the pressure on the ardent demand for PRH, it is indeed necessary to have transitional housing arrangement as a new interim point to triage the housing needs of the grass roots. As Ms Alice MAK has just mentioned, temporary housing was actually very common in Hong Kong in the 1950s.

For the implementation of a transitional housing scheme, first of all, the Government should clarify the eligibility of applicants. It is believed that those who are currently living in subdivided units or others who have housing needs have already applied for PRH. The scheme can simplify the procedures by listing this group of registered waitlisted applicants who are eligible for PRH under the transitional housing waiting list. For others who are non-PRH applicants as mentioned by Prof Joseph LEE, we have to consider their removal from the transitional housing units and study how to arrange their future housing needs. Secondly, we have to set the priority of the waiting list. For example, transitional housing would be arranged for those applicants who have obtained a PRH registration number and have waited for three years or above. Still the details have to be agreed upon by us later. By comparing this figure with the actual supply of public housing in the next few years, we would be able to assess the actual demand for transitional housing.

After setting the direction of the scheme, the most important part is how to supply the relevant transitional housing units. As many Members have just mentioned, transitional housing should be government-led instead of being arranged by community organizations. Nonetheless, in the short term, it is difficult for the Government to model on the past method of reclaiming large areas of land to solve the problem of temporary or transitional housing. Therefore, we can only do some brain-work from what is available now. The Government is actively studying the conversion of industrial buildings into residential uses, namely the revitalization of industrial buildings. Last November, the Town Planning Board accepted the Government's proposal to flexibly handle the application of converting industrial buildings into transitional housing. This is a good start. However, as Mr YIU Si-wing has said just now, a single source of supply obviously could not overcome the present predicament. Therefore, we hope that the Government can also conduct a comprehensive review on the existing idle agricultural land in the rural areas as soon as possible. 7106 LEGISLATIVE COUNCIL ― 21 February 2019

If it is confirmed that there are no development plans in the next few years, the sites should be used to develop transitional housing by the Government or non-governmental organizations instead in the form of a lease.

President, although according to the existing Schedule of Notes to Outline Zoning Plans, unless otherwise specified, prior permission from the Town Planning Board should be obtained for the development of transitional housing in the rural areas. However, I believe that the Task Force on Transitional Housing under the Transport and Housing Bureau can definitely resolve similar technical problems and remove all restrictions for the provision of transitional housing.

Apart from land supply, it is also a challenge to produce housing units from scratch in a short period of time. If we cannot find suitable existing buildings, like industrial buildings, then prefabricated modular housing could be a viable option. The construction period of these modular housing has been significantly shortened, with a service life of 50 years. The industry estimated that each unit would cost about $400,000. The biggest advantage is that it can be recycled, i.e. can be easily relocated from one transitional site to another one, which is environmentally friendly and cost-effective.

At present, we have transitional housing schemes such as the Social Housing Sharing Scheme, the Modular Social Housing Scheme, the Light Housing Project and the SOUK housing project. Although the names or formats of the schemes are different and there are various organizations in operation, they all face the same challenge of "funding support". I hope that in the Budget to be announced by the Financial Secretary next Wednesday, the Government will really allocate a sum of money to set up a "Transitional Housing Fund" as it is rumoured, to ease the housing problem of people who are waiting for public housing and those living in undesirable conditions.

President, I will support Mr Vincent CHENG's motion today. As for the other amendments, like setting transitional housing targets, developing idle agricultural land and Government land, I will also support each and every one of these constructive ideas.

I so submit. Thank you, President.

LEGISLATIVE COUNCIL ― 21 February 2019 7107

MR KWOK WAI-KEUNG (in Cantonese): President, it is a bit embarrassing to discuss the construction of transitional housing again today because it is like turning back the clock and returning to the 1970s and 1980s. Our society has been advancing, how come the supply of public housing in Hong Kong has not improved at the same time but regressed instead? This is worth pondering. Of course, policy failures in housing supply by past governments, whether in cutting supply of public rental housing ("PRH") and the suspension of the Home Ownership Scheme flats, have also aggravated the shortfall.

What problems are we actually facing now? Under such a difficult situation, why are we still shamelessly discussing the construction of transitional houses? It is because of the present reality that half of those living in unfit dwellings or subdivided units are applicants on the PRH Waiting List and the waiting time for PRH is getting longer and longer. The latest figure is 5.5 years. I am a member of the Hong Kong Housing Authority and I think that the average waiting time would soon become six years.

In fact, everyone understands the gravity of the problem. In the coming five years, the supply of PRH and the Green Form Subsidized Home Ownership Pilot Scheme flats will add up to just 74 600 units, which is far from the target. The short-term, mid-term and long-term measures for land supply will take at least 8 to 10 years to become effective at the earliest. Frankly speaking, it is impossible to use distant water to quench the present thirst. On the other side, members of the public are getting more and more frustrated when seeing the Government's vain efforts to provide housing. In fact, the Government must make some "remedial measures" to break through the target of "moving into PRH" in three years.

President, transitional housing is basically an inferior policy, yet the Government has no choice but put it in the Policy Address. The Chief Executive even said that this is a top priority. Nonetheless, it is a pity that the Task Force on Transitional Housing is composed of only seven members. How much power would they have? Can they obtain land and public funds? I am a bit worried. Besides, the current practice of relying on non-governmental organizations ("NGOs") acting as associates to raise funds or solicit know-hows has ended in some cases where the Government is contributing "soy sauce" and NGOs are donating the "chicken". Does the Government really want to well 7108 LEGISLATIVE COUNCIL ― 21 February 2019 develop transitional housing or is it just putting up a show? How can we solve the housing problem by producing several hundreds of units in a year? The Government actually knows the answer better than anyone.

In addition, President, subdivided unit is also a long-standing problem. Everyone can see that, many colleagues have also mentioned that just now, Hong Kong has been pursuing a high land price policy. The Government is making huge revenue from land sale proceeds and stamp duty. Every year, there is a budget surplus. However, the grass roots are cornered because their purchasing power cannot catch up with the increase in property market prices. At present, since the rent returns from partitioned units are very attractive, the living space of subdivided units tenants are getting smaller and smaller as a result while the rents are becoming higher and higher. If we still refuse to face this problem, I definitely worry that this will become a main factor of social instability.

Therefore, we urge the Government to set up a "Transitional Housing Fund" and increase the size and functions of the Task Force on Transitional Housing, with members coming from the Housing Authority, the Hong Kong Housing Society or the Urban Renewal Authority. They should be there to lead the transitional housing projects. Only by then can we really solve the problem.

Furthermore, President, we also suggest that the Government should make a list of lots with development potentials because we are not sure how much idle land is held by various government departments and how many buildings (such as idle government units, school premises or staff quarters) are available. These buildings are geared to the development of transitional housing units in terms of ancillary facilities, transportation or layouts. The Government should try its best to provide transitional housing. The Administration should not hold the mindset that public housing is already the lowest level of accommodation and anything provided below that would only result in backfire. In my opinion, the Government definitely must squarely deal with this kind of holding back and evasive attitude.

President, we also see that it has been a long time since our industries moved northwards. It is indeed possible to consider using vacant or under-utilized industrial buildings to provide transitional housing. If the Government is willing to do so, it is highly possible that an additional 18 000 transitional housing units could be made available in the next 10 years, which is LEGISLATIVE COUNCIL ― 21 February 2019 7109 exactly a large percentage of the shortfall in PRH units produced by the Government. Therefore, we strongly encourage the Government to make use of industrial buildings. Of course, the Government should also take the initiative to negotiate with owners of the industrial buildings to set a validity period of the lease because I believe owners of the industrial buildings may also concern about the impact on their future development if the premises are used as transitional housing units. But I think the Government should buy time to solve the housing problem.

President, the original motion and the various amendments moved today are not easy to handle at the administrative level. They involve a lot of manpower, material resources and money. But this is a major issue concerning people's livelihood, especially when it is a problem that the Government has created on its own. Therefore, the Government should not muddle through the work for fear of trouble. As a responsible Government, we should avoid dodging the problem and must face up to the challenge. We should identify sites to provide sufficient transitional housing units in the short term and provide sufficient PRH units in the long time, in order to solve the housing needs of the grass roots.

I so submit.

DR JUNIUS HO (in Cantonese): President, I would like to thank Mr Vincent CHENG in moving the motion on "increasing transitional housing supply". In fact, this topic is similar to the motion on "increasing housing supply in the short to medium term to rectify the problem of public housing shortage" moved by Mr James TO on the 17th of last month. I have also spoken last time to put forward my views. I expressed to Secretary Frank CHAN and Under Secretary Raymond SO how we could identify more open spaces and idle land to better the transitional housing arrangements. I have specifically stated that we should re-examine our previous temporary housing policy.

Of course, today's theme is about how to convert industrial buildings, idle land and other vacant buildings as much as possible to increase the supply of transitional housing units. The Government always seems to adopt a "care but hold back from total care" attitude in this respect. Therefore, an intermediary, 7110 LEGISLATIVE COUNCIL ― 21 February 2019 like non-governmental organizations (NGOs), is engaged as a buffer or cushion to develop transitional houses. But in fact, if we want to handle this work better, we have to be bold enough and do not make the distribution of transitional houses too fragmentary. Of course, scattered locations also have a good side because as people are living in different areas, serious impact on the traffic of a particular zone will not occur. However, such arrangements can never solve the problem of more than 110 000 people who are currently living in an undesirable condition. These people have to wait for 5.5 years before they can be allocated public housing. I have said the same thing last time―the waiting time is too lengthy, even five days are too long. Therefore, I last suggested that brownfield sites and existing fishing ponds should be used for the construction of temporary housing or transitional housing.

As far as traffic is concerned, there are some locations suitable for the construction of transitional housing. For example, there is available space near San Tin. All we need to do is to some modifications and improvement works on the traffic, then the place can be connected to the Lok Ma Chau route nearby. There is also rail service to provide convenient transportation to the residents. In addition, there are also accessing roads to the Northern Link where all the main trunk roads are connected. The place is relatively close to the Mainland, so it is very convenient to travel between the Mainland and Hong Kong. As I have mentioned last time, this problem should not be directed at the Development Bureau alone. Since we are talking about transitional housing today, I would like to reiterate that I believe that the two Bureaux should improve communication and liaison. In this regard, the Government should always take the lead, it would do better than other community organizations.

If the Government is willing to take things in their own hands, there would be a multiplier effect. On this topic, I believe Members of both the pro-establishment camp and the pan-democratic camp share the same view, though the approach may be different. Everyone agrees that this issue is urgent and needs to be addressed. If the Government can identify dozens of hectares of idle land or brownfield sites in the vicinity of Lok Ma Chau near the frontier area and construct transitional houses there, it is practical and the cost is not high. Mr Vincent CHENG has proposed to set up a $2 billion "Transitional Housing Fund". But I think the amount should go beyond that. If possible, the Government should allocate more funding. In any case, the estimates of revenues and expenses are often wrong in the budget every year, an estimated LEGISLATIVE COUNCIL ― 21 February 2019 7111 surplus of tens of billion dollars turned out to be a hundred billion dollars. It is said that this year's surplus would be less than the previous one, but there are still more than $40 billion. If part of the surplus is used to resume land to build transitional housing units and provide supporting facilities, it should be more than sufficient. If the Government resumes land for public facilities on reasonable terms, there are applicable Ordinances on land resumption. If deficiencies are found and improvements to the Ordinances concerned are necessary, legislative amendments are also obligatory.

I think we have the money needed. Basically, I "totally accept" all the proposals put forward by Mr Vincent CHENG. As for the amendments moved by other Members, the contents are more or less the same. I only want to talk about the amendment proposed by Mr CHU Hoi-dick about the use of military land and the Disneyland to build transitional housing units. I find this impracticable and does not meet the requirements of the Basic Law. It is because military land serves a specific purpose which cannot be modified arbitrarily. Besides, it is not a decision that can be made solely within the capacity of the Hong Kong Special Administrative Region. Proposing the use of military land for transitional housing construction while we are dealing with this internal problem, I find it totally inappropriate. If any consensus on the use of military land can be reached with the Beijing Government, would the land be used only for transitional housing construction? It might be better to use it for public housing construction. We are trying very hard to identify land, we are now even talking about using more than 30 hectares of the golf course precinct. Therefore, if we really want to touch on the use of military land and reach a consensus, those lands should not be limited to transitional housing uses. That is what I mean.

As for the reserved land of the Disneyland, there is no reason to use it for transitional housing construction. Having spent so much money on developing the theme park, if the Hong Kong Government builds some houses that are completely incompatible with the surroundings, then it is a proposal that is completely lacking in vision and disregarding the actual situation.

I basically support the motion moved by Mr Vincent CHENG. I so submit. Thank you, President.

7112 LEGISLATIVE COUNCIL ― 21 February 2019

MS CHAN HOI-YAN (in Cantonese): President, Hong Kong people are hard-working, generation after generation, their only wish is to "have a shelter under which to dwell". No one would have imagined that "having a shelter under which to dwell" is a luxury in present day Hong Kong. It is because the construction of public housing is seriously lagging behind. Hong Kong people awaiting a small public housing unit might not be given a first flat offer even after waiting for five, six or seven years.

The problems facing the young people are even greater. It is a known fact that the median floor area of accommodation in Hong Kong is small. Let's take a look of the situation. Young people start to work in the society when they get older. Their original intent is to improve their living through hard work, but they are faced with high rents of private housing. How about public housing? They want to waitlist for public housing, but they are not eligible.

According to statistics compiled by the Census and Statistics Department and social welfare institutions, the population and households living in subdivided units keep increasing. Would people who have money and the necessary means choose to live in subdivided units? However, many of the grass roots and young families in Hong Kong have limited financial resources. They only hope to gradually improve their economy and life by moving into public housing. Meanwhile, in the face of the high rents of private housing, they can only choose to stay temporarily in subdivided units or "partitioned rooms". They truly just want to stay there temporarily because they still hope the Government could honour the promise of "allocating a public housing flat within three years". Nonetheless, the Government has failed them time and again.

I would like to point out that in order to tackle well the housing problem of the general public (especially young people), the Government must show greater determination and resolution and think out of the box in order to solve the existing housing dilemma. Therefore, I indeed support and thank Mr Vincent CHENG for moving the motion on "increasing transitional housing supply" today. This will give Members another opportunity for brainstorming and let the Government absorb Members' views on improving transitional housing arrangement.

President, I have mentioned many times that the Administration should formulate a policy on transitional housing as soon as possible, including consulting the local community on site selection, setting up mechanisms and LEGISLATIVE COUNCIL ― 21 February 2019 7113 conducting detailed studies. However, the burden of the responsibilities now falls on the Task Force on Transitional Housing. The top priority of the Task Force is to provide decent accommodation for subdivided unit tenants within a shorter time frame through various means.

Transitional housing is positioned precisely to make up for the shortcomings of the current housing ladder. The so-called "shortcomings" refers to the current shortfall in public housing supply which has been lagging seriously behind the actual demand for various reasons. The average waiting time is 5.5 years before the public can expect to "move into a public housing unit", while the waiting time for young people are generally more than 10 years. Under the present circumstances, the so-called "housing ladder" is actually an abstract "ladder of eternity". For me, the provision of transitional housing to those who have been waiting for three years but not yet allocated public housing is the most direct way to help them. The existing transitional housing projects, such as modular housing, container housing or vacant flats under urban renewal projects, can provide a certain number of flats in a short period of time, so that the public can have a shelter during the few years while waiting "to move into public housing" and set foot on the rungs of the housing ladder.

Everyone knows that illegal conversion of subdivided units will weigh down on the loadbearing structure of a building and speed up the ageing process of old buildings, which has a direct bearing on the safety of residents. The Administration should know very well that the number of old buildings over 50 years of age in Sham Shui Po, Yau Tsim Mong and Kwai Tsing will rise sharply in the next five years, while the vast majority of subdivided units are located at the above areas.

Nonetheless, under the prevailing situation, if subdivided unit tenants are asked to move out of subdivided units, where can they get a shelter? Can they afford rental units that are more expensive? That's beyond their means. The way to solve or eradicate this problem in the long run is to find land to build a sufficient number of public housing units. Well, everyone knows that the large number of public housing units cannot be completed right away, so the Government must do something to help them. Since the Government cannot promptly assist the subdivided unit tenants who are in dire straits, what should we do?

7114 LEGISLATIVE COUNCIL ― 21 February 2019

The Government has repeatedly rejected the subdivided unit rent allowance and rent control supported by cross-party Members and said it will not consider it. Such being the case, does it mean the Government has no intention to take any measures in the short run? The Government also knows that transitional housing is a viable way out, but the Government has shifted its responsibility to community organizations, saying that more creative and flexible transitional housing projects in different formats could be launched in this way. Yes, I think this indeed is more creative and flexible; but regrettably I really can't accept it because the Government has the ultimate responsibility to lead and promote transitional housing projects, including provision of more resources and land, setting targets of housing supply and so on.

As for how to increase transitional housing supply, apart from identifying available land and making use of temporary sites, I think we can consider making good use of existing resources. Something that I have already suggested earlier on: the intervening period from acquisition to redevelopment for old urban buildings acquired by the Urban Renewal Authority ("URA") generally lasts for a considerable period of time, ranging from three/four years to even over 10 years. Many of these buildings are still structurally sound up to the time they are demolished and rebuilt.

It is worth noting that we are facing the problem of urban decay. It is expected that many buildings will need to be redeveloped in the future. Therefore, I suggest that the Government should make good use or even full use of the existing building resources to increase the supply of transitional housing. I have earlier suggested to the Financial Secretary that the Government can provide project funding to URA to assist URA in conducting structural surveys and refurbishment of the old buildings and flats acquired, with a view to providing a certain number of transitional housing units in the short term to meet the urgent needs of the public.

President, even one more transitional housing unit does count. With each additional unit, we can help one more family to improve their living condition and allow them to step onto the housing ladder. Therefore, I hope that the Government will play a more active leading role in the housing problem and eradicate the housing problem in Hong Kong with more vigour using a multi-pronged approach.

I so submit. Thank you, President.

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DR FERNANDO CHEUNG (in Cantonese): President, first of all, I would like to thank Mr Vincent CHENG for moving the motion on "increasing transitional housing supply".

Housing problem in Hong Kong has been lingering on for many years since the colonial era. The problem got even worse after the reunification because the Government has put the land in Hong Kong on auction bit by bit and implemented a high land price policy. Land goes to the highest bidder. Although the Government's land sales policy has caused property prices to go beyond the means of the general public, the Government still adheres to it and ignores the basic housing needs of Hong Kong people. As a result, all Hong Kong people are worried about their own housing needs―with the exception of property owners. The community has also become divided as the owners hope that property prices will continue to rise, but those without one hope that property prices will fall. Besides, the increase in rents has far exceeded the affordability of the public. Even if they don't buy a flat, they can hardly afford the rent.

In our society, all the opportunity costs and the sacrifices that we have made … The Government states that Hong Kong has a low tax rate, but the public actually pays extremely high taxes. Moreover, a large portion of the public's expenditure is spent on housing, including mortgage and rent payment. All these are caused by the Government. As a result, hundreds of thousands of people are currently living in unfit dwellings. The terminology used by the Government is very subtle, in fact, they are simply living in cramped and deplorable accommodations. Hong Kong is such an advanced and affluent city, but hundreds of thousands of people are living in "pigeonholes" and succumbing to the tiny dwellings. The Chinese character "poor" reflects squarely this situation. Its upper part is made of the character "den" and the lower part means "to curl up the body". The character in its entirety means "inside the cave you see no one". Although Hong Kong is a very well-off society, its people live in poverty. How come we end up like this?

What response has the Government given? It is "Give me land for more housing construction". Why the Government want land from us? Isn't that the Government is the main landowner in Hong Kong? Why does the Government need more land? The Government already has a lot of land. Why they want more? They want more for land auctions to swell their coffers. The Government continues to implement the high land price policy. Though they 7116 LEGISLATIVE COUNCIL ― 21 February 2019 are comparable to "a person so fat that he cannot even put his own socks on", still they continue to join hands with real estate developers to bully the people of Hong Kong. Although the grievance of the society has reached a critical point, the Government still behave as usual.

We ask the Government to assist low-income earners because the problem has become very absurd now. The per-square-foot rents for subdivided units are even higher than those for luxurious residential units. Nonetheless, when we ask the Government to implement rent control or tenancy control, the Government says no because rent control will reduce the supply of flats and tenancy control is not feasible because it is very hard to require landlords to sign stipulated tenancy agreements. When we ask the Government to introduce rent allowance, the Government says no, claiming that the availability of rent allowance would induce the landlords to increase the rent. The money would go to the pockets of the landlords and the public cannot be benefited. When we ask the Government to compel more owners to rent out their vacant properties and fully implement the vacant property tax, the Government says this measure is difficult to execute and it can only be applied on newly completed flats. But the Government will never be able to collect this tax because as long as the last brick is not laid, the building is still uncompleted. This is our Government. No matter what demands you raise, they will only respond by saying they cannot do this or that.

Past Governments have all stated that housing problem is the top priority of their administration and an issue of greatest concern to them, yet they said they could not do anything. Given this background, we point out that the Government should do something about transitional housing. Hong Kong used to have temporary housing areas, even other countries will also build transitional housing units with a view to alleviating the housing problem. But our Government claimed that this was not feasible. It has been more than a decade since the Government claimed that this was not feasible. They said, "If land is available, why not use it for the construction of public housing or long-term housing. Why use it for the construction of temporary housing?" Ultimately, the present Government has made a gesture to do something and intends to set up a $1 billion fund. Mr Vincent CHENG's motion has proposed a funding allocation of $2 billion. Can this really help? How many transitional housing units are there in Hong Kong now? A preliminary analysis by the Research Office of the Legislative Council Secretariat found that there are only some 500 LEGISLATIVE COUNCIL ― 21 February 2019 7117 now. Even if the number is increased by 3 times, 4 times, or even 10 times to 5 000 units, so what? How many people are waiting for public housing now? How big is the demand? This is nothing but a vain effort.

Government officials in Hong Kong are not doing anything concrete. They have all become lazy and laid-back. The Government relies only on the high land price policy, but this has given rise to the growth of indolent officials who are sluggish without any intention to solve the most basic housing problem of Hong Kong people. After all, as civil servants, they enjoy high salaries and pension benefits and they are not affected by housing problems at all. Principal officials are even worry-free. This is their world. Although they know that the poor are having a hard time and has to live in subdivided units, they will just say that they should be self-reliant. Isn't that the Government will not do something until the society has reached beyond the tolerant point?

The Government should learn about Taiwan's approach to transitional housing. The Taiwanese Government has implemented the "subletter" programme. The Government rents flats in the market and then let them out to low-income earners at low rents. It even introduces numerous policies and tax incentives to encourage owners to rent out their flats at low rents to help the poor. Even a non-governmental organization can implement the "light room" project, why can't the Government? Is it because the Government does not have the capacity? Or is it because the Government has never thought about it? Stop kidding me.

If the officials have the resolution, they would have solved the problem long time ago. The Government is the biggest landlord and the richest entity, but they are telling us there is nothing they can do unless we give them land (The buzzer sounded) …

PRESIDENT (in Cantonese): Dr CHEUNG, please stop speaking.

MR CHAN CHI-CHUEN (in Cantonese): The topic of debate in this Council today is transitional housing. As the name implies, transitional housing does not mean to let the public have a permanent home or live a peaceful and contented life. It is a short-to-medium term measure with a hope to slightly relieve the 7118 LEGISLATIVE COUNCIL ― 21 February 2019 grave predicament of those who have been waiting for public housing for many years but yet been allocated a public rental housing ("PRH") unit. Since transitional housing supply is bound to be limited, we can only say it is something "better than nothing". As some Members have said in their earlier speeches, one more unit can always help one more family.

Mr Vincent CHENG has made a number of recommendations today, including "to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing". However, if the policy is simply introduced with no other supporting measures formulated, transitional housing units may become an alternative form of subdivided units with high rent and small size, an alternative form of subdivided units with policy support. Therefore, if the Government really allows or encourages private owners to operate transitional housing, other supporting measures must be formulated. For example, for the rent level of transitional housing units, the Government should stipulate that owners cannot arbitrarily increase rents or refuse to rent out a unit. In the end, all of these involve the issues of tenancy control and vacancy tax.

The public would ask, if the Government is implementing rent control and vacancy tax on transitional housing, why don't they introduce rent control on other housing units rented by the public now, or even vacancy tax in the secondary market? To effectively improve the housing problem, apart from suppressing rent increases, the Government should augment the supply of housing flats at the same time; keep the rents of private properties at a reasonable level, and encourage more owners to rent out their flats. The full implementation of rent control and vacancy tax in the secondary market that we have always been mentioning is a direction that everyone could think of. If the Government allows private property owners to operate transitional housing without the implementation of related controls, it will eventually evolve into endorsement or rationalization of subdivided units.

In my opinion, the Government should really introduce measures to impose controls. For example, only members of the public who have genuine needs can apply for public housing, or even the transitional housing that we are discussing today. Or else, if those who don't have genuine needs can also queue up for public housing or the new transitional housing, then no matter how many housing units are provided, it will be futile in the end.

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President, I have submitted a written question to the Government yesterday. According to their written reply, "In the past three years, the HA had received about 380 reports relating to PRH applicants' concealment of information, and had initiated random checks on about 1 800 PRH application cases. Among such cases, about 50 cases involved the concealment of ownership of properties outside Hong Kong"―this could cover properties in the Mainland or overseas. From this, we can see that the number of cases involving the concealment of ownership of properties outside Hong Kong accounts for 2% of the cases checked. If this ratio reflects the reality, then is it possible that there are thousands of cases involving the concealment of ownership of properties outside Hong Kong among the over 200 000 applications on the Waiting List? Besides, among those 50 cases, there were only four cases of successful prosecution and conviction. Is the Government unable to step up screening whether an applicant is truly eligible for PRH or even the transitional housing proposed now? If the Government is really unable to do so, even construction of thousands of flats will be useless.

I think before using public funds to build transitional housing units, the Government must put in place a mechanism to ensure that an applicant is making a factual declaration on the ownership of properties outside Hong Kong when he/she is admitted to publicly-funded transitional housing units. The Government should also stipulate that if the value of the property held by the applicant outside Hong Kong exceeds a certain level, he/she will not be admitted to the transitional housing unit in order to ensure that the unit is made available to those who have genuine needs.

Of course, there is a more fundamental problem. Any discussion on housing and land issues is inseparable from the population policy. As I pointed out earlier, even if Members' proposals are fully implemented, the number of transitional housing units is quite limited. If the Government does not take into account the financial capabilities of the new arrivals … At present, 150 One-way Permit ("OWP") holders are being admitted to Hong Kong on a daily basis. Their number would add up to tens of thousands in a year. Amongst them, there must be some who need to apply for public housing. Although they are not qualified for public housing application when they first arrive in Hong Kong, sooner or later, they will become eligible. If in the first few years of their arrival in Hong Kong, they cannot afford to rent a place better than PRH or transitional housing units, they will eventually join the waiting queue. At present, the 7120 LEGISLATIVE COUNCIL ― 21 February 2019

Government is earnestly encouraging non-government organizations and the private sector to participate in the provision of units under the transitional housing scheme. But how many units can the scheme yield? Briefly, it is "a drop in the ocean", which can never solve the housing problem of local residents.

If the transitional housing scheme is to be effective and beneficial to the local people whose housing need is long overdue, the Government must revise the population policy and get back the right of vetting and approving OWPs. The Hong Kong Government will examine whether each application for immigration to Hong Kong is indeed eligible, and taking into account the society's capacity to bear, before approval is granted.

Housing issues are about supply as well as demand. Since increasing supply is so difficult, the Government must suppress demand. The Government must adopt a multi-pronged approach to resolve―I should use the word "improve" instead of "resolve"―to improve the serious situation of endless waiting for public housing in Hong Kong.

MR STEVEN HO (in Cantonese): President, after hearing the speeches of a few Members, I also want to speak to express my feelings―especially when I heard "Slow Beat" mentioned about the pressure on public housing in Hong Kong caused by the housing demand of new arrivals. Nonetheless, Mr Vincent CHENG's motion today will not focus on the impact caused by a particular group. We just hope to find a relief for the overall housing problem in Hong Kong. Of course, the provision of transitional housing may not solve all the problems, but for those who are waiting for public housing, this might also be a direction that can be tried out. Therefore, we also hope that the SAR Government will strengthen its support in this regard.

Secondly, I have to respond to the speech made by "Slow Beat" just now. Actually, if we recall the days when our generation grew up in Hong Kong, we used to live in public rental housing ("PRH") estates. I used to live in Yau Oi Estate and my grandmother had lived in the demolished Sun Fat Estate. My grandmother was really something. She had given birth to more than 10 children. At that time, eight, nine or ten persons could live together in a PRH unit of 300-400 sq ft. Well, ask yourself, does this type of living condition LEGISLATIVE COUNCIL ― 21 February 2019 7121 common in PRH units now? When we hear that a unit has six tenants, we would already say that it is very crowded. Even a unit with five members is conceived as crowded and household splitting is requested.

Therefore, after we have read some statistics, we will have a clear idea about the average number of persons living in PRH flats, from five point something, six point something in the past 30 years to two point something, three point something in the present. So, to a certain extent, this is also one of the main reasons leading to the shortage of PRH units. Of course, a Member has specifically queried how new arrivals could successfully obtained PRH units. To a certain extent, the phenomenon is the result of someone winning a case in the past. But I do not want to mention these political issues here today. Instead, we should focus on today's motion.

Furthermore, why do I rise and speak today? That is because I have seen in the amendment of Mr Tony TSE the proposal to develop agricultural land, and I would like to make a very important statement here. Yesterday we have heard the Government said that it would fully accept the proposals of the Task Force on Land Supply ("Task Force") on Lantau Tomorrow Vision. The report specifically mentions that whether it is to develop the Lantau Tomorrow Vision or to develop agricultural land through public-private partnership, relevant measures to better support the agricultural and fisheries industries should be implemented. Therefore, I would like to take this opportunity to point out to all Members, any future amendment or motion proposed by Members that will touch on the sea or agricultural land, if not accompanied by any proposal to assist the agricultural and fisheries industries, I would not give my support to any of them.

Therefore, whenever you talk about the development of agricultural land in the future … I understand that Mr Tony TSE may have missed it out when drafting the amendment. He might not think that way deep down, but the wordings are evident. If we want to get a motion passed at the Legislative Council and oblige the Government to implement certain policies, we must be very careful with each word. Therefore, I hope that today will be my last time not to vote because the amendment of Mr Tony TSE talks about the development of agricultural land. But in all future amendments or motions, whenever the agricultural and fisheries industries are mentioned―I reiterate once again―I request Members to make corresponding suggestions to support the development 7122 LEGISLATIVE COUNCIL ― 21 February 2019 of agricultural and fisheries industries. Why do I talk like this? Looking at our society, the SAR Government is facing the pressure on housing supply today, while the people of Hong Kong―even our fellows living in PRH units, the Home Ownership Scheme flats or mortgaged private properties―they are not living a very happy life.

A friend from the Mainland once told me that making $1 million in Hong Kong and making $1 million in the Mainland are totally different in terms of contentment and satisfaction, because life in Hong Kong is too stressful. How come our lives are so stressful? One of the reasons is that the Government has failed to create an environment in which all industries are thriving. Therefore, even if the Task Force has submitted the report and Members have made proposals for the construction of more public housing units, the Government should also bear in mind that the industries now operating on brownfield sites are also sustaining the livelihood of many Hong Kongers, even though they have illegally converted the uses of brownfields or agricultural land into carparks. Of course, I am not happy with the devastation done to the farmland. Yet the industries are just stowing some commercial vehicles on those sites, which are financial tools for making a living. Therefore, even if we build more PRH and transitional housing units, in the absence of sufficient employment opportunities, how can they be happy?

Therefore, I would like to make myself clear to the SAR Government again today about the importance of supporting measures. Whether the public can live happily is not only about having a shelter to dwell under, there need to have supporting elements like employment and recreation. Recently, many Members have also begun to pay attention to whether there are cinemas in the residential neighbourhood. Therefore, I hope that the SAR Government will pay attention to this aspect of development. I reiterate once again that as of today, I still haven't heard the Secretary for Development Michael WONG, upon acceptance of the report of the Task Force, said anything about making adjustments, providing concession or coordination for the agricultural and fisheries industries or other related industries. I still haven't heard anything about this.

Of course, many people also want to compel me to state my position and ask me whether I support or oppose the proposals. I am sorry that until today, I am still waiting for the SAR Government to propose a plan before I can tell you LEGISLATIVE COUNCIL ― 21 February 2019 7123 whether I am for or against. Even "Carrie LAM" … it is easy for her, she can just say let's take it all, let's do it. Yet this is not an excuse for the SAR Government to adopt the "across-the-board manner". If there are no other supporting measures, sorry, I would lobby the Democratic Alliance for the Betterment and Progress of Hong Kong not to give their support.

Therefore, I hope that the SAR Government will pay double attention. I would also like to say sorry to Mr Tony TSE again because I cannot vote in favour of his amendment today, but I will not vote against it or abstain from voting. I think I have shown due respect to him in doing so. Thank you, President. I so submit.

PRESIDENT (in Cantonese): Does any other Member wish to speak? Mr WU Chi-wai, please speak.

MR WU CHI-WAI (in Cantonese): President, when we talk about increasing transitional housing supply, we actually have to examine the overall demand for housing in the community. Of course, there are two aspects to the present housing demand that need to be dealt with.

First of all, we must examine Hong Kong's population policy―the 150 daily quotas for One-way Permit holders who come to Hong Kong for various reasons―is the society's overall capacity to bear able to cope with this population growth? And how? Or how can we effectively manage the social pressure brought by the increase in population of various kind? I think this is a very important topic, but the Government has not yet provided a good answer until today. We may not be able to grasp even the most basic information about the needs of those who are coming to Hong Kong, whether related to services or other types of needs. Therefore, I personally think that from the perspective of population policy or population planning, the Government has the responsibility and the capability to examine the background of the people who are coming to Hong Kong, and the kind of services they need. A different stance should be taken, not just accepting whoever is sent here. This is a fairly basic condition. Of course, discussions of more important or more serious population policies may only be ensued on another occasion.

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Secondly, I would like to talk about a basic problem, i.e. Hong Kong people are very discontented with the housing situation. "Without a roof" is of course a problem, too many people have no alternative but live in subdivided units is also a problem. Yet the more important thing is, we notice that the Government is letting Hong Kong's precious land to lie idle. As Mr Andrew WAN has mentioned in his amendment that the site reserved for the second phase development of the Hong Kong Disneyland covers 60 hectares, is it a mission impossible to use a small portion of it for the construction of transitional housing? If the Government allows no discussion of the matter and just says that's not viable, is it fair to the people who have an overall demand for housing in the community? Yet in the blink of an eye, the Government has turned the site into a "flower-themed park". It looks like that the problem of idling the land is solved, but the land is just used for "flower sunbathing". How can members of the public be convinced by this approach and attitude? Of course, the Option to purchase this land has automatically been extended now. But don't forget that in 2025, Disneyland may again apply for extended use of this land if its attendance has reached a certain level. The Option is valid for 30 years, even though no one knows if there will be any further development. In other words, although there is such a large piece of land in our community, it is allowed to "sunbath" without anyone knowing whether it will be developed or when it will be developed. This is another reason why the public is not convinced.

Furthermore, we have long been talking about the demand for reclamation and the land use planning for nearshore reclamation sites. One of the projects that we have given up studying is the Sunny Bay Reclamation. What will be its land use after reclamation? We have had many discussions today. In the past, there were suggestions to use the reclaimed land as theme park or proposals to use it as car racing tracks. With the changes in social economy or land needs, we say that the society's prevailing demand for housing was great. Proposals to resume brownfield sites are even raised, but those against this proposal have queried how the Government would handle the economic operations on the brownfield sites. Still, even if this reclamation project is successfully carried out in the end, if the land is eventually planned for a theme park, the public would feel that such land use is very unfair. New arrivals are snatching resources in many aspects; the Government is also constructing "toothpick buildings" in every community and still blaming those withholding the green light as ignoring the housing needs. But then, is it the Government themselves who have made a bigger mistake. Have they ever thought about finding a solution?

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Thirdly, while we are always talking about the construction of transitional housing, I remember that in her last Policy Address, Mrs Carrie LAM has suggested the promotion of the idea of letting subsidized sale flats with premium unpaid. The Hong Kong Housing Society was asked to arrange some odd and complicated procedures permitting the owners to sublet their flat but not letting out the whole flat, and various kinds of restrictions were also proposed. Well, let us not forget that there are as many as 300 000 Home Ownership Scheme flats with premium unpaid. How much potential supply will be created if the policy is relaxed? In fact, if the Government does not take a drastic step, how can we achieve this goal? Besides, we have frozen housing supply at the policy level.

Fourthly, some colleagues mentioned that whether for the developers themselves or the Government itself, there are often some planning with a definite implementation table but not yet dealt with for a long time, be it vacant school premises, community equipment or facilities. I remember that there is a community hall in my constituency. Years back, my colleagues said that the old structure should be demolished. In the end, we fortunately managed to keep that old community hall. Yet no related modification plan is seen so far. In other words, discordant planning among different government departments is also pretty annoying. While on the one hand, the Government stresses that housing needs are so important to the society, but on the other hand, it allows various departments to pass the buck around. Although land is available, delays are caused due to various restrictions and the land cannot be used for transitional housing. If the Government fails to fully review these problems to convince the public, then there is only a slim chance that our housing problem could be resolved. I hope that the Government will face these problems squarely.

PRESIDENT (in Cantonese): Does any other Member wish to speak?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Mr Vincent CHENG, you may now speak on the amendments. The time limit is five minutes.

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MR VINCENT CHENG (in Cantonese): President, in the absence of any rental control and rental subsidies these days, transitional housing is actually the only option for improving the living environment of grass-roots households who are in a dire wait for public housing allocation. I believe that today, Members all hope that the Government can pay heed to their demand for more, faster actions. So, I strongly hope that the motion today can be passed smoothly in the end, so as to reflect a clear inclination held by the entire legislature, the inclination that it requests the Government to increase transitional housing supply more proactively.

Speaking of the seven amendments today, I must first thank all those Members for their recommendations on the motion. Many amendments are supplementary by nature, and they have retained the main part of the original motion and enriched its contents. For instance, Mr Tony TSE proposes to consider the idea of constructing transitional housing on those sites which will not be used by the Government in the next five years. Another example is Ms Alice MAK's proposals of providing a one-stop information and application website for transitional housing programmes, and expanding the establishment of the Task Force on Transitional Housing. These proposals are very desirable, and the Democratic Alliance for the Betterment and Progress of Hong Kong will support these amendments.

I also thank various Members for raising different views in their earlier speeches. Among them, Mr WU Chi-wai mentioned how vacant school premises could be used effectively; Mr YIU Si-wing discussed how to communicate and liaise with community organizations; and Ms CHAN Hoi-yan asserted that not only residents of subdivided units but also those living in dilapidated buildings would be affected.

Nevertheless, I cannot totally agree to some amendment contents, and I do not quite understand them either. The issue of transitional housing has actually been discussed many times at Panel meetings and followed up by a Subcommittee. The impression I get every time is that without any distinction of political affiliation, Members invariably think that the Government has not done enough or offered any policy support, and it has shirked its responsibility. As mentioned by many Members earlier on, its development is led mainly by community organizations, and they hope that the Government can also play a part. But strangely enough, Mr CHU Hoi-dick's amendment has deleted the part LEGISLATIVE COUNCIL ― 21 February 2019 7127 concerning my request for active participation from the Hong Kong Housing Authority, the Hong Kong Housing Society ("HS") and also the Urban Renewal Authority ("URA"). If the Government is to step up its efforts as we have requested, the prerequisite is that three organizations must be involved, namely HS, URA and also the Housing Department. So, I cannot support this amendment.

Second, I cannot support Mr Jeremy TAM's amendment either. Just now, I heard Mr TAM's thoughts. He was concerned that the inclusion of transitional housing into the Long Term Housing Strategy would affect housing supply. I wish to reiterate one point. As also mentioned by Mr Wilson OR just now, the transitional housing we now talk about concerns the effective use of certain idle government sites or places currently not in use, such as Yue Kwong Chuen. Another example is the Yen Chow Street project in Sham Shui Po which I have been following up. Why can't the site be used to construct public housing? Because there are many underground facilities at the site, and it is simply impossible to conduct piling works. We are talking about such sites, and housing supply under the Long Term Housing Strategy definitely will not be affected. So, I hope Mr Jeremy TAM can consider supporting my motion.

Lastly, I hope we can work hard and strive for transitional housing together. President, I so submit.

UNDER SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, I thank the Members who spoke just now. In this closing remark, I wish to supplement a few points.

We have listened to many Members expressing their valuable advice on transitional housing. They hope that people living in inadequate housing conditions can alleviate their housing difficulties through transitional housing. As mentioned by the Secretary for Transport and Housing in the opening remark, the Task Force led by the Under Secretary for Transport and Housing will provide one-stop coordinated support on transitional housing matters. This includes offering advice to non-government organizations on administrative or statutory procedures and assisting them in applying for suitable funding support.

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The Government has assisted several transitional housing projects initiated by the non-government organizations. The details of each project are different. The non-government organizations responsible for the projects have flexibly used community resources to provide transitional housing, while meeting the needs of the residents and providing suitable support to them. Some such examples are social housing in existing vacant residential buildings, as well as other projects initiated by different non-government organizations on vacant Government lands and private lands by using "Modular Integrated Construction" method. It is expected that, together with the projects now being launched, about 900 housing units can be provided, together with various social services such as job placement and counselling. The Task Force is also assisting other transitional housing projects of different natures. These projects are located in different districts. Some in the urban area and some in the rural area. One example is transitional housing projects that are converted from vacant non-residential buildings (such as school premises).

Just now, some Members also expressed their views on the location of individual projects. We are open on this point. The Task Force welcomes the non-government organizations to suggest locations for different projects, whether in residential, non-residential or vacant sites. The Task Force will follow up the administrative procedures or statutory requirements concerned and advise on and assist in the application for funding support and the technical details.

Some Members suggest using the site reserved for Phase 2 development of the Hong Kong Disneyland Resort ("HKDL") for transitional housing. According to the Option Deed signed in 2000 between the Government and the Hongkong International Theme Parks Limited, i.e. the joint venture with the Government and the Walt Disney Company as shareholders ("the joint venture"), the joint venture has an Option to purchase the Phase 2 site for taking forward HKDL's further development. Before the joint venture exercises the Option, the site can be used for short-term uses as listed in the Deed of Restrictive Covenant. These permitted uses include recreational, sports and cultural facilities, but not for residential purposes (including the construction of transitional housing). When considering these short-term uses, the Government also needs to take into account whether such uses are compatible with the use and atmosphere of HKDL. The Government has to respect the spirit of the contract and has no intention to alter the existing land uses of the Phase 2 site.

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Some Members also request the Urban Renewal Authority ("URA") to participate in the provision of transitional housing. In fact, URA constantly provides residential units in old buildings for the Hong Kong Council of Social Service to use in the Community Housing Movement. We will continue to encourage URA to provide more housing units which are suitable for use as transitional housing.

Basically, we adopt an open attitude on how to make available more transitional housing since transitional housing may come in different arrangements and with different ideas. We hope to bring together community efforts, especially allowing different non-government organizations to extend their creativity and expertise to provide various kinds of transitional housing projects, so as to tie in with the needs of the residents and provide different social services. From the perspective of the Government, we hope that there can be more supply of transitional housing. Given the short-term nature of transitional housing, and the different arrangements and objective situations of the projects, it is impractical, nor helpful to the work of non-government organizations, to lay down rigid targets, such as fixing the number of housing units or beneficiaries. Nevertheless, this does not mean that the Task Force does not have a work target. Through this debate today, we will review the future work of the Task Force, with a view to more effectively taking forward transitional housing projects. We will strive to increase the supply of transitional housing by maintaining our role as a helper and facilitator and continuing with discussions on how to relax the restrictions through the policy.

Regarding the provision of subsidies, as mentioned by the Secretary for Transport and Housing in the opening remark, the Finance Committee of the Legislative Council approved the Government's proposal in January 2019 to set up a $1 billion fund to support the non-government organizations to carry out site formation works on vacant government sites and restore vacant school premises for short-term uses. The fund can also provide funding support to applicable transitional housing projects. The service targets, specific details and the service natures differ among individual transitional housing projects initiated by the non-government organizations. The Task Force will continue to advise on the funding applications according to individual cases. The Government notes the requests of Members and stakeholders to increase the financial supports in taking forward transitional housing projects, and is actively considering the proposals.

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As a matter of fact, the Government has been exchanging views with social welfare agencies, professional bodies and Legislative Council Members on how to take forward and support transitional housing projects led by the non-government organizations. The Legislative Council set up in December 2018 a subcommittee under the Panel on Housing titled the Subcommittee to Follow Up Issues Related to Inadequate Housing and Relevant Housing Policies ("the Subcommittee"). In the past three meetings of the Subcommittee, many of its members pointed out the problems with transitional housing. In the administrative paper recently submitted by the Government, it sets out in detail the measures and specific work of the Government in this regard. We will continue to humbly listen to views through different platforms and pragmatically work with project proposers to jointly take forward feasible projects.

However, as mentioned by the Secretary in the opening remark, transitional housing is only a short-term relief measure. The Government has repeatedly pointed out that a fundamental way to reverse the housing supply imbalance and resolve housing issues in the long run is to constantly increase land and housing supply in accordance with the Long Term Housing Strategy. Increasing the supply can help stabilize property prices and rents, and ultimately benefit different walks of life who intend to buy their own housing or rent a private residential flat.

Many Members have provided their views on transitional housing in this motion debate. We will carefully consider these views, and take these valuable views to the Task Force and integrate them into its future work. We will continue to think out of the box and assist and facilitate various short-term community initiatives to increase the supply of transitional housing, with a view to alleviating the hardship faced by families on the public rental housing waiting list and the inadequately housed. Thank you, President.

PRESIDENT (in Cantonese): I now call upon Mr Tony TSE to move an amendment.

MR TONY TSE (in Cantonese): President, I move that Mr Vincent CHENG's motion be amended.

The amendment moved by Mr Tony TSE (See the marked-up version at Annex 7)

LEGISLATIVE COUNCIL ― 21 February 2019 7131

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr Tony TSE's amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Jeremy TAM rose to claim a division.

PRESIDENT (in Cantonese): Mr Jeremy TAM has claimed a division. The division bell will ring for five minutes.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr Tommy CHEUNG, Ms Starry LEE, Mr CHAN Kin-por, Mr Frankie YICK, Mr YIU Si-wing, Mr POON Siu-ping, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan, Mr Holden CHOW, Mr SHIU Ka-fai, Dr Pierre CHAN, Mr CHAN Chun-ying, Mr LUK Chung-hung and Mr Tony TSE voted for the amendment.

7132 LEGISLATIVE COUNCIL ― 21 February 2019

Mr James TO, Mr LEUNG Yiu-chung, Prof Joseph LEE, Mr Charles Peter MOK, Mr IP Kin-yuen, Mr SHIU Ka-chun and Mr KWONG Chun-yu voted against the amendment.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr WONG Kwok-kin, Mr Michael TIEN, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Ms Alice MAK, Mr KWOK Wai-keung, Dr Elizabeth QUAT, Dr Junius HO, Mr Wilson OR, Mr CHEUNG Kwok-kwan, Mr Vincent CHENG and Ms CHAN Hoi-yan voted for the amendment.

Ms Claudia MO, Mr WU Chi-wai, Mr CHAN Chi-chuen, Dr Fernando CHEUNG, Dr Helena WONG, Mr Alvin YEUNG, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin voted against the amendment.

THE PRESIDENT announced that among the Members returned by functional constituencies, 22 were present, 14 were in favour of the amendment and 7 against it; while among the Members returned by geographical constituencies through direct elections, 28 were present, 14 were in favour of the amendment and 14 against it. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.

MS STARRY LEE (in Cantonese): President, I move that in the event of further divisions being claimed in respect of the motion on "Increasing transitional housing supply" or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

LEGISLATIVE COUNCIL ― 21 February 2019 7133

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Ms Starry LEE be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

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.

I order that in the event of further divisions being claimed in respect of the motion concerned or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute.

PRESIDENT (in Cantonese): Ms Alice MAK, you may move your amendment.

MS ALICE MAK (in Cantonese): President, I move that Mr Vincent CHENG's motion be amended.

The amendment moved by Ms Alice MAK (See the marked-up version at Annex 8)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Ms Alice MAK's amendment be passed.

7134 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

PRESIDENT (in Cantonese): I think the question is agreed by …

(Mr Jeremy TAM indicated his wish to claim a division)

PRESIDENT (in Cantonese): As a number of Members were walking around in the Chamber just now, I could not see clearly. Any Member who wishes to claim a division should rise and indicate his/her wish to the President. How can the President see clearly when Members walk around freely in the Chamber?

Mr Jeremy TAM rose to claim a division.

PRESIDENT (in Cantonese): Mr Jeremy TAM has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Mr Tommy CHEUNG, Prof Joseph LEE, Ms Starry LEE, Mr CHAN Kin-por, Mr Steven HO, Mr Frankie YICK, Mr YIU Si-wing, Mr Charles Peter MOK, Mr IP Kin-yuen, Mr POON Siu-ping, Ir Dr LO LEGISLATIVE COUNCIL ― 21 February 2019 7135

Wai-kwok, Mr CHUNG Kwok-pan, Mr Holden CHOW, Mr SHIU Ka-fai, Mr SHIU Ka-chun, Mr CHAN Chun-ying, Mr LUK Chung-hung, Mr KWONG Chun-yu and Mr Tony TSE voted for the amendment.

Dr Pierre CHAN voted against the amendment.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr WONG Kwok-kin, Mr Michael TIEN, Mr WU Chi-wai, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Ms Alice MAK, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Dr Elizabeth QUAT, Mr Andrew WAN, Dr Junius HO, Mr LAM Cheuk-ting, Mr Wilson OR, Mr CHEUNG Kwok-kwan, Mr Vincent CHENG and Ms CHAN Hoi-yan voted for the amendment.

Dr CHENG Chung-tai voted against the amendment.

Ms Claudia MO, Mr CHAN Chi-chuen, Mr Alvin YEUNG, Mr CHU Hoi-dick, Ms Tanya CHAN, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 21 were in favour of the amendment and 1 against it; while among the Members returned by geographical constituencies through direct elections, 28 were present, 19 were in favour of the amendment, 1 against it and 8 abstained. Since the question was agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was passed.

7136 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): Members have already been informed that as Ms Alice MAK's amendment has been passed, Mr CHU Hoi-dick and Mr Jeremy TAM have withdrawn their amendments.

PRESIDENT (in Cantonese): Mr SHIU Ka-chun, as the amendment of Ms Alice MAK has been passed, you may move your revised amendment.

MR SHIU KA-CHUN (in Cantonese): President, I move that Mr Vincent CHENG's motion be further amended by my revised amendment.

The revised amendment moved by Mr SHIU Ka-chun (See the marked-up version at Annex 9)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr SHIU Ka-chun's revised amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

Mr SHIU Ka-chun rose to claim a division.

PRESIDENT (in Cantonese): Mr SHIU Ka-chun has claimed a division. The division bell will ring for one minute.

LEGISLATIVE COUNCIL ― 21 February 2019 7137

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Mr Tommy CHEUNG, Prof Joseph LEE, Ms Starry LEE, Mr CHAN Kin-por, Mr Steven HO, Mr Frankie YICK, Mr YIU Si-wing, Mr Charles Peter MOK, Mr IP Kin-yuen, Mr POON Siu-ping, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan, Mr Holden CHOW, Mr SHIU Ka-fai, Mr SHIU Ka-chun, Dr Pierre CHAN, Mr CHAN Chun-ying, Mr LUK Chung-hung, Mr KWONG Chun-yu and Mr Tony TSE voted for the amendment.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr WONG Kwok-kin, Ms Claudia MO, Mr Michael TIEN, Mr WU Chi-wai, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Ms Alice MAK, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Dr Elizabeth QUAT, Mr Andrew WAN, Mr CHU Hoi-dick, Dr Junius HO, Mr LAM Cheuk-ting, Mr Wilson OR, Mr CHEUNG Kwok-kwan, Mr AU Nok-hin, Mr Vincent CHENG and Ms CHAN Hoi-yan voted for the amendment.

Mr CHAN Chi-chuen, Mr Alvin YEUNG, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM and Mr Gary FAN abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present and 22 were in favour of the amendment; while among the Members returned by geographical constituencies through direct 7138 LEGISLATIVE COUNCIL ― 21 February 2019 elections, 28 were present, 22 were in favour of the amendment and 6 abstained. Since the question was agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was passed.

PRESIDENT (in Cantonese): Mr Andrew WAN, as the amendments of Ms Alice MAK and Mr SHIU Ka-chun have been passed, you may move your revised amendment.

MR ANDREW WAN (in Cantonese): President, I move that Mr Vincent CHENG's motion be further amended by my revised amendment.

The revised amendment moved by Mr Andrew WAN (See the marked-up version at Annex 10)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr Andrew WAN's revised amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Gary FAN rose to claim a division.

PRESIDENT (in Cantonese): Mr Gary FAN has claimed a division. The division bell will ring for one minute.

LEGISLATIVE COUNCIL ― 21 February 2019 7139

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Prof Joseph LEE, Ms Starry LEE, Mr Steven HO, Mr Charles Peter MOK, Mr IP Kin-yuen, Mr POON Siu-ping, Mr Holden CHOW, Mr SHIU Ka-chun, Dr Pierre CHAN, Mr LUK Chung-hung and Mr KWONG Chun-yu voted for the amendment.

Mr Tommy CHEUNG, Mr Frankie YICK, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr SHIU Ka-fai voted against the amendment.

Mr CHAN Kin-por, Mr YIU Si-wing, Mr CHAN Chun-ying and Mr Tony TSE abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Mr WONG Kwok-kin, Ms Claudia MO, Mr Michael TIEN, Mr WU Chi-wai, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Ms Alice MAK, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Dr Elizabeth QUAT, Mr Andrew WAN, Mr CHU Hoi-dick, Mr LAM Cheuk-ting, Mr Wilson OR, Mr CHEUNG Kwok-kwan, Mr AU Nok-hin and Mr Vincent CHENG voted for the amendment.

Dr Junius HO voted against the amendment.

7140 LEGISLATIVE COUNCIL ― 21 February 2019

Dr Priscilla LEUNG, Mr CHAN Chi-chuen, Mr Alvin YEUNG, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM, Mr Gary FAN and Ms CHAN Hoi-yan abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 13 were in favour of the amendment, 5 against it and 4 abstained; while among the Members returned by geographical constituencies through direct elections, 28 were present, 19 were in favour of the amendment, 1 against it and 8 abstained. Since the question was agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was passed.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung, as the amendments of Ms Alice MAK , Mr SHIU Ka-chun and Mr Andrew WAN have been passed, you may move your revised amendment.

MR LEUNG YIU-CHUNG (in Cantonese): President, I move that Mr Vincent CHENG's motion be further amended by my revised amendment.

The revised amendment moved by Mr LEUNG Yiu-chung (See the marked-up version at Annex 11)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr LEUNG Yiu-chung's revised amendment be passed.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

LEGISLATIVE COUNCIL ― 21 February 2019 7141

Mr Gary FAN rose to claim a division.

PRESIDENT (in Cantonese): Mr Gary FAN has claimed a division. The division bell will ring for one minute.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Prof Joseph LEE, Ms Starry LEE, Mr Steven HO, Mr Frankie YICK, Mr Charles Peter MOK, Mr IP Kin-yuen, Mr POON Siu-ping, Ir Dr LO Wai-kwok, Mr Holden CHOW, Mr SHIU Ka-chun, Dr Pierre CHAN and Mr KWONG Chun-yu voted for the amendment.

Mr Tommy CHEUNG, Mr CHAN Kin-por, Mr YIU Si-wing, Mr CHUNG Kwok-pan, Mr SHIU Ka-fai, Mr CHAN Chun-ying and Mr Tony TSE voted against the amendment.

Mr LUK Chung-hung abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Ms Claudia MO, Mr Michael TIEN, Mr WU Chi-wai, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Dr Fernando CHEUNG, Dr Helena WONG, Dr Elizabeth QUAT, Mr Andrew WAN, Mr CHU 7142 LEGISLATIVE COUNCIL ― 21 February 2019

Hoi-dick, Dr Junius HO, Mr LAM Cheuk-ting, Mr Wilson OR, Mr CHEUNG Kwok-kwan, Mr AU Nok-hin, Mr Vincent CHENG and Ms CHAN Hoi-yan voted for the amendment.

Mr WONG Kwok-kin, Mr CHAN Chi-chuen, Ms Alice MAK, Mr KWOK Wai-keung, Mr Alvin YEUNG, Ms Tanya CHAN, Dr CHENG Chung-tai, Mr Jeremy TAM and Mr Gary FAN abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 14 were in favour of the amendment, 7 against it and 1 abstained; while among the Members returned by geographical constituencies through direct elections, 28 were present, 19 were in favour of the amendment and 9 abstained. Since the question was agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was passed.

PRESIDENT (in Cantonese): Mr Vincent CHENG, you still have 1 minute 44 seconds to reply. Then, the debate will come to a close.

MR VINCENT CHENG (in Cantonese): President, to begin with, I wish to take this opportunity to thank the seven Members for their amendments and also the 15 Members for their speeches. I also hope that Members, whether they are now walking, standing or sitting, can support my motion.

I agree to Members' various viewpoints. Most of the viewpoints can serve as a valuable source of reference, and they are not in conflict with the contents of my original motion. As I said at the outset, we can drive the supply of transitional housing only with a transitional housing fund, financial support, a policy and also a supply target for such units. I hope this is the legislature's consensus, something keenly anticipated by the organizations participating in the coordination of transitional housing schemes and also those living in inadequate housing conditions such as subdivided units.

LEGISLATIVE COUNCIL ― 21 February 2019 7143

President, Members often say that the 100 000 or so residents of subdivided units are living their life in dire conditions every day. Hong Kong is an international metropolis, but its living environment is very appalling. Hong Kong people have been very hard-working all along, and they honestly deserve a better living environment.

As for some Members' concern that the promotion of transitional housing may affect public housing supply, I wish to stress that the sites in our present proposals are those idle government sites and school campuses, together with lands under short-term tenancies. Or, transitional housing can be provided by converting existing housing buildings. I do not believe public housing supply will thus be affected. I also agree to some Members' assertion that it is necessary to ensure a turnover of such units, so as to increase the opportunity for receiving public housing allocation among those living in subdivided units. I sincerely hope that Members can support my motion. A journey of a thousand miles begins with a single step. Thank you, President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr Vincent CHENG, as amended by Ms Alice MAK, Mr SHIU Ka-chun, Mr Andrew WAN and Mr LEUNG Yiu-chung, be passed. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Gary FAN rose to claim a division.

PRESIDENT (in Cantonese): Mr Gary FAN has claimed a division. The division bell will ring for one minute.

7144 LEGISLATIVE COUNCIL ― 21 February 2019

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Functional Constituencies:

Mr James TO, Mr LEUNG Yiu-chung, Prof Joseph LEE, Ms Starry LEE, Mr Steven HO, Mr Charles Peter MOK, Mr IP Kin-yuen, Mr POON Siu-ping, Mr Holden CHOW, Mr SHIU Ka-chun, Dr Pierre CHAN, Mr LUK Chung-hung and Mr KWONG Chun-yu voted for the motion as amended.

Mr Tommy CHEUNG, Mr Frankie YICK, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr SHIU Ka-fai voted against the motion as amended.

Mr CHAN Kin-por, Mr YIU Si-wing, Mr CHAN Chun-ying and Mr Tony TSE abstained.

THE PRESIDENT, Mr Andrew LEUNG, did not cast any vote.

Geographical Constituencies:

Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mr WONG Kwok-kin, Ms Claudia MO, Mr Michael TIEN, Mr WU Chi-wai, Mr CHAN Han-pan, Mr LEUNG Che-cheung, Ms Alice MAK, Mr KWOK Wai-keung, Dr Fernando CHEUNG, Dr Helena WONG, Dr Elizabeth QUAT, Mr Andrew WAN, Dr Junius HO, Mr LAM Cheuk-ting, Mr Wilson OR, Mr CHEUNG Kwok-kwan, Mr Vincent CHENG and Ms CHAN Hoi-yan voted for the motion as amended.

Dr CHENG Chung-tai voted against the motion as amended.

LEGISLATIVE COUNCIL ― 21 February 2019 7145

Mr CHAN Chi-chuen, Mr Alvin YEUNG, Mr CHU Hoi-dick, Ms Tanya CHAN, Mr Jeremy TAM, Mr Gary FAN and Mr AU Nok-hin abstained.

THE PRESIDENT announced that among the Members returned by functional constituencies, 23 were present, 13 were in favour of the motion as amended, 5 against it and 4 abstained; while among the Members returned by geographical constituencies through direct elections, 28 were present, 20 were in favour of the motion as amended, 1 against it and 7 abstained. Since the question was agreed by a majority of each of the two groups of Members present, he therefore declared that the motion as amended was passed.

(Ir Dr LO Wai-kwok stood up, indicating that he had pressed the wrong button when casting his vote earlier and expressing his wish to make correction)

PRESIDENT (in Cantonese): Ir Dr LO, I have already announced the voting result, and it cannot be changed. But your voting intention will be put on record.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the Council until 11:00 am on Wednesday, 27 February 2019.

Adjourned accordingly at 7:27 pm.

7146 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 1

The marked-up version of the amendment moved by Mr CHAN Kin-por (Translation)

That the fundamental concept of the Mandatory Provident Fund ('MPF') schemes, implemented in 2000, is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, the average loss of each scheme member has exceeded $8,000, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation; in order to put the retirement savings of scheme members to more practical use after deducting the administration fees, the annualized rate of return for MPF was 4.8%, which had far outpaced inflation; but due to fluctuations in the investment market in recent years, MPF's overall rate of return has been highly volatile, even though a 22.3% rate of return was recorded in 2017, the rate dropped to -8.83% in 2018, some scheme members are thus worried that MPF is insufficient to cope with their retirement life; in this connection, this Council urges the Government to revitalize MPF by allowing enhancing the existing MPF schemes, including streamlining the administrative processes, proactively promoting paperless employer contributions and expeditiously introducing an eMPF centralized electronic platform, so as to substantially reduce administration fees, thereby raising MPF's overall rate of return in the long run; increasing the amount of tax deduction for voluntary MPF contributions to encourage middle-class people to make more contributions; and promoting financial management education to teach people how to effectively manage MPF; and at the same time, the Government should allow scheme members flexibility and autonomy in using MPF to take out medical insurance, so that when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment LEGISLATIVE COUNCIL ― 21 February 2019 7147

expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system.

Note: Mr CHAN Kin-por's amendment is marked in bold and italic type or with deletion line.

7148 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 2

The marked-up version of the amendment moved by Mr LUK Chung-hung (Translation)

That, although the fundamental concept of the Mandatory Provident Fund ('MPF') schemes have been implemented for years, their effectiveness have always been criticized by society; the fundamental concept of the MPF schemes is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement, but not all people can be benefited, coupled with the Government's delay in implementing the establishment of a universal retirement protection system, the retirement life of some members of the public therefore lacks protection; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, the average loss of each scheme member has exceeded $8,000, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation its average return rate has not only failed to deliver a good investment return for years, the performance of individual funds has also lagged behind the inflation rate, seriously affecting the retirement protection of wage earners; in order to put the retirement savings of scheme members to more practical use establish a better retirement system, this Council urges the Government to, through improving the current MPF system, revitalize MPF by allowing scheme members flexibility and autonomy in using MPF to take out medical insurance, so that when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system to enhance retirement protection for the public; specific measures include:

LEGISLATIVE COUNCIL ― 21 February 2019 7149

(1) expeditiously implementing the abolition of MPF offsetting mechanism, and priority to abolish the offsetting arrangement should be accorded to non-civil service contract staff, and employees of outsourced companies and intermediaries;

(2) expeditiously implementing MPF full portability to allow scheme members freedom to choose MPF trustees;

(3) enhancing MPF's Default Investment Strategy ('DIS'), including lowering the total fee cap under DIS, reviewing annually DIS' effectiveness, and the Government or non-profit-making organizations taking the lead in establishing DIS, so as to promote market competition, lower the overall fee levels of funds and improve service quality;

(4) encouraging fund trustees to launch more low fee funds, including index funds and guaranteed funds, so as to provide scheme members with more investment choices; and

(5) paying employees' MPF contributions for low-income scheme members to enhance their retirement protection.

Note: Mr LUK Chung-hung's amendment is marked in bold and italic type or with deletion line.

7150 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 3

The marked-up version of the amendment moved by Mr WONG Ting-kwong (Translation)

That after the Government implemented the Mandatory Provident Fund ('MPF') schemes in 2000, the community has continuously put forward different proposals relating to the choice of investment products, trustee fees and usage of MPF; the fundamental concept of the Mandatory Provident Fund ('MPF') schemes is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by trustee fees and inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, the average loss of each scheme member has exceeded $8,000, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation; in order to put the retirement savings of scheme members to more practical use, this Council urges the Government to revitalize MPF schemes to minimize the erosion of MPF, and by allowing allow scheme members flexibility and autonomy in investing and using MPF; specific measures include:

(1) further lowering MPF trustee fees and conducting a study on requiring trustees to collect fixed administration fees;

(2) encouraging the market to introduce additional MPF investment products, such as products resembling bank deposits that charge no management fees and fund products linked to inflation rates, and examining the introduction of investment products that linked to Exchange Fund returns, etc, with a view to increasing the choice of scheme members;

(3) allowing scheme members to partially withdraw their MPF accrued benefits for first-time home purchase; and

LEGISLATIVE COUNCIL ― 21 February 2019 7151

(4) allowing scheme members to take out medical insurance, so that when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system.

Note: Mr WONG Ting-kwong's amendment is marked in bold and italic type or with deletion line.

7152 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 4

The marked-up version of the amendment moved by Dr KWOK Ka-ki (Translation)

That the problem of ageing population in Hong Kong has become increasingly serious, but Hong Kong's retirement protection system has all along been deficient and incomprehensive, and while a universal retirement protection scheme has obtained the consensus of the majority of members of the public, the Government has refused to implement it; the fundamental concept of the Mandatory Provident Fund ('MPF') schemes is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, the average loss of each scheme member has exceeded $8,000, coupled with the fact that the excessively high MPF administration fees have all along been a subject of criticism, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation; in order to put the retirement savings of scheme members to more practical use enable members of the public to obtain appropriate retirement protection, this Council urges the Government to revitalize MPF before the implementation of a genuine universal retirement protection scheme with tripartite contributions from employees, employers and the Government within the current term of this Government by allowing scheme members flexibility and autonomy in using MPF to take out medical insurance, so that when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system, including lowering the ratios of administration fees and management fees to prevent fund investment companies from gnawing the contributions of LEGISLATIVE COUNCIL ― 21 February 2019 7153

scheme members, and introducing a provision to allow early withdrawal of MPF by scheme members suffering from critical illnesses or in urgent and special circumstances for emergency purposes.

Note: Dr KWOK Ka-ki's amendment is marked in bold and italic type or with deletion line.

7154 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 5

The marked-up version of the amendment moved by Dr Fernando CHEUNG (Translation)

That the fundamental concept of the Mandatory Provident Fund ('MPF') schemes is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, the average loss of each scheme member has exceeded $8,000, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation; in order to put offer better protection to the retirement savings of scheme members to more practical use, this Council urges the Government to revitalize MPF by allowing scheme members flexibility and autonomy in using MPF to take out medical insurance, so that when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system, enacting legislation to regulate the fee cap of MPF administration and management fees charged by MPF trustees, lowering the management fee cap of the Default Investment Strategy to 0.5% or below, allowing employees to choose to deposit part of their contributions into the Exchange Fund, and considering centrally collecting the contributions and managing the records of retirement or pension accounts, so as to further reduce the fees.

Note: Dr Fernando CHEUNG's amendment is marked in bold and italic type or with deletion line.

LEGISLATIVE COUNCIL ― 21 February 2019 7155

Annex 6

The marked-up version of the amendment moved by Mr Paul TSE (Translation)

That the fundamental concept of the Mandatory Provident Fund ('MPF') schemes is to enable working persons to make personal savings through contributions from both employees and employers and receive returns derived from investment of the funds, so as to assist members of the public in coping with life after retirement; from December 2000 to the end of 2017, although the total MPF assets have exceeded $844 billion, the assets have in fact been eroded by inflation, and the return rates have invariably been far from satisfactory over the years; according to a market report in mid-2018, calculated on the basis of MPF's overall performance, the average loss of each scheme member has exceeded $8,000, rendering MPF's real purchasing power being almost exhausted after several decades, which is a worrying situation; in order to put the retirement savings of scheme members to more practical use, this Council urges the Government to revitalize MPF by allowing scheme members flexibility and autonomy in using MPF to pay the down payment of first home purchase, take out medical insurance and subscribe to passive index funds (e.g. the Tracker Fund of Hong Kong) with lower management fees on their own without involving any fund trustees, so that they can acquire their own properties, make good use of their self-occupied properties as reverse mortgage after retirement, minimize the erosion of their contributions by trustees, and when they fall ill, besides seeking medical treatment under the public healthcare system, they may also choose to go to private healthcare institutions, so as to receive appropriate treatment expeditiously; this proposal not only can protect the personal health of members of the public, but also relieve the pressure on the public healthcare system.

Note: Mr Paul TSE's amendment is marked in bold and italic type.

7156 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 7

The marked-up version of the amendment moved by Mr Tony TSE (Translation)

That, the land and housing shortage problem is extremely acute in Hong Kong; according to the projection in the Long Term Housing Strategy Annual Progress Report 2018, over 110 000 households in Hong Kong live in inadequate housing conditions; prior to the allocation of public housing units for such households, transitional housing is an important housing option for them; yet, the failure to include transitional housing in the Long Term Housing Strategy announced on 16 December 2014 and its subsequent annual reviews has resulted in a lack of policy and financial support for transitional housing and its supply stagnancy; in this connection, this Council urges the Government to adopt the following measures to substantially increase transitional housing supply, in a bid to improve the living environment of families living in inadequate housing conditions:

(1) to include transitional housing in the Long Term Housing Strategy, and formulate a supply target for transitional housing, including setting the target of its total supply within the next three years at no less than 10 000 units;

(2) to invite the Hong Kong Housing Authority, the Hong Kong Housing Society and the Urban Renewal Authority to actively increase the provision of transitional housing;

(3) to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing;

(4) to introduce policies for encouraging private land owners to use their idle agricultural lands that will not be able to be used for high-density residential development in the short term for constructing transitional housing, and to let the relevant units to needy people at rents below market rates;

(5) to expedite the vetting and approval of applications for rezoning lands for transitional housing purpose and the works concerned, and, without compromising building and fire safety, to LEGISLATIVE COUNCIL ― 21 February 2019 7157

appropriately relax the restrictions on various aspects of transitional housing, such as ventilation, natural lighting, and kitchen and toilet facilities;

(4)(6) to establish a transitional housing fund of no less than $2 billion, so as to take forward and support various transitional housing schemes; and

(5)(7) to make public a list of idle government lands or facilities that are suitable for transitional housing purpose, including those lands or facilities with tenure or tenancies due to expire within one year, so as to enable the relevant organizations to study and prepare for any transitional housing programmes as early as possible; and

(8) to use those government lands with long-term development plans for constructing transitional housing if no significant impacts will result from not implementing the relevant plans within five years.

Note: Mr Tony TSE's amendment is marked in bold and italic type or with deletion line.

7158 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 8

The marked-up version of the amendment moved by Ms Alice MAK (Translation)

That, in recent years, surging property prices and inadequate public housing supply have put grass-roots families in increasingly acute housing difficulties; according to the projection in the Long Term Housing Strategy Annual Progress Report 2018, over 110 000 households in Hong Kong live in inadequate housing conditions; prior to the allocation of public housing units for such households, transitional housing is an important housing option for them; yet, the failure to include transitional housing in the Long Term Housing Strategy announced on 16 December 2014 and its subsequent annual reviews has resulted in a lack of policy and financial support for transitional housing and its supply stagnancy; in this connection, this Council urges the Government to adopt the following measures to substantially increase transitional housing supply, in a bid to improve the living environment of families living in inadequate housing conditions:

(1) to include transitional housing in the Long Term Housing Strategy, and formulate a comprehensive policy and a supply target for transitional housing, including setting the target of its total supply within the next three years at no less than 10 000 units;

(2) to invite the Hong Kong Housing Authority, the Hong Kong Housing Society and the Urban Renewal Authority to actively increase the provision of transitional housing;

(3) to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing;

(4) to establish a transitional housing fund of no less than $2 billion, so as to take forward and support various transitional housing schemes; and

(5) to provide a one-stop website for the centralized dissemination of information on and the unified receipt of applications for transitional housing programmes under various organizations, LEGISLATIVE COUNCIL ― 21 February 2019 7159

while taking the initiative to introduce transitional housing programmes to grass-roots families awaiting public housing and inviting applications from eligible families at regular intervals;

(6) to increase the size and functions of the Task Force on Transitional Housing under the Transport and Housing Bureau, so as to support more transitional housing schemes and those of a large scale, thereby expediting transitional housing supply;

(5)(7) to make public a list of idle government lands or facilities that are suitable for transitional housing purpose, including those lands or facilities with tenure or tenancies due to expire within one year, so as to enable the relevant organizations to study and prepare for any transitional housing programmes as early as possible; and

(8) to introduce measures for encouraging developers and private land owners to lend their idle lands for developing transitional housing schemes.

Note: Ms Alice MAK's amendment is marked in bold and italic type or with deletion line.

7160 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 9

The marked-up version of the revised amendment moved by Mr SHIU Ka-chun (Translation)

That, in recent years, surging property prices and inadequate public housing supply have put grass-roots families in increasingly acute housing difficulties; according to the projection in the Long Term Housing Strategy Annual Progress Report 2018, over 110 000 households in Hong Kong live in inadequate housing conditions; prior to the allocation of public housing units for such households, transitional housing is an important housing option for them; yet, the failure to include transitional housing in the Long Term Housing Strategy announced on 16 December 2014 and its subsequent annual reviews has resulted in a lack of policy and financial support for transitional housing and its supply stagnancy; in this connection, this Council urges the Government to adopt the following measures to substantially increase transitional housing supply, in a bid to improve the living environment of families living in inadequate housing conditions:

(1) to include transitional housing in the Long Term Housing Strategy, and formulate a comprehensive policy and a supply target for transitional housing, including setting the target of its total supply within the next three years at no less than 10 000 units;

(2) to invite the Hong Kong Housing Authority, the Hong Kong Housing Society and the Urban Renewal Authority to actively increase the provision of transitional housing;

(3) to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing;

(4) to establish a transitional housing fund of no less than $2 billion, so as to take forward and support various transitional housing schemes;

(5) to provide a one-stop website for the centralized dissemination of information on and the unified receipt of applications for transitional housing programmes under various organizations, while taking the LEGISLATIVE COUNCIL ― 21 February 2019 7161

initiative to introduce transitional housing programmes to grass-roots families awaiting public housing and inviting applications from eligible families at regular intervals;

(6) to increase the size and functions of the Task Force on Transitional Housing under the Transport and Housing Bureau, so as to support more transitional housing schemes and those of a large scale, thereby expediting transitional housing supply;

(7) to make public a list of idle government lands or facilities that are suitable for transitional housing purpose, including those lands or facilities with tenure or tenancies due to expire within one year, so as to enable the relevant organizations to study and prepare for any transitional housing programmes as early as possible; and

(8) to introduce measures for encouraging developers and private land owners to lend their idle lands for developing transitional housing schemes;

(9) to implement the transitional housing policy under the Government's lead, rather than solely assisting with and facilitating those short-term measures led and implemented by the community, so as to take forward and support various transitional housing schemes, with a view to providing adequate and affordable temporary housing for families which have awaited public housing for three years or above to improve their living standards; and

(10) to formulate a central co-ordination mechanism for vacant buildings and lands, and to entrust the Lands Department with the management of those idle government lands, facilities and buildings which are not expected to be planned for any use within the next two years, so as to expeditiously utilize the relevant resources for constructing transitional housing, and to use a portion of such transitional housing units to rehouse those residents affected by the Government's enforcement actions on housing demolition and land resumption.

Note: Mr SHIU Ka-chun's amendment is marked in bold and italic type.

7162 LEGISLATIVE COUNCIL ― 21 February 2019

Annex 10

The marked-up version of the revised amendment moved by Mr Andrew WAN (Translation)

That, in recent years, surging property prices and inadequate public housing supply have put grass-roots families in increasingly acute housing difficulties; according to the projection in the Long Term Housing Strategy Annual Progress Report 2018, over 110 000 households in Hong Kong live in inadequate housing conditions; prior to the allocation of public housing units for such households, transitional housing is an important housing option for them; yet, the failure to include transitional housing in the Long Term Housing Strategy announced on 16 December 2014 and its subsequent annual reviews has resulted in a lack of policy and financial support for transitional housing and its supply stagnancy; in this connection, this Council urges the Government to adopt the following measures to substantially increase transitional housing supply, in a bid to improve the living environment of families living in inadequate housing conditions:

(1) to include transitional housing in the Long Term Housing Strategy, and formulate a comprehensive policy and a supply target for transitional housing, including setting the target of its total supply within the next three years at no less than 10 000 units;

(2) to invite the Hong Kong Housing Authority, the Hong Kong Housing Society and the Urban Renewal Authority to actively increase the provision of transitional housing;

(3) to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing;

(4) to establish a transitional housing fund of no less than $2 billion, so as to take forward and support various transitional housing schemes;

(5) to provide a one-stop website for the centralized dissemination of information on and the unified receipt of applications for transitional housing programmes under various organizations, while taking the LEGISLATIVE COUNCIL ― 21 February 2019 7163

initiative to introduce transitional housing programmes to grass-roots families awaiting public housing and inviting applications from eligible families at regular intervals;

(6) to increase the size and functions of the Task Force on Transitional Housing under the Transport and Housing Bureau, so as to support more transitional housing schemes and those of a large scale, thereby expediting transitional housing supply;

(7) to make public a list of idle government lands or facilities that are suitable for transitional housing purpose, including those lands or facilities with tenure or tenancies due to expire within one year, so as to enable the relevant organizations to study and prepare for any transitional housing programmes as early as possible; and

(8) to introduce measures for encouraging developers and private land owners to lend their idle lands for developing transitional housing schemes;

(9) to implement the transitional housing policy under the Government's lead, rather than solely assisting with and facilitating those short-term measures led and implemented by the community, so as to take forward and support various transitional housing schemes, with a view to providing adequate and affordable temporary housing for families which have awaited public housing for three years or above to improve their living standards; and

(10) to formulate a central co-ordination mechanism for vacant buildings and lands, and to entrust the Lands Department with the management of those idle government lands, facilities and buildings which are not expected to be planned for any use within the next two years, so as to expeditiously utilize the relevant resources for constructing transitional housing, and to use a portion of such transitional housing units to rehouse those residents affected by the Government's enforcement actions on housing demolition and land resumption;

(11) to conduct studies on converting the use of part of the site which has been reserved for the second phase development of the Hong Kong Disneyland to transitional housing development; and

7164 LEGISLATIVE COUNCIL ― 21 February 2019

(12) to actively convert vacant school premises into transitional housing.

Note: Mr Andrew WAN's amendment is marked in bold and italic type.

LEGISLATIVE COUNCIL ― 21 February 2019 7165

Annex 11

The marked-up version of the revised amendment moved by Mr LEUNG Yiu-chung (Translation)

That, in recent years, surging property prices and inadequate public housing supply have put grass-roots families in increasingly acute housing difficulties; according to the projection in the Long Term Housing Strategy Annual Progress Report 2018, over 110 000 households in Hong Kong live in inadequate housing conditions; prior to the allocation of public housing units for such households, transitional housing is an important housing option for them; yet, the failure to include transitional housing in the Long Term Housing Strategy announced on 16 December 2014 and its subsequent annual reviews has resulted in a lack of policy and financial support for transitional housing and its supply stagnancy; in this connection, this Council urges the Government to adopt the following measures to substantially increase transitional housing supply, in a bid to improve the living environment of families living in inadequate housing conditions:

(1) to include transitional housing in the Long Term Housing Strategy, and formulate a comprehensive policy and a supply target for transitional housing, including setting the target of its total supply within the next three years at no less than 10 000 units;

(2) to invite the Hong Kong Housing Authority, the Hong Kong Housing Society and the Urban Renewal Authority to actively increase the provision of transitional housing;

(3) to introduce policies for encouraging private property owners to convert their residential properties or whole blocks of industrial buildings into transitional housing;

(4) to establish a transitional housing fund of no less than $2 billion, so as to take forward and support various transitional housing schemes;

(5) to provide a one-stop website for the centralized dissemination of information on and the unified receipt of applications for transitional housing programmes under various organizations, while taking the 7166 LEGISLATIVE COUNCIL ― 21 February 2019

initiative to introduce transitional housing programmes to grass-roots families awaiting public housing and inviting applications from eligible families at regular intervals;

(6) to increase the size and functions of the Task Force on Transitional Housing under the Transport and Housing Bureau, so as to support more transitional housing schemes and those of a large scale, thereby expediting transitional housing supply;

(7) to make public a list of idle government lands or facilities that are suitable for transitional housing purpose, including those lands or facilities with tenure or tenancies due to expire within one year, so as to enable the relevant organizations to study and prepare for any transitional housing programmes as early as possible; and

(8) to introduce measures for encouraging developers and private land owners to lend their idle lands for developing transitional housing schemes;

(9) to implement the transitional housing policy under the Government's lead, rather than solely assisting with and facilitating those short-term measures led and implemented by the community, so as to take forward and support various transitional housing schemes, with a view to providing adequate and affordable temporary housing for families which have awaited public housing for three years or above to improve their living standards; and

(10) to formulate a central co-ordination mechanism for vacant buildings and lands, and to entrust the Lands Department with the management of those idle government lands, facilities and buildings which are not expected to be planned for any use within the next two years, so as to expeditiously utilize the relevant resources for constructing transitional housing, and to use a portion of such transitional housing units to rehouse those residents affected by the Government's enforcement actions on housing demolition and land resumption;

(11) to conduct studies on converting the use of part of the site which has been reserved for the second phase development of the Hong Kong Disneyland to transitional housing development; and

LEGISLATIVE COUNCIL ― 21 February 2019 7167

(12) to actively convert vacant school premises into transitional housing;

(13) to urge the Urban Renewal Authority, after land resumption, based on social needs to allocate more sites for constructing transitional housing, so as to rehouse those residents affected by urban redevelopment;

(14) to streamline the application procedures for using idle government lands or facilities and increase the transparency of the application mechanism, so as to expedite the construction of transitional housing; and

(15) to examine the enhancement and reinstatement of the policy on temporary housing areas in the colonial era, in a bid to increase transitional housing supply, so as to provide a safe, reasonably comfortable living environment for families awaiting public housing and alleviate their financial pressure arising from renting private residential units.

Note: Mr LEUNG Yiu-chung's amendment is marked in bold and italic type.