LEGISLATIVE COUNCIL ─ 11 July 2013 15219

OFFICIAL RECORD OF PROCEEDINGS

Thursday, 11 July 2013

The Council continued to meet at half-past Eleven o'clock

MEMBERS PRESENT:

THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P.

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE LEE CHEUK-YAN

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHAN KAM-LAM, S.B.S., J.P.

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE EMILY LAU WAI-HING, J.P.

THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P.

THE HONOURABLE TOMMY CHEUNG YU-YAN, S.B.S., J.P.

THE HONOURABLE FREDERICK FUNG KIN-KEE, S.B.S., J.P.

THE HONOURABLE VINCENT FANG KANG, S.B.S., J.P.

THE HONOURABLE WONG KWOK-HING, B.B.S., M.H.

DR THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P. 15220 LEGISLATIVE COUNCIL ─ 11 July 2013

THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P.

THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P.

THE HONOURABLE WONG TING-KWONG, S.B.S., J.P.

THE HONOURABLE RONNY TONG KA-WAH, S.C.

THE HONOURABLE CYD HO SAU-LAN

DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P.

THE HONOURABLE CHAN HAK-KAN, J.P.

THE HONOURABLE CHAN KIN-POR, B.B.S., J.P.

DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, S.B.S., J.P.

DR THE HONOURABLE LEUNG KA-LAU

THE HONOURABLE CHEUNG KWOK-CHE

THE HONOURABLE WONG KWOK-KIN, B.B.S.

THE HONOURABLE IP KWOK-HIM, G.B.S., J.P.

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

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

THE HONOURABLE ALAN LEONG KAH-KIT, S.C.

THE HONOURABLE LEUNG KWOK-HUNG

THE HONOURABLE ALBERT CHAN WAI-YIP

THE HONOURABLE WONG YUK-MAN

THE HONOURABLE CLAUDIA MO LEGISLATIVE COUNCIL ─ 11 July 2013 15221

THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P.

THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P.

THE HONOURABLE NG LEUNG-SING, S.B.S., J.P.

THE HONOURABLE STEVEN HO CHUN-YIN

THE HONOURABLE FRANKIE YICK CHI-MING

THE HONOURABLE WU CHI-WAI, M.H.

THE HONOURABLE YIU SI-WING

THE HONOURABLE GARY FAN KWOK-WAI

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

THE HONOURABLE CHARLES PETER MOK

THE HONOURABLE CHAN HAN-PAN

DR THE HONOURABLE KENNETH CHAN KA-LOK

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

THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P.

THE HONOURABLE KENNETH LEUNG

THE HONOURABLE ALICE MAK MEI-KUEN, J.P.

DR THE HONOURABLE KWOK KA-KI

THE HONOURABLE KWOK WAI-KEUNG

THE HONOURABLE DENNIS KWOK 15222 LEGISLATIVE COUNCIL ─ 11 July 2013

THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, J.P.

DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG

THE HONOURABLE SIN CHUNG-KAI, S.B.S., J.P.

DR THE HONOURABLE HELENA WONG PIK-WAN

THE HONOURABLE IP KIN-YUEN

DR THE HONOURABLE ELIZABETH QUAT, J.P.

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

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

THE HONOURABLE TANG KA-PIU

DR THE HONOURABLE CHIANG LAI-WAN, J.P.

IR DR THE HONOURABLE LO WAI-KWOK, B.B.S., M.H., J.P.

THE HONOURABLE CHUNG KWOK-PAN

THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P.

THE HONOURABLE TONY TSE WAI-CHUEN

MEMBERS ABSENT:

DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P.

THE HONOURABLE ABRAHAM SHEK LAI-HIM, G.B.S., J.P.

THE HONOURABLE STARRY LEE WAI-KING, J.P.

THE HONOURABLE CHAN CHI-CHUEN LEGISLATIVE COUNCIL ─ 11 July 2013 15223

PUBLIC OFFICERS ATTENDING:

PROF THE HONOURABLE K C CHAN, G.B.S., J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY

THE HONOURABLE WONG KAM-SING, J.P. SECRETARY FOR THE ENVIRONMENT

MS CHRISTINE LOH KUNG-WAI, J.P. UNDER SECRETARY FOR THE ENVIRONMENT

CLERKS IN ATTENDANCE:

MR ANDY LAU KWOK-CHEONG, ASSISTANT SECRETARY GENERAL

MISS FLORA TAI YIN-PING, ASSISTANT SECRETARY GENERAL

MISS ODELIA LEUNG HING-YEE, ASSISTANT SECRETARY GENERAL

15224 LEGISLATIVE COUNCIL ─ 11 July 2013

MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Council now continues with the motion debate on "Promoting the waste recycling industry to create employment opportunities". I now call upon Members who will move amendments to speak.

PROMOTING THE WASTE RECYCLING INDUSTRY TO CREATE EMPLOYMENT OPPORTUNITIES

Continuation of debate on motion which was moved on 10 July 2013

MR WU CHI-WAI (in Cantonese): President, the debate topic today has a close connection with the landfill funding request scheduled for discussion at the Finance Committee meeting this Friday and can provide a timely opportunity for the Council to re-open discussion on our environmental protection and waste recovery policies.

The greatest mistake of the Government was that it did not put forward the initiatives of adopting an enclosed design for refuse collection vehicles, setting up a steering committee under the Chief Secretary for Administration, providing long-term subsidies to the waste recovery industry, and establishing a waste recovery fund until the Public Works Subcommittee discussed the relevant funding request. These policies had been discussed in the Council for a very long time, but the Government had never taken any follow-up actions. It was only when the landfill funding request encountered such strong resistance that the Government finally rolled out these proposals. This shows the public very clearly that the Government decided to put forward these proposals only because it wanted to secure enough votes. This tactic leads me to think about the opposite scenario. Suppose there were enough votes to secure the passage of the funding request that day, would the Government still find it necessary to delve inside the drawer and then present all these measures?

Anyway, it is still a good thing that the Government is willing to put forward these measures, because society can at least do some fresh thinking based on the Government's new ideas. Nevertheless, precisely because these measures are so new and have never been discussed thoroughly in society, we must LEGISLATIVE COUNCIL ─ 11 July 2013 15225 carefully and thoroughly consider what problems may arise in the course of their implementation. Precisely because of the need for thorough consideration, I think the Government should first consider withdrawing the request for landfill funding for the time being, and in the several months to come, it should consider very seriously and thoroughly how our waste management work can be fully taken forward along the lines of the new ideas, and then seek to forge a social consensus on the end-of-pipe treatment tool under our waste management policy, with a view to bringing forth territory-wide commitment to waste management.

The original motion and the amendments all mention that waste reduction at source is an issue of great concern to us, and that waste reduction at source also gives development prospects to the waste recovery system. Unfortunately, despite the publication of "A Policy Framework for the Management of Municipal Solid Waste (2005-2014)" by former Secretary Sarah LIAO, the proportion of waste separation at source in Hong Kong has still remained hardly satisfactory. Waste recovery in our context mainly relies on exporting recovered materials, and this is often used by some people as some sort of a report card to boast that our work of waste recovery is not that unsatisfactory after all. But honestly, have we done enough? Our waste recovery industry has been exporting 95% of the recyclable materials it has collected. If other countries "close their gates", one instance being the Operation Green Fence put in place by the Mainland, many recovered resources which can be recycled will have to be sent to landfills. This means that the crux of our problem has not been addressed.

We have always treated waste recovery as a standalone concept in our discussions, meaning that once after recovering certain materials and making arrangements for back-end separation, we will no longer bother about what will subsequently happen to these materials as long as we know they will be handled. There is one obvious conceptual difference between recovery for export and recovery for recycling. In Hong Kong, there is only recovery for export; recovery for recycling is rare. We maintain that an over-reliance on recovery for export is exactly the shortcoming of our waste recovery system. In addition, our waste recovery for export is annotated by the fact that the waste materials we recover for export are all low-end export resources. That is why when the Mainland launches the Operation Green Fence to tighten the requirements on imports of recovered resources, the resources recovered by us must be sent to landfills. This is really a great pity.

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Thus, if we want to see the sustainable operation of our waste recovery mechanism, we must review our present reliance on waste recovery for export. We must take a look at our very concept, and ask ourselves whether we can defy the restrictions imposed by our export destinations, and whether we should thus consider the possibility of waste recovery for recycling. For instance, the Government has recently set up a production line in preparation for the imposition of a glass bottle charge. Yan Oi Tong has also set up a special production line for the treatment of recovered plastic bottles. Furthermore, we must also consider how we can upgrade the quality of recovered materials. In the case of plastic bottles, for example, overseas experience in plastic bottle recovery tells us that since different types of plastics may be used in making the different parts of a plastic bottle ― the cap, the body and the label, for example ― there must be separate treatment for each type of plastics, and it is only in this way that resources recovered can be turned into useful raw materials after recycling. Otherwise, substantial expenses must first be spent before these materials can be turned into really useful raw materials.

The recovery of plastics is another example. In 2011, the export volume of recovered plastics stood at 840 000 tonnes. When compared with the figure in 2010, this figure shows a drop of 730 000 tonnes, a decline of nearly 50%. During the same period, the volume of locally recycled plastics was 4 000 tonnes only, representing less than 1%. Thus, we can see that with the implementation of the Operation Green Fence and the consequent impossibility of exporting massive quantities of sub-standard plastic materials, the problem has surfaced.

Since the volume of locally recycled plastic materials is so small, what will happen to our waste plastics if other places stop their waste plastics imports, or if the profits of exporting waste plastics fall? Disposal at landfills is the only answer. Furthermore, since the recovery of waste plastics under the existing mode of operation cannot generate too much economic benefit, it is difficult to encourage members of the public to directly engage in the trade. Thus, the work of waste separation at source has been far from satisfactory. In other words, the plastic materials recovered are often intermingled with other materials and contaminated, no longer capable of recycling and reuse. As a result, once importers of waste plastics in other places (that is, the countries to which local wastes are exported) require us to enhance the quality of our recovered materials, we have to dump them in landfills. On the other hand, however, in the case of LEGISLATIVE COUNCIL ─ 11 July 2013 15227 the Yan Oi Tong project, there is a shortage of plastics. And, in some other cases, we can even see the very odd phenomenon of manufacturers having to import plastics from other places for recycling in Hong Kong.

We therefore maintain that the promotion of the waste recycling industry must comprise two aspects, namely waste recovery and waste separation at source. As rightly pointed out by LAM Hang-chi in yesterday's Hong Kong Economic Journal, waste recovery for export is a big business. But we must do a good job in waste separation at source, so as to ensure that the majority of recyclable materials will not be contaminated and can be used for useful purposes.

On the basis of this analysis, I maintain that the Government should set market prices for various waste materials having low economic value, so that their recovery can operate as effectively as the recovery of waste paper and aluminium cans. And, through the provision of financial incentives, the Government should also seek to increase people's willingness to voluntarily take part in waste separation at source, so as to reduce the costs incurred by waste recovery operators for hiring extra manpower to do waste separation. Moreover, the Government should also make direct investment in the establishment of recycling industries with the objective of helping the sector to gradually switch from recovery for export to recovery for recycling, so that our waste recovery volumes can be freed from the constraint imposed by places of import. In drawing up this proposal, I studied the Government's existing arrangements for glass bottle recovery and the production line of Yan Oi Tong, and this proposal is the expansion of the relevant arrangements.

The Government often claims that it should not interfere with market operation, and that in the absence of any market prices for reference, it cannot set any prices for waste materials of low economic value. We maintain that the Government should draw reference from, say, the glass bottle levy, which covers three components, namely transportation costs, the sums returned to collectors of recovered materials, and reasonable gross profits for recovery operators. In this way, if reasonable market prices can be set for plastic materials, people will naturally take part in their separation and collection, in very much the same way as they engage in the recovery of waste paper and aluminium cans. And, precisely for this reason, I think that the Government should review the recovery strategy and policy as a whole, and give comprehensive consideration to the costs 15228 LEGISLATIVE COUNCIL ─ 11 July 2013 of waste management, rather than solely focusing on the development of any single item.

Today, I have proposed an amendment on behalf of the Democratic Party. As for the part on food waste in my amendment, Dr Helena WONG will put forth our views on the subject. I hope that Members can explore whether the focus of our overall recovery strategy should be switched from recovery for export to recovery for recycling, and whether we should introduce high technologies (The buzzer sounded) …… and conduct scientific researches ……

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

MR WU CHI-WAI (in Cantonese): …… in order that our green collar industries can really be firmly established.

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

MR WU CHI-WAI (in Cantonese): Thank you, President.

MR LEE CHEUK-YAN (in Cantonese): President, this Council has actually been discussing waste recovery for many years. Almost right from the reunification, we have been discussing this topic. However, we have just been marking time, failing to make any progress. Today, the Council once again holds a debate on this issue today. In fact, we have long since reached a consensus, the consensus of demanding the Government to properly handle waste recovery.

Ms Cyd HO of the Labour Party already put forth our requests clearly yesterday. We hold that if we are to properly handle waste reduction and recovery, $2 billion must be allocated for the purpose. If there can be a recurrent expenditure of $2 billion for this purpose every year, we will be able to vigorously implement waste recovery and waste reduction in all housing estates throughout the territory. This is also related to our advocacy on green employment, because after some computations, we find that carrying out this task LEGISLATIVE COUNCIL ─ 11 July 2013 15229 throughout the territory as aforesaid will create 10 000 posts. Of course, after handling waste recovery properly, we will need to consider how to handle recycling. This task similarly depends on the allocation of resources by the Government to conduct researches and provide subsidies.

As for whether we must really provide subsidies to the recycling industry, I do not think that the answer is necessarily yes. The reason is that if the job of recovery is properly done, recovered materials can then be supplied free of charge to recycling companies for further production, and since they can then export their products or sell the fertilizers they have produced, it may not be necessary to provide any subsidies to them. However, in case things do not work out that way, the provision of subsidies to the recycling industry will be a better option than the present practice of sending waste to landfills. The transportation of waste to landfills is never free, right? The company belonging to Swire asks for over $100 per ton. Money has to be paid all the same. But, you know, even when spending money in this way is not worthwhile, the Government still refuses to spend any money on waste recovery.

Thus, yesterday, Ms Cyd HO of the Labour Party stated clearly her hope of having a funding of $2 billion from the Government. She also set out one long-term objective, the objective of attaining this golden distribution in the handling of waste: handling 72% of our waste by recovery and recycling; 5% by the worst option of landfilling; and the rest by incineration, on condition that the pollution problem caused by incineration can be resolved. If yes, we may consider handling 23% of our waste by incineration. But what is most important should be the handling of 72% of our waste by recovery and recycling. I have heard how the Secretary kept shaking his head when he heard Ms HO propose this golden distribution yesterday. Well, I can only respond by likewise shaking my head, because it is such a great pity the Government has neither the guts nor commitment to make any better efforts in this regard.

Second, my amendment to Ms Cyd HO's amendment mainly aims to ask the Government to withdraw the funding application already submitted to the Finance Committee, and to re-submit the application after resolving the issue of $2 billion funding every year. Our other request is that when granting lands in the future, the Government should require all housing estates to be equipped with waste recovery facilities, so that waste recovery can also be handled in the course of land grants. Also, in a belated and desperate attempt to salvage the situation, Carrie LAM is going to the Tuen Mun District Council for consultation today. But in what ways can the authorities abate residents' resistance? In the case of 15230 LEGISLATIVE COUNCIL ─ 11 July 2013 the Tuen Mun landfill, for example, can all the waste be transported by sea instead? This will help reduce the adverse impacts on residents in the entire Tuen Mun District. Or, even if part of the waste must still be transported by land, can a new road leading to the landfill be built? Can the existing sewage problem in Ta Ku Ling be resolved?

If the Government can heed the voices of residents at the district level and address their concerns, it can at least abate district-level resistance. Thus, after the Government has adopted the several measures mentioned above, this Council will be able to consider whether the funding request can be accepted. The reason is that we will at least have some confidence that the proportion of waste to be disposed of by landfilling will be substantially reduced in future, and that waste recovery will be genuinely adopted. But then, this will bring us to the question of whether the landfill in Tuen Mun will still need 200 hectares? This is another issue. Maybe, it will not be necessary to have 200 hectares. Therefore, to sum up, we hope that if the Government is really sincere in dealing with the issue properly, it can withdraw the funding applications now.

However, the Government claims that the problem is very pressing because the lifespan of the landfill in Tseung Kwan O will come to an end in 2015. The landfills in Ta Ku Ling and Tuen Mun will be filled to capacity respectively in 2017 and 2019. My point is that if the problem is really that pressing and the authorities know very well that the landfills will soon be filled up, why didn't they start working on waste recovery at an earlier time? Why didn't they consult the residents concerned much earlier? Why didn't they work out an integrated waste management system before submitting the funding application to the Legislative Council? The Government is always like this, forever making belated and desperate attempts to salvage the situation. How are they going to salvage the situation this time around? Well, they are going to set up a steering committee led by Carrie LAM to commence discussion on setting up a recycling fund or the possibility of allocating a recurrent expenditure. But then, the scale of the whole thing is not specified.

How can I tell whether you are just wooing us with sweet talks now, and whether you would just take a few small steps to "honour" your undertakings afterwards? This simply cannot resolve the problem. Thus, we need to know the scale of funding. Will there be a funding of $2 billion? If this is not the case, I will say that the Government simply does not have any sincerity to really tackle the issue of waste recovery. I think the Government has hastened to make all these undertakings only because it finds the situation getting very pressing and LEGISLATIVE COUNCIL ─ 11 July 2013 15231 desperate. This actually highlights the Government's incompetence. If actions had been taken earlier, everything could have been dealt with more easily. There is such a great haste now, and the Secretary is unable to cope. So, once again, Carrie LAM is asked to salvage the situation.

The Government is always like this. When it wants to canvass votes, it will invariably hasten to do a little something. But our greatest fear is that once it gets through, it will forget everything. The Government is surely very anxious now, but it has not made any clear undertakings; instead, it only asks us to trust it. But we were deceived by it many times in the past. After getting enough votes to secure the passage of a motion, it stopped doing anything or simply did something half-heartedly. So, we are not going to accept his words this time around. We are asking the Government to make a clear commitment, and this commitment must be in the form of funding allocation. If the Government can create a recurrent expenditure item of $2 billion in the Budget, we will have confidence that the Government is really committed to implementing the initiatives concerned in the future. If not, the Labour Party will certainly refuse to render its support. We hope that for the future development of Hong Kong, the Government will squarely address the issue of waste management. Of course, the most important thing is to take the lead in reducing waste, including the biggest piece of "waste" in Hong Kong, the Chief Executive of the SAR.

SECRETARY FOR THE ENVIRONMENT (in Cantonese): President, thanks to Mr KWOK Wai-keung for proposing the motion and Ir Dr LO Wai-kwok, Dr Kenneth CHAN, Mr Gary FAN, Ms Cyd HO, Mr WU Chi-wai and Mr LEE Cheuk-yan for proposing the amendments.

The waste crisis currently faced by Hong Kong is a long-standing problem. We all agree that we should adopt a multi-pronged approach encompassing waste reduction at source, enhanced recovery, and the development of a comprehensive waste disposal infrastructure comprising energy-from-waste facilities and landfill extension. These methods are by no means the options in a multiple-choice question. They must be adopted as a whole mix governed by appropriate ratios for the disposal of different types of waste. Our overall direction is to give priority to waste reduction on the one hand, and make good use of waste as resources on the other.

The remarks of Members are consistent with the direction of "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" (the Blueprint) published 15232 LEGISLATIVE COUNCIL ─ 11 July 2013 two months ago. The Blueprint analyses the current challenges and opportunities of waste management in Hong Kong, setting out various reasonable targets for the next 10 years. It is concrete and specific, complete with action plans and measures for tackling problems. About 10 years ago, we also published a policy framework, but there is a difference between it and the Blueprint. Many Members have omitted the one very important point that Hong Kong has witnessed a huge increase in overall consumption desire and a high degree of resource wastage over the past decade. While engaging in waste recovery, if we look ahead at the coming 10 years, we must also realize the even greater importance of building a culture of using less and wasting less through a process of transforming people's mentality. Hence, there is no doubt that what this Government must do as a matter of top priority after assuming office must be the promotion of waste recovery, but it is equally important for us to foster a culture of treasuring food, for example. In that sense, the Food Wise Hong Kong Campaign is very important, and must be implemented before anything else. If we talk about food waste recovery on the one hand and keep wasting food on the other, we will in fact be creating a mid-stream problem for ourselves, one which requires greater resource support to tackle. The policy direction of the newly published Blueprint, however, begins with using less and wasting less. When it comes to recovery, efforts can be enhanced in all aspects. Next, I will talk about the several major directions of the Blueprint.

First of all, I would like to explain the latest situation of waste management in Hong Kong. Over the past decade, efforts have been made under a multi-pronged approach set out in the Policy Framework for the Management of Municipal Solid Waste (2005-2014) (the Policy Framework), and progress has been made on many fronts. For instance, the overall recovery rate of municipal solid waste in Hong Kong has risen from 43% in 2005 to 48% at present. As the objective proposed in the Policy Framework at that time was to achieve 45% in 2009, the goal set at that time has already been achieved. Furthermore, with the implementation of quantity-based charging for construction waste in 2006, the disposal rate of construction waste has been reduced substantially by several tens of percentage points. Moreover, the first producer responsibility scheme has already been put into implementation, and a 50-cent plastic bag levy is now imposed in supermarkets.

The experience in other places such as Taiwan and South Korea has drawn the great attention of Members, and Mr KWOK Wai-keung, in particular, has expressed many views in this regard. It is undeniable that we need to improve our waste management, and we should learn from the progressive ideas put into LEGISLATIVE COUNCIL ─ 11 July 2013 15233 practice in other cities. For this reason, we visited South Korea with two delegations of Legislative Council Members in June this year, and we also visited Taipei with members of various advisory committees in the same month, with a view to finding out how Hong Kong can learn from the experience of these two places in waste management. Waste reduction in these places is marked by the participation of government, society and the commercial sector. And, the planning for waste management facilities and also the actual mix of such facilities in operation both include incinerators, landfill expansion, and so on. The experience of the two places tells us that results in waste reduction cannot be achieved overnight. It has taken Taipei and South Korea 10 to 20 years to achieve the existing standards. For instance, it has taken South Korea two decades to achieve 60%, 20% and 20% respectively for the volumes of waste handled by recovery, incineration and landfilling. The objectives set out in the Blueprint are very similar. We hope to attain this target within a decade. Just now, some Members asked whether a 70% recovery rate could be achieved. I do not intend to argue with them, but would like to point out that whether this target can be achieved within 10 years must depend on what support facilities are available to help us reasonably achieve the levels required. It has taken South Korea two decades to achieve 60%, a very high level, for the volumes of waste handled by recovery.

Furthermore, I would like to say a few words about the new vision of using less and wasting less under the Blueprint. After studying overseas experience, we realize one very important point, the point that we must transform Hong Kong people's mentality and build a culture of cherishing resources and wasting less. Yesterday, Dr Kenneth CHAN talked about the need for having more recovery facilities for single-use plastic water bottles. But in this regard, we really need to consider certain questions more deeply. Why are there so many single-use commodities in Hong Kong? Should we avoid using such commodities as much as possible? I would think that on our part, we should use our own water bottles. In the Central Government Complex, for instance, the use of single-use plastic water bottles is already prohibited. Hence, this is not only a question of recovery, but also, more importantly, a question of going up-stream to change our culture.

Our Blueprint sets out clear objectives and timetables, including a specific proposal on reducing the per capita disposal rate of municipal solid waste by 40% and enhancing the recovery rate within a decade. Furthermore, members of the public are very much concerned about landfill extension. The target formulated 15234 LEGISLATIVE COUNCIL ─ 11 July 2013 under the Blueprint is to substantially reduce the share of landfilling in solid waste management from 52% at present to 20% or even less within a decade, with a view to bringing a change to Hong Kong's long-time reliance on landfilling. All these are specific proposals.

Nevertheless, to ensure the successful implementation of this Blueprint and the attainment of the expected goals, we must make concrete efforts in many areas, including driving the development of related industries, particularly the resource recovery and recycling industries. Besides, green employment opportunities must be created and environmental industries established, in order that a win-win situation can be achieved locally and even regionally, as mentioned by Members. Hence, in this respect, I believe that all of us do share a common vision. The relevant views put forward by Mr KWOK, Ir Dr LO Wai-kwok and Ms Cyd HO are all very concrete and specific.

Regarding policies and rules, we also hope that we can make substantial progress. Hence, right after the new Government's taking office, we already seized every opportunity, in the hope of expeditiously materializing the policy of quantity-based charging for municipal solid waste. Last year, we already invited the Council for Sustainable Development (SDC) chaired by Mr Bernard CHAN to initiate the process of public engagement, with a view to materializing the charging policy as soon as possible. As Members also know, the experience of both Seoul and Taipei shows that implementing quantity-based waste charging can substantially reduce waste generation and increase recovery. Such an effect is very obvious and concrete in these two places. Hence, one of the most important waste reduction policies in the Blueprint is the broad direction of quantity-based waste charging, which was supported by the mainstream public opinion as indicated by the outcome of the public consultation exercise held in 2012. The Government and the SDC have been working together on the required preparations over the past six months. In the coming two months, the SDC will issue papers with specific proposals in order to engage the public in discussions on finalizing the fine details for expeditiously implementing quantity-based waste charging in Hong Kong.

Waste charging is closely related to Members' another proposal, mandatory waste separation. We certainly hear many voices in support of mandatory waste separation, but we must realize that if we are to introduce full-scale mandatory waste separation at source in Hong Kong, we must need many different kinds of support, including close monitoring and the tracing of waste sources. In the LEGISLATIVE COUNCIL ─ 11 July 2013 15235 course of actual implementation, many challenges will arise, and so will privacy concerns. For instance, when compared with people in South Korea, do Hong Kong people have the same degree of acceptance? Overseas experience shows that priorities must inevitably be set on such issues, and in the case of Taiwan, mandatory waste separation was introduced only after many years of implementing quantity-based waste charging. And, in the case of South Korea, mandatory separation has not yet been implemented so far. Hence, we think that in our own case, we should first focus on quantity-based waste charging for the time being, rather than focusing on mandatory waste separation.

Besides, regarding construction waste, another concern of Members (especially Mr Gary FAN), the Construction Waste Disposal Charging Scheme has been in place since 2006 to provide the industry with incentives to reduce the generation of construction waste. At present, more than 90% of the inert construction waste generated will be reused or recycled, rather than being disposed of in landfills. Of course, since the volume of construction projects in Hong Kong is quite sizeable, the quantities of construction waste disposed of in landfills daily are still large, amounting to 3 300 tonnes or so. In order to reduce the generation and disposal of construction waste, we will review the Construction Waste Disposal Charging Scheme and consult the industry according to the timetable set by the Blueprint. Besides, the Hong Kong Green Building Council and the relevant industry stakeholders have recently set up a cross-sector working group, and the working group has conducted exchanges with focus on how to substantially reduce the generation of construction waste. We will follow up with them on ways to implement the relevant proposals, including reviewing construction waste charging.

Furthermore, Members have expressed concern about how the various producer responsibility schemes can be implemented step by step. Mr Gary FAN, Ir Dr LO Wai-kwok and Mr WU Chi-wai have all expressed concern in this regard. We must implement quantity-based municipal solid waste charging, and we must at the same time introduce the required support measures, including the provision of appropriate waste reduction incentives and more waste recovery channels. The Government will take active steps to progressively implement the various producer responsibility schemes as follows:

First, we will expand the Environmental Levy Scheme on Plastic Shopping Bags, extending its scope from supermarkets to the entire retail sector. We are going about this task in earnest.

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Second, the Government is preparing legislative proposals on the introduction of a new producer responsibility scheme for waste electrical and electronic equipment. We will adopt the Design-Build-Operate model to establish disposal facilities in the EcoPark. The relevant project aims to directly upgrade Hong Kong's recycling capacity, so that the electrical and electronic waste generated locally can be properly handled and recycled into useful materials inside Hong Kong.

Third, in a bid to quicken our pace in this regard, we already launched a public consultation exercise early this year, between February and May, on the first of these schemes, A New Producer Responsibility Scheme on Glass Beverage Bottles. The response of the community was generally positive, and the scheme was supported by the mainstream opinion. The Government is collating the opinions received, so as to map out the way forward for the scheme. I have heard Mr WU Chi-wai's suggestions on the scheme, and will consider them along with other ideas when mapping out the way forward. As regards other products, including beverage plastic bottles and packaging materials, we will progressively explore room for expediting the introduction of mandatory producer responsibility schemes.

Besides, Members are very concerned about how the implementation of green life planning can be taken forward at the community level. Dr Kenneth CHAN and Mr KWOK Wai-keung have both expressed their concern. Members all understand that if we are to promote a culture of using less, reducing waste, avoiding waste generation and increasing waste recovery at the community level, we all must play a part. We all agree that for such ideas to reach the community and take root in the community, active public participation is extremely important. There must be partnership between the Government and the public.

Besides the need for optimizing the use of roadside rubbish bins and three-coloured bins, we also see room for further examining their quality and quantity. We have planned to do some corresponding counting in the time to come. As regards the question raised by Members about the existing ratio of roadside recovery bins to ordinary rubbish bins, I can answer that relevant statistics are available. The ratio of recovery bins to ordinary rubbish bins is 1:11. I must, however, emphasize that this ratio is not the most important consideration. Members visiting Seoul, Taipei and even Tokyo will find that the rubbish bins and even recovery bins in these places are even smaller than Hong LEGISLATIVE COUNCIL ─ 11 July 2013 15237

Kong in number. Hence, the point is actually not so much about the number of roadside recovery bins; rather, what counts should be how an overall mechanism can be put in place to facilitate waste recovery. I must also emphasize that roadside recovery bins are in fact not the main source of waste recovery in Hong Kong; rather, the main sources are the commercial and industrial sector, homes, and so on. Hence, Members must be able to see what the key point is.

Another point is that more importantly, we must formulate specific plans, including plans to set up community green stations. We have already stated that we have plans that can enable us to set up community green stations in different districts in Hong Kong, plans that can bring us closer to the community. Besides education and publicity, we will also provide support in respect of waste recovery. We have drawn up five pilot schemes through which we hope to promote our work in this regard. We have already reached the stage of inviting public tenders from non-governmental organizations (NGOs) for assisting in the operation of community green stations. These stations will fully utilize the district networks of the relevant organizations. With them, it will be possible to build up contacts with schools, property management companies, other stakeholders and various organizations, and in this way, joint efforts can be made to promote environmental protection education and build a culture of reducing waste and encouraging resource recycling.

Naturally, green education aside, these community green stations will also support the work of waste recovery in the community, particularly in respect of absorbing materials with low recovery values but of environmental implications, such as waste electrical and electronic equipment, waste glass bottles, and even waste timber. Operating bodies will reach out to the community to collect recoverable materials, and implement other measures of separation at source to assist the community in turning awareness into actions, increasing recovery rates, and quantifying their recovery effectiveness with these rates. We have already completed the site search for the first two pilot projects and gained District Council support. Our goal is to complete the construction of pilot green stations in phases in late 2013 or early 2014. Hopefully, the network can be expanded to cover the 18 districts in the territory.

The making of joint efforts by the Environmental Protection Department (EPD), the Environmental Campaign Committee, the Home Affairs Department (HAD) and the 18 District Councils to promote community participation is likewise very important. In this regard, apart from hardware facilities such as 15238 LEGISLATIVE COUNCIL ─ 11 July 2013 community green stations, there are many different ways to encourage community participation in environmental protection activities. In 2012-2013, the EPD, the Environmental Campaign Committee and the HAD joined hands to grant $150,000 to each district, and to provide technological support to the 18 District Councils for promoting various events with "Go Green on Waste Management ― Reduce, Reuse, Recycle" as the theme. Committees or working groups were set up by various District Councils with the responsibility of taking forward the detailed implementation of community promotion events. More than 40 community organizations or NGOs were invited during the year to organize relevant events. The number of participants was very large, amounting to more than 90 000. Moreover, more than 130 000 households were involved in the recovery events organized in housing estates. In view of the good responses to these events, we will continue with our efforts and promote such events in the following year.

As I mentioned just now, waste reduction at source is crucial. As more than 40% of the garbage disposed of in landfills is food-related, we have hastened to launch the Food Wise Hong Kong Campaign for food waste reduction before anything else. This is also a concern to Mr KWOK Wai-keung, Mr WU Chi-wai and Mr Gary FAN.

As regards the proposal of reducing food waste and promoting food waste recovery, Members must realize that about 3 600 tonnes of food waste is disposed of in landfills daily, accounting for more than 40% of the landfilled garbage. In order to tackle this problem, a multi-pronged approach must be adopted. The overall direction is first to avoid and reduce the generation of food waste, and to recover and recycle unavoidable food waste as much as possible.

Members all know that education and publicity are very important to food waste reduction. The EPD has launched food waste reduction and recycling programmes in different districts, including the Save Food Day, the Green Lunch Charter, the Food Waste Recycling Partnership Scheme, the Food Waste Reduction Program, the Islands Food Waste Recycling Scheme, the Food Waste Recycling Projects in Housing Estates, and so on.

In order to further enhance food waste reduction, the Government set up the Food Wise Hong Kong Steering Committee in December last year for taking forward the Food Wise Hong Kong Campaign, with a view to encouraging both the public and the industries to change behaviour and adopt good practices, including encouraging commercial operators to donate leftover food to charities LEGISLATIVE COUNCIL ─ 11 July 2013 15239 for the purpose of achieving the objective of reducing food waste and making effective use of eatable food.

Besides reducing waste at source, we will also build hardware facilities, including the construction of organic waste treatment facilities (OWTFs) to turn food waste into useful compost products and biogas. But we need time to implement their construction step by step. The first OWTF, which is to be built at Siu Ho Wan in North Lantau, will handle 200 tonnes of food waste daily and is expected to be completed in 2016. The second OWTF, which is to be built at Shaling in North District, will handle 300 tonnes of food waste daily and is expected to be completed in 2017. Meanwhile, the Government will enhance planning for the construction of OWTFs in various districts. We have commenced an active search for suitable sites. Furthermore, the EPD has granted a plot of land in the second phase of the EcoPark to a private company for food waste recovery. It is expected that about 100 tonnes of food waste can be handled daily.

As regards Members' point of concern on mandatory food waste recovery, we have studied the experience of the European Union, Taiwan and South Korea and come to the observation that this will require support in many respects, such as the precondition of having enough OWTFs. As I have already mentioned, there is now a timetable for the completion of the first and second phases of OWTFs in Hong Kong. And, site search and planning will be carried out for the third phase of OWTFs and additional OWTFs with the aim of constructing more regional OWTFs for food waste recovery. However, before the OWTFs can fully address the needs of the whole territory, Hong Kong is not well-equipped to consider implementing mandatory food waste recovery. However, we will step up our efforts in this respect.

As regards Members' point on installing food waste recovery facilities on building floors in newly completed buildings, I hope Members can appreciate that Hong Kong is a tiny and densely populated place. Most residential buildings are high-rise blocks comprising many units each offering a very small living area. Given such objective constraints as small living areas and residents' concern about foul smell and hygiene, the installation of food waste recovery facilities on building floors will be quite a challenging task, and may not be the most suitable and effective solution. And, even in Taiwan and South Korea, food waste recovery facilities are not found on each building floor either. Hence, we must carefully consider which method can best suit Hong Kong's circumstances having 15240 LEGISLATIVE COUNCIL ─ 11 July 2013 regard to Hong Kong's actual objective circumstances and the experience of others. Hong Kong's experience of food waste recovery in residential buildings is very limited, but we will actively follow up this matter. The Government is currently implementing different pilot schemes on food waste recovery in various places, including different housing estates, with the purpose of amassing and analysing relevant experience as part of our active preparations for large-scale food waste recovery in the future. The implementation of food waste recovery requires the provision of sufficient end-of-pipe processing facilities, including the OWTFs mentioned just now. In this connection, we will build a greater number of regional facilities, and seek to achieve effective recovery of food waste by adopting practices that suit Hong Kong's circumstances.

In respect of food donations, the Government has always encouraged commercial operators to donate eatable leftover food to the needy and help answer the needs of the grassroots. At present, various food donation programmes are already available in the community. Their organizers and operators have slowly built up a practicable and feasible model of operation regarding the forms of donations, specific arrangements and the issue of responsibility.

For instance, since 2009, through various Short-term Food Assistance Service Projects, the Government has been providing short-term food assistance to individuals who have difficulties in meeting their daily food expenditure. An additional funding of $200 million has recently been approved by the Finance Committee of the Legislative Council for the purpose of perfecting and lengthening these Projects in the period up to late 2015. Besides, through the Partnership Fund for the Disadvantaged, the Government has given financial support to an NGO called Foodlink for the purpose of co-operating with the business sector to collect unsold cooked food and unsold food in markets for delivery to needy individuals and households. Furthermore, the Social Welfare Department is working in collaboration with another NGO called Food Angel, and needy individuals and households are referred to the latter for lunch boxes prepared with recovered food. The Government does not intend to get directly involved in the operation of community canteens at this stage.

The Food Wise Hong Kong Campaign has been in operation for quite some time. In addition to a series of publicity and education activities, we hope to establish an effective territory-wide platform through this campaign. The aim is to establish connections between relevant business operators (such as hotels and LEGISLATIVE COUNCIL ─ 11 July 2013 15241 supermarkets) with relevant recipients of donations, with a view to enhancing their communications and stepping up donation campaigns on leftover food.

The proposals put forward in Mr KWOK Wai-keung's motion and the amendments proposed by Ir Dr LO Wai-kwok, Dr Kenneth CHAN, Mr Gary FAN, Ms Cyd HO, Mr WU Chi-wai and Mr LEE Cheuk-yan on the promotion of waste recovery and recycling on many fronts are in line with our broad direction. I would like to listen to the views of Honourable Members first and give a response later on. Thank you, President.

MR TANG KA-PIU (in Cantonese): President, the Secretary emphasized public engagement several times a moment ago. If this concept of public engagement had really been put into practice, the rows over landfills over the past few days or weeks would not have occurred. Just now, the Secretary cited many examples towards the end of his speech. He mentioned one certain organization, one certain district, and one certain joint project. He sounded as though all the people and the whole community were very determined and committed. However, what he talked about was after all one isolated example only. The Government's policy is manifested in one single example only. And, it cannot extend this very good example to all Hong Kong. We fear that the blueprint mentioned by the Secretary may just be a mere document or something written solely for discussion in this Chamber, rather than anything that can really be implemented through any policies, laws and the deployment of resources which can rouse all Hong Kong people into taking concrete actions and make them in any way more willing to join hands to contribute to the cause of environmental protection.

I have always had many doubts about the Government's determination to promote environmental protection. Let me cite an example. In 1999, the Education Bureau did something which was basically and initially quite a good measure. One or two organizations were offered subsidies and asked to recover used computers, recycle them and give them to school children who were not quite so financially well-off. These school children were mainly from families in receipt of textbook assistance or CSSA. They were given free second-hand computers.

However, this computer recycling programme was withdrawn in 2009 and replaced subsequently by "i Learn at home", under which subsidies are offered to 15242 LEGISLATIVE COUNCIL ─ 11 July 2013 two organizations for running a scheme to help school children buy a first-hand computer at lower prices. But does a Primary One student ― because only Primary One students are eligible ― actually need to have a brand-new computer as a starting point for online learning? I think you all know the answer only too well. People like us who are of poor parentage would always buy cheaper second-hand products when we started to learn new things as a child. I fail to see why the Government should have chosen to promote the use of first-hand products, why it should have stopped the smooth-running recovery of used computers from the commercial sector and community, and replaced it by the provision of subsidies for purchasing first-hand computers. Such a move is wrong in the very first place. And, in the end, "i Learn at home" is not so much a success either because if one wants a cheap computer, one can always buy a custom-ordered computer in Mong Kok. Thus, "i Learn at home" simply brings us nowhere.

There is another example. Many grass-roots people, particularly "old kaifongs" in remote areas, have complained to us that they can no longer find any electrical workers. Of the three major electrical appliances, the case with air-conditioners is better. But when refrigerators, washing-machines and television sets are out of order, there will be no one who knows how to repair them or dares to repair them, so people must discard all these electrical appliances and buy new ones. This problem is not a new one, and is particularly serious in remote areas, such as the new towns of Tung Chung, Tin Shui Wai, and Ma On Shan, where we cannot find any neighbourhood repair shops commonly seen in the past. As a result, these poor families are in effect forced to buy first-hand electrical appliances despite great reluctance. These are actually long-standing problems. Maybe, the Environment Bureau simply thinks that these are just minor problems which should be handled by other Policy Bureaux, having nothing to do with the cause of environmental protection it is responsible for. However, problems like these are all interrelated and closely linked. I hope the Administration can hear the examples I have been talking about.

Let me cite one more example. The Administration encourages the transport sector's voluntary participation in the scheme of phasing out pre-Euro III diesel vehicles. But if these 86 000 vehicles are phased out, they will at once become refuse. They have never told us how they are going to handle these 86 000 vehicles after their being phased out. I hope that they can answer this question.

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About the plastic bag measure mentioned just now, we hope that it can be extended from supermarkets to public markets. In fact, the implementation of environmental protection initiatives also involves our way of life. While conducting studies on the enactment of legislation, can they also discuss with the Food and Environmental Hygiene Department (FEHD) whether it is possible to identify a certain public market under the FEHD, seek the agreement of relevant trade associations, offer the shop operators a six-month rental holiday and invite them to stop using plastic bags during this period, so as to test whether the measure can work out in practice? I think rather than repeatedly engaging in all these high-sounding discussions in the Chamber, we should seek to ensure that the measure is within their capability and discuss all the practical problems with different government departments, with a view to changing people's existing habits and customs.

Moreover, in respect of the issue of waste recovery in housing estates mentioned just now, the Housing Department (HD) should have a major role to play. Since over 30% of Hong Kong people live in public housing estates and public housing tenants are mostly nuclear families who usually cook and eat at home for financial reasons, the HD should assume the responsibility of handling the food waste generated in public housing estates. However, the present situation of food waste recovery in housing estates is extremely unsatisfactory. As a symbolic start, a trial scheme has been launched in 14 housing estates. Is this too late, too little, and too slow? Can more be done?

Speaking of the handling of refuse in housing estates, I think Mr LEUNG Che-cheung, who is sitting before me, should also know the absurdity of the so-called Automated Refuse Collection System (ARCS) installed at certain housing estates in Tin Shui Wai and Tung Chung. The ARCS is installed in 11 public rental housing estates all over Hong Kong. Cleaning workers are asked to dump the refuse they have collected directly into refuse chutes leading to an underground vacuum tube that transports the refuse to a central refuse treatment station for compacting. However, refuse which is too hard or too wet cannot be treated. So what kind of refuse can the ARCS really handle anyway? For example, watermelon rind, pork bone left after making soup must not be dumped into the chutes. A more important and in fact fatal shortcoming of such systems is the stench problem, which cannot be resolved. As a result, the ARCS is never used in some housing estates, such as Tin Yat Estate in Tin Shui Wai. In Yat 15244 LEGISLATIVE COUNCIL ─ 11 July 2013

Tung Estate, a housing estate in my District Council constituency, residents have been complaining day in day out, questioning why the stench has still remained despite continuous handling. The ARCS is also not used in Wong Tai Sin.

Thus, the portfolios of all government departments are in one way or another related to waste treatment and environmental protection. How can the authorities extend the measures to all of Hong Kong through the formulation of policies and enactment of legislation? The good job done by just one single non-governmental organization (NGO) must not be used as an example to illustrate overall success, when in fact the measures are incapable of extending to the whole of Hong Kong.

I hope that after listening to various examples and views, the authorities can tell us how the measures can be extended to the whole community of Hong Kong.

I so submit. Thank you.

MR MA FUNG-KWOK (in Cantonese): President, the extension of the three landfills has aroused heated discussions in the community recently. Although the Government withdrew the application regarding the landfill in Tseung Kwan O at the last moment, the other two applications are still pending the decision of the Finance Committee. In other words, whether the other two landfills will be extended is still unknown. Even if the applications are eventually approved, the Government can at best buy time for eight or 10 years. The issue of solid waste treatment is still pressing.

The one request put forward by most people in the midst of all the controversies is that the Government must properly tackle waste reduction at source before anything else. The volume of waste generated by Hong Kong people is very alarming, large enough to form a garbage heap weighing 13 000 tonnes every day, and far greater than the volumes generated in nearby Taiwan and South Korea. Hong Kong is a long way behind other countries in both refuse treatment and waste reduction. To completely resolve the problem is no easy task, but the Government is still obligated to address the issue.

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President, I maintain that we must uphold the principle of sustainability for the handling of waste, meaning that we must start from avoiding and reducing waste generation, and then go for recycling and reuse. The previous-term Government once planned to introduce a number of measures to reduce waste at source, but in the end, it did not take any active steps to implement the measures. Instead of showing the determination it should have, the previous-term Government simply left this "hot potato" to the current-term Government. And, at this very time when no further delay can be tolerated, the present authorities still refuse to do anything except using "a city besieged by rubbish" as a reason for coercing the public to accept obnoxious facilities such as incinerators and landfills. Frankly speaking, due to the Government's attitude and approach all along, it is indeed difficult to persuade local residents to give up the mentality of "don't put any such things in my backyard", and to reduce their resistance to the extension of obnoxious facilities. Actually, both the Government and the public should understand that if we are to tackle such problems properly, we must all share the responsibility. The Government is duty-bound to formulate proper planning, so as to give reassurance to the public. Measures should also be adopted to enhance people's environmental awareness, so that resource wastage and waste generation can both be reduced.

Land is very precious in Hong Kong. Granting land for landfill extension is only a stop-gap measure, an approach that can only treat the symptoms but cannot cure the disease. The Government's long-standing policy of over-relying on landfill extensions actually reflects its lack of determination to resolve the problem. The Operation Green Fence implemented by the Mainland has made the operation of the recycling industry increasingly difficult. The Government has all along clung to the attitude of non-intervention, showing indifference and giving very little support to the recycling industry. Some environmental protection groups have been actively promoting food waste recovery in recent years, but the Government is similarly indifferent to them, thus plunging them into a shortage of funding and support facilities. In that case, how can there be any improvements to the environment?

As a matter of fact, if measures of waste reduction at source are implemented properly, they will not only reduce waste, but will also create employment opportunities. Thus, I believe the public will not oppose the use of public money for providing subsidies in this regard. The waste recovery industry is basically not a very profitable industry, and it also faces a shortage of 15246 LEGISLATIVE COUNCIL ─ 11 July 2013 land for development. The Mainland has recently started to deter "foreign refuse" by forbidding the direct importation of any waste that is not sorted beforehand. Huge quantities of recovered waste in Hong Kong therefore can no longer be exported. But due to the problems mentioned, the local recovery industry is unable to process all these waste. In the end, such recovered waste must be sent to landfills, thus setting off a vicious cycle. The recovery industry is facing severe financial hardship, and is in dire need of capital to upgrade its facilities. For example, operators need to purchase sorting, cutting and compacting machines for turning waste into recyclable materials that can be exported and reused as commodities of value.

Thus, the Government must vigorously drive the development of the recycling industry based on the concept of "circular economy". The Environment Bureau has recently announced that it will establish a steering committee to promote the sustainable development of the recycling industry and study ways of supporting its long-term development. In this regard, I recommend the Government to draw reference from the practice of Singapore.

The Singapore Government has been vigorously promoting the development of recycling parks in recent years. Lands are granted at very low costs with leases that can be as long as 30 years, with a view to inducing operators to enter the recycling business. The results have been quite satisfactory. The SAR Government may study this practice and offer preferential leases to the recovery industry, non-profit-making organizations and social enterprises. It may also consider providing low-interest loans to help investors construct plants, upgrade facilities and reduce operating costs, so that the recycling industry can sustain its operation. Such measures can increase the waste recovery rate and also drive the development of a green economy.

President, the recovery rate of domestic solid waste in Hong Kong is only 40%. The reason for this is that mandatory separation of waste is not required in Hong Kong. Families are used to disposing of food waste together with other refuse. According to studies, if food waste is separated from other refuse, the recovery rate may go up to higher than 80%, and odour can be reduced by 90%. As we all know, food waste is of very high recovery value because it can be recycled into fertilizers and animal feed. After food waste has been separated, the vast majority of the remaining refuse such as waste paper and plastics can be further separated for recycling. Thus, I agree that the Government should enact LEGISLATIVE COUNCIL ─ 11 July 2013 15247 legislation to promote refuse separation, and expand the Food Waste Recycling Projects in Housing Estates, so as to extensively implement food waste recovery and recycling. Meanwhile, the Administration should also offer subsidies to green groups for running compensated waste recovery schemes, so as to encourage the public to actively participate in the recovery of recyclable materials.

Since incinerators and landfills are not welcomed by the public, the huge public outcries are understandable. However, other proposed initiatives such as the second phase of the Environmental Levy Scheme on Plastic Shopping Bags, the waste charge consultation, and the expansion of producer responsibility schemes have likewise aroused the resistance of many people and the commercial sector. In this connection, I must point out that while it is true that the Government's policies must be people-oriented, people themselves must not neglect their own responsibility. All people in Hong Kong generate waste, so we must all show common commitment and pay heed to the long-term interests of Hong Kong. Thus, I agree to the request of the original motion for the allocation of funds to establish a "waste resources recovery and recycling fund" that supports the sustainable development of the waste recycling industry. I also agree that the proceeds from environmental protection-related levies should be transferred to this fund to sustain its operation.

Many members of the public and Members are worried that once the applications for landfill extensions are approved, the Government will slow down its efforts to promote waste reduction. Throughout the discussion of this motion, many Members have put forth a number of excellent proposals and amendments. I agree to all of them. However, I do not agree to Mr LEE Cheuk-yan's proposal of withdrawing the funding applications for landfill extension at this stage. As a matter of fact, certain proposals may encounter difficulties in the course of their implementation, but I believe the Government will also agree that landfill extension should not be the only way out for waste handling. Regarding waste reduction, I hope the Government can review its entire strategy, adopt a more active attitude, and put feasible proposals into practice expeditiously.

President, I so submit.

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MR CHEUNG KWOK-CHE (in Cantonese): President, in 2004, Dr Sarah LIAO, the then Secretary for the Environment, Transport and Works, introduced "A Policy Framework for the Management of Municipal Solid Waste (2005-2014)" (Policy Framework), which sets out the specific objectives of waste reduction for the following 10 years, advocating that society should reduce waste at source, implement recycling measures, and encourage reuse. However, the Donald TSANG administration simply ignored the Policy Framework and focused only on developing landfills instead. Today, after nine years, the Government published another document entitled "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" (Blueprint). But the strategies mentioned are broad directions only, and are just old ideas. As a matter of fact, the failure of Hong Kong to properly tackle the waste problem stems not from any problems of policy contents, but from a political problem. Whoever is the Chief Executive ― Donald TSANG, LEUNG Chun-ying, or God knows who else in the future ― no policies can possibly work out as long as the Chief Executive is still circumscribed by a handful of consortia and the privileged few, and devoid of any popular mandate. Thus, I am very skeptical of whether the present Blueprint can resolve the problem of "a city besieged by refuse" faced by Hong Kong.

President, even a primary school student knows that tackling at source is the best way to handle refuse. The world has long since reached a consensus that only waste reduction and separation at source can enable us to really resolve the refuse problem. Japan, for example, has already put in place a refuse charging regime. I have read about a household practice in Japanese families, knowing that after finishing a bottle of coke, people will first rinse the glass bottle, and then tear off the plastic label on the body of the bottle. As for the bottle cap, it will be handled separately. There is a clear and separate step to handle each bottle part. After a certain quantity of soft drink bottles have been saved up, the bottles will be returned for recovery. In Canada, refuse separation and recovery is basically a national policy. In some provinces, such as Alberta, a bottle deposits must be paid on purchase of a bottle of soft drink. Hong Kong is a long way behind these places in this respect. But if we do not make a start, we will always lag behind. It is impossible for Hong Kong to rely on incinerators and landfills forever.

Of course, even with satisfactory source separation of waste and every effort to reduce refuse and recover waste, some waste which is not recyclable and LEGISLATIVE COUNCIL ─ 11 July 2013 15249 difficult to separate will still remain. In the end, it must still be dumped in landfills. However, if we can first incinerate the remaining materials that cannot be recycled or reused and then deliver the ashes to landfills, we will be able to achieve substantial reduction of waste volume, not to mention the enhanced efficiency of incinerators and landfills and the reduction of their environmental hazards. After all, refuse separation and reduction should be the pre-requisites for building incinerators and developing landfills. Waste reduction and separation at source is the only means to really tackle the refuse problem.

I support Ms Cyd HO's amendment, which puts forward the specific proposal of urging the Government to develop the recycling industry and create elementary posts. At this juncture, I would like to tell you a story. In a community in Xuanwu District of Beijing, the Government and environmental groups started to implement a trial scheme on refuse separation and recycling in 1998. Over the years, they have received fact-finding delegations from more than 20 countries. This scheme has also attracted frequent media coverage and commendation. However, a little known fact is that the participation of local residents in the scheme has been very low, and the result of refuse separation attributable to the residents is actually very unsatisfactory. The scheme has still become a model community project only because peasants and workers have been scavenging and collecting waste in what can be regarded as a supplementary, second round of waste separation. Well, the fact that Mainland China can still cope with the refuse problem is largely attributable to the presence of several dozen million scavengers and individual waste recovery workers.

My point of telling this story is to illustrate the importance of developing the recycling industry. The Government should take the lead in doing so, because whether refuse can be separated in the end actually hinges on the availability of support facilities in transportation and handling for each kind of refuse. When actively implementing refuse separation and collection, and in encouraging waste recovery, the Government must comprehensively consider and devise an integrated chain of refuse handling which covers collection, separation, transportation, processing, trading, and the various segments of co-ordination work involving the building and monitoring of the recycling market. The Government must never shirk its responsibility, especially because the Mainland's further restrictions on solid waste import in recent years have resulted in one case where a whole batch of waste plastics that could not be exported to the Mainland was discarded improperly in Hong Kong. In fact, the export of refuse is both against the principle of justice and also unreliable. Thus, the development of the 15250 LEGISLATIVE COUNCIL ─ 11 July 2013 local recycling industry is the only permanent solution and also a strategy of redeveloping resources.

President, I have heard a saying that there is no total rubbish but only un-utilized resources on the earth. I hope that the Government can adopt the attitude of making the best use of resources, and will not tackle the challenge arising from "the rubbish besieging Hong Kong" merely as a problem requiring a solution.

President, I so submit.

MR LEUNG CHE-CHEUNG (in Cantonese): President, for reasons of today's motion on promoting the waste recycling industry, I have studied the "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" (Blueprint) released by the Government earlier. This document indicates that in Singapore and Taiwan, both of which are also in Asia, only 1% to 2% of the waste is disposed of by landfilling. The rest is disposed of by incineration and recovery. Land is scarce in Hong Kong but its population is huge, so landfilling is the most undesirable way of handling waste. However, Hong Kong has still been relying solely on landfilling to handle waste all the same. I really find this very unsatisfactory.

It has been eight years since the Government published "A Policy Framework for the Management of Municipal Solid Waste (2005-2014)" (Policy Framework) in 2005. But we all think that on the issue of refuse handling, Hong Kong has only been engaging in empty talks, failing totally to make any achievement. Waste recovery and recycling is a well-knit and specialized branch of expertise. In places with a high recovery rate, waste separation is invariably very sophisticated and the recovery network very close-knit, and three-colour separation bins are no longer the only means adopted. But our Government still thinks that by installing three-colour separation bins, and by relying on people to scavenge cardboards and recover plastics as well as metal cans, it can already discharge the duty of waste recovery. While the Government keeps boasting about the effectiveness of three-colour separation bins, all can actually see the reality that recovered plastic bottles are simply not recyclable due to perfunctory separation and dirty conditions, and must be dumped at landfills in the end.

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Many Members have already expressed their strong dissatisfaction with waste recovery and recycling. I do not intend to do so any more. In respect of today's motion, I will focus on expressing my view on "foreign rubbish".

Earlier, some members of the recycling industry and I inspected a number of rural recovery sites which received "foreign rubbish". Many countries do not welcome such "foreign rubbish" and even prohibit its entry. But such refuse still manage to find its way as "recovered materials" to the recovery sites in Hong Kong, a place which in fact has no room for handling refuse. As estimated by the sector, there is a monthly import of 4 000 tonnes to 6 000 tonnes of "foreign rubbish" into Hong Kong. Some waste recovery operators re-export such refuse to the Mainland and Vietnam for profits. Such refuse is mainly made up of plastic bottles and metals, and their quality varies. Some such refuse was not cleaned and sorted at the time of recovery, and is thus unrecyclable and polluting.

President, since February this year, the Mainland has been strictly enforcing the Operation Green Fence to forbid the import of sub-standard waste. Consequently, such "foreign rubbish" is stranded in Hong Kong. To reduce the expenses of renting storage, some recovery operators simply mix their "foreign rubbish" with local rubbish, and then send it all to landfills for disposal. In reply to a question asked in the Legislative Council on "foreign rubbish" on 5 June, the Government did not reply directly as to how much "foreign rubbish" was refused entry by the Mainland and was delivered to the landfills in Hong Kong. It only indicated that from March to the end of May this year, 70 tonnes of plastic waste was eventually delivered to landfills after detailed inspection by the Environmental Protection Department had identified the waste as locally produced refuse. This indicates that the Government has deliberately turned a blind eye to the mixing of "foreign rubbish" with local refuse and the subsequent dumping of such refuse in landfills by recovery operators ― I am referring to unscrupulous operators. The permission for the import of "foreign rubbish" in the very first place and the dumping of such refuse at the landfills in Hong Kong can all show that the Government has made repeated blunders.

Whether any recycled resources can be made from "foreign rubbish" depends on whether there was any thorough cleaning and sorting at the time of initial recovery overseas. If such refuse is intermingled with too many pollutants or other refuse, it will pollute the environment, and will be regarded by the Government as real refuse. At present, 99% of the materials recovered in 15252 LEGISLATIVE COUNCIL ─ 11 July 2013

Hong Kong are exported to other places for processing and subsequent recycling. Put simply, the recycling industry in Hong Kong exists in name only. The import of such "foreign rubbish" is practically useless to the recovery industry.

By now, even the Mainland, which attaches top importance to economic development, has forbidden the import of "foreign rubbish" due to environmental reasons. How come such "foreign rubbish" is still accepted by Hong Kong, a place with a much higher environmental awareness? Why is it impossible for the Government to step up enforcement and clamp down on "foreign rubbish"? Such a move will certainly gain more support from the public and Members than extending landfills or building incinerators. Thus, I hope that the Government can administer the right remedy on the refuse problem, and expeditiously identify a solution to the problem of "foreign rubbish", which pollutes and inflicts negative impacts on Hong Kong.

President, I so submit. Thank you.

DR ELIZABETH QUAT (in Cantonese): President, the issue of landfill extension has plunged Hong Kong into such a dilemma today largely because over the years, Hong Kong has never stopped generating waste, and refuse can only be crammed into landfills due to the under-development of the waste recycling industry. This, coupled with the failure to solve the odour and pollution problems caused by refuse collection vehicles over all the years, has led to increasing public grievances. To solve the problem, the Government must administer the right remedy, meaning that it must rationalize the entire waste handling chain encompassing waste reduction, recovery, handling and recycling. Concrete and focused policies must be formulated on all these four aspects.

It is of course important to encourage the public to reduce and separate waste. Yet, as the Secretary earlier put, the imposition of a waste levy may not be without disputes, and the mandatory separation of waste may not necessarily be passed. Also, if the waste that has been sorted by people cannot be effectively recovered and recycled, all recovered materials may still be crammed into landfills, thus further dampening people's desire of waste separation. Hence, today I wish to put forward suggestions on the recovery and handling of recyclable waste.

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In fact, the handling of recyclable waste is closely dependent on market forces. Recyclable waste can be divided into food waste, low-value recyclable waste and high-value recyclable waste, each of which should be handled in a separate way. In respect of food waste, the Secretary has said a lot, so I am not going to dwell on it any more. What I want to discuss are high-value recyclable waste and low-value recyclable waste. In the landfills of Hong Kong, we basically cannot find any high-value recyclable waste such as household electrical appliances like washing-machines, television sets, refrigerators and electronic products. As their resale values are high, waste recovery operators are more than happy to receive them, so people in the market will naturally collect and handle them for resale to waste recovery operators to make profit. This is exactly the case with cardboards and aluminium cans, which can yield high returns. People will readily collect them to make money. There is simply no need for the Government to consider how to handle them.

In contrast, since low-value recyclable waste such as glass bottles, plastic bottles, wooden planks, and so on, are low in market value and costly in transportation, operators are reluctant to handle them for fear of suffering losses. Let me take the washing, smashing and reselling of waste plastics as an example. As there is no land in Hong Kong to carry out these procedures and the trade is not profitable, operators will naturally stay away. If there are no buyers, then there will also be no sellers and collectors. In Hong Kong, about 25 million tonnes of low-value materials like plastics, glass, timber, and so on, are dumped in the landfills every day. They account for about a quarter of our municipal solid waste, but they take up a lot of space. If we cannot recover them, any further landfill extension, however large in area, will be useless. And, this is no ultimate solution either. If the Government can offer incentives to enhance the market values of low-value recyclable waste, it may be possible for us to further alleviate the pressure on the landfills.

The experience of South Korea and Japan in waste management tells us that imposing a waste levy, incineration and landfilling are merely some of the means to handle waste. The most difficult, complicated and demanding part of the work is recovery and processing. In South Korea, facilities of processing recyclable waste are set up in different places, and some of them are called resource recycling facilities. Operationally, local governments provide both the land and money required for their establishment and also subsidize their operation. These facilities serve as central buyers, and are responsible for purchasing, handling, sorting, cleaning, shredding, dismantling and selling 15254 LEGISLATIVE COUNCIL ─ 11 July 2013 recyclable waste. The proceeds from the sale of recyclable waste are ploughed back to support the required operation funds.

President, the Hong Kong Government may look into or consider the setting up of such large-scale resource recycling facilities in different districts for the purpose of purchasing low-value recyclable waste from local operators at specified prices. The idea is to increase the market value of such waste through the provision of government subsidies, and after thorough sorting and handling, the waste can be resold to local exporters or operators for export or recycling. This can help the industry to resolve its long-standing shortage of land and resources for thorough sorting, cleaning, shredding, and so on, and can offer waste handling incentives, so that all Hong Kong people can engage in the work of waste recovery. I believe this can offer a practicable solution to the bottleneck problem currently faced by the waste recovery industry.

In addition, since the Mainland customs authorities have tightened the inspection standards for imported waste through the Operation Green Fence launched in February this year, the Hong Kong Government may also consider holding negotiations with the Central Government to ensure that all the waste handled by the resource recycling facilities can meet the national standards in respect of recycled and reusable materials. Certificates may then be issued, so that local exporters holding such certificates may resell the waste purchased from the resource recycling facilities to China or other places. That way, recyclable waste that cannot be used for recycling in Hong Kong can be provided with a stable export outlet.

To sum up, I suggest that the Government should first seek to promote territory-wide participation in waste separation and recovery through education and the provision of incentives. And, resource recycling facilities should be set up under government leadership. Once an effective waste recovery and separation system is in place in Hong Kong, the Government should proceed to vigorously assist, encourage and promote the development of the waste recycling industry. Assistance in respect of land grants, technologies, and so on, should be offered, along with investments in the research and development as well as the application of green technologies, with a view to forming a sustainable waste handling mechanism over time. It is only in this way that we can achieve the goals of reducing waste and increasing the rates of waste recovery and recycling, and in turn reduce our reliance on incineration or landfilling.

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Simply by exploring ways to educate the public on waste recovery, reduction or separation, we cannot possibly solve the problem of waste handling in Hong Kong. The Government must offer support in respect of waste recovery, handling and recycling if we are to find a way out.

President, I so submit.

MR FRANKIE YICK (in Cantonese): President, the recent proposal to extend the three landfills has stirred up huge public outcries in town mainly because of the fact that the SAR Government has never actively implemented any waste handling mechanism over all the years, and its efforts to promote waste reduction, recovery and recycling are never strong enough, thus making it necessary for us to handle nearly 50% of our waste by landfilling today. Upon comparison, we are a long, long way behind our neighbours like Singapore and Taiwan.

The Government published "A Policy Framework for the Management of Municipal Solid Waste (2005-2014)" (Framework) in 2005 to put forward a series of measures on waste reduction, reusing, recycling, and so on. But it has failed to achieve any substantial results. That year, 9 000 tonnes of municipal solid waste were generated a day; six years afterwards, in 2011, the figure only dropped slightly by 4%. In May this year, the Government published the "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" (Blueprint), which is yet another 10-year waste management blueprint. But it is just old wine in a new bottle. The Liberal Party honestly does not hope that yet another decade later, Hong Kong must still rely on landfilling as the ultimate means of waste handling.

In fact, the Government should vigorously promote the idea of "turning waste into opportunities", meaning that it should seek to create new business prospects and employment opportunities by making efforts to support the waste recovery and recycling industry. Regrettably, the Government has never offered any appropriate support to the industry. For example, in recent years, the Mainland has tightened its policy on waste import under the Operation Green Fence, permitting only the import of cleaned and shredded waste plastics. But the authorities have not assisted waste recovery operators in holding negotiations with the Mainland on possible solutions, nor have they introduced any relief measures. As a result, waste recovery operators are faced with imminent closure. At present, only two waste recovery operators in Hong Kong are sizeable enough to have the means to purchase extra shredding machines and 15256 LEGISLATIVE COUNCIL ─ 11 July 2013 recruit more workers for the sorting and cleaning of waste as required by the Mainland's new policy. As for other operators, they can only transport the waste plastics returned from the Mainland to the landfills, thus adding to their pressure.

The local waste recovery and recycling industry has always been facing the problem of high operating costs. The incessant rises in transportation and wage costs in recent years have rendered their business operation even more difficult. The Government has provided some lands to the waste recycling industry, but the remote locations of such lands have only added to the costs of transportation. Furthermore, these lands are provided on lease terms of three to five years. Tenants must still spend lots of money and time on the provision of water and electricity as well as site formation. Very often, they must move out even before they can recover all these costs. All these have added to the difficulties faced by operators. The Government no doubt also provides lands to the industry in the two phases of the EcoPark in Tuen Mun, but the admission threshold of the EcoPark is very high, so this does not help much. And, even after admission, business operation will not be easy due to the presence of many restrictions. Some tenants of EcoPark Phase II have told us that the Government even took two years to approve their plant construction plans. They say that while they must pay two years' rent for nothing, construction cost also doubled during that period of time, thus adding to their burden. The Government has been advocating the development of the six major industries, and the green industry is one of such industries, but its support to the green industry over the years has been inadequate.

Hong Kong is a cosmopolitan city, but its waste handling and recycling industry is lagging far behind others. This is shameful. Asian cities in our neighbourhood have put in place many excellent policies to support the waste recycling industry. In Japan, their Eco-Town Program is co-developed with the funds provided by their government and enterprises in the Eco-Towns. The government also offers subsidies on hardware facilities and software services such as research and development. Waste recovery plants in the Eco-Towns also receive allowances at the initial stage of establishment. In Taiwan, support for the waste recovery and recycling industry takes the form of taxation, land use, leases as well as loan financing, and so on. The Government should draw reference from these places, formulate policies on land supply and tax concessions, and even provide the required hardware facilities and software services such as technical assistance, so as to foster the development of the waste recycling industry in Hong Kong.

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The Chief Secretary for Administration has disclosed that a steering committee on promoting the sustainable development of the waste recovery industry will be set up shortly to assist the industry's development, and a fund dedicated to waste recovery is under consideration. The Liberal Party hopes that the committee can be set up as soon as possible, and concrete steps can be taken to enhance the support for the waste recycling industry. The fund concerned should be modelled on a similar fund in South Korea. It should be a permanent and long-term fund, with part of the money reserved for offering support to small waste recycling enterprises in the form of low-interest loans for purchasing necessary production equipment.

Some waste recovery operators say that waste recovery in Hong Kong now is unable to cover all kinds of recyclable waste. Hence, for the purpose of optimizing the support arrangements for waste recovery and systematically collecting all kinds of waste, while the Government seeks to conduct education and offer more incentives to encourage enterprises and the public to engage in waste separation at source, it should also consider the proposal of the Liberal Party on making the best use of existing refuse collection points, areas below flyovers and industrial lands as waste recovery points, so as to establish a local waste recovery system. This can reduce the industry's operating costs on the one hand, and bring forth the comprehensive and focused recovery system for all kinds of recyclable waste on the other.

President, Hong Kong's success in fully developing the waste recovery and recycling industry will not only help promote the green cause, but will also offer prospects to solid waste handling, thus alleviating the pressure on the landfills and leading to new business opportunities as well as many job opportunities.

President, I so submit.

MR POON SIU-PING (in Cantonese): President, the promotion of green industries is not a new topic of discussion in this Council. Yet, the discussion today is especially meaningful, because the Government now plans to extend the three landfills and is seeking funding approval from the Finance Committee of this Council. This has given rise to strong repercussions. Landfill extension is necessitated by the huge volume of waste in Hong Kong. As the landfills are about to reach capacity, extension is necessary, or there will be no way to handle our waste. Promoting waste recovery and recycling can no doubt help alleviate the pressure on the landfills.

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Green industries are closely related to the reuse and recycling of waste. In the discussions on promoting waste recovery, concerns about the recovery of domestic waste and waste separation are inevitably brought up, because without effective waste separation and recovery, no full-fledged green industries can ever emerge. As suggested by Members who put forward the motion and the amendments today, encouraging the public to separate waste, optimizing the system of waste separation and recovery, and implementing producer responsibility schemes are all essential to the development of green industries in Hong Kong.

The objective of using three-colour waste separation bins is to encourage waste separation, and this measure of waste separation and recovery has been in use for 15 years. As pointed out by the Government in reply to a Member's question early this year, about 16 000 sets of waste separation bins are installed throughout Hong Kong in places covering public and private housing estates, schools, public places, country parks, and so on, with a view to facilitating the separation of waste by the public. Having put in place waste separation measures, we must still note that it is equally important to implement adequate support measures to ensure that the waste put into the bins by the public in the process of waste separation will indeed be sent to the plants of green industries instead of the landfills. Otherwise, it will be meaningless to separate waste.

About a month ago, a media report quoted a contractor responsible for clearing the garbage collected by three-colour bins as admitting that due to the limited channels of selling recyclable waste, some of the recovered waste could only be dumped in the landfills in the end. Last year, some 700 000 tonnes of waste paper, about 600 000 tonnes of plastics and more than 60 000 tonnes of metal materials like aluminium cans were dumped in the landfills. This is very unsatisfactory. This also illustrates that while efforts to encourage the public to develop an awareness of waste separation is certainly very important to the handling of waste in Hong Kong, there is another issue of much greater importance, the issue of how we can speed up the development of green industries in Hong Kong, so that there can be sufficient capacity to handle the local waste that has undergone separation. This is a problem which the Government cannot evade.

As early as 2007, in this Council, LI Fung-ying, a former Member belonging to the Federation of Hong Kong and Kowloon Labour Unions, already requested the Government to squarely address the frailty of Hong Kong's green industries and assist in their development, especially the development of small and medium green industries. A few days ago, the Secretary for the LEGISLATIVE COUNCIL ─ 11 July 2013 15259

Environment disclosed that the Government would shortly set up a steering committee to provide cross-department support to the waste recovery industry, and would also set up a waste recovery fund to provide lands or direct subsidies to recovery operators. The steering committee will even be led by the Chief Secretary for Administration. This is a belated effort, but it is better late than never. I hope that the Government can really make determined efforts to support green industries this time around, and comprehensively consider all factors in the process of policy-formulation, so as to ensure their smooth implementation.

President, I must also raise two last points. First, green industries can create more job opportunities, but Hong Kong is now close to full employment. I do not want to see the development of green industries becoming an excuse for some in the business sector to call for labour import. Moreover, the existing Environment and Conservation Fund provides subsidies to community groups for operating waste recovery services, but some such groups have reflected to me the difficulties in finding suitable shop spaces for waste recovery due to exorbitant shop rents. I hope that apart from supporting green industries, the future steering committee can also consider ways to support the waste recovery efforts of voluntary community groups.

President, I so submit.

MR TONY TSE (in Cantonese): President, in May this year, I joined an inspection trip organized by the Panel on Environmental Affairs of this Council to some of the local waste management and handling facilities located in Tuen Mun and Tseung Kwan O, including the EcoPark in Tuen Mun. Frankly speaking, I am disappointed with the EcoPark in Tuen Mun, because its overall design and operation can hardly remind us of the idea of environmental protection. There are very little greening and very few trees over there, leading people to think that the resources devoted by the Government to waste recycling are far from enough.

In fact, throughout the time from the finalization of its construction to its inauguration, the EcoPark has always attracted many criticisms and faced with many problems, including the need for re-tender due to the difficulties encountered in a previous land tender, and the delayed completion of the infrastructure facilities to be built by the Government inside the EcoPark. Many waste recovery operators who have moved into the EcoPark have also complained that the relevant government policies and some support facilities are unable to dovetail with their operational needs, thus posing difficulties to their 15260 LEGISLATIVE COUNCIL ─ 11 July 2013 operation and even forcing them to close down their business and leave. I naturally hope that the Government can learn from this experience, and then make more determined efforts to improve itself in the course of promoting waste recycling and developing the waste recovery and recycling industry, including the formulation of concrete targets and practical policies as well as the introduction of support measures conducive to the sustainable development of the industry. The reason is that waste recycling, separation of waste at source, waste levy and landfill extension are not separate issues, but just a whole basket of interlocking factors.

I believe the Government's objective of establishing the EcoPark is to promote and encourage investments in the waste recovery and recycling industry through the provision of low-cost lands and common facilities, so that the industry can upgrade itself. Now that the EcoPark has been operating for many years, has the Government ever gauged its effectiveness, including its ability to attract more investments in the local waste recovery and recycling industry, and whether there is any upgrading of the industry in the direction of high-tech and high value-adding development? Many people opine that there is only waste recovery but no waste recycling in Hong Kong. How can the Government reverse this difficult situation by means of the EcoPark? I hope that the Secretary can give a response later.

President, inadequate investment of resources aside, the measures rolled out by the Government to encourage and promote waste recycling are also not active enough. In the case of food waste, for example, the food waste recovered in Hong Kong accounts only for 3% or so of the total volume of food waste. In contrast, the food waste recovery rates of our neighbours like South Korea and Taiwan are respectively as high as 90% and 40%, so Hong Kong's food waste recovery rate and result are obviously a long way behind theirs. The root cause of this is that even now, Hong Kong has not yet implemented any food waste recovery programme, nor has it invested sufficient resources to vigorously promote food waste recovery across the entire community. For example, the present Food Wise Hong Kong Campaign led by the Government aims to reduce food waste by 10% in the coming three years, but have any concrete measures and schemes been formulated so far? As far as we can observe, there seems to be none. This is disappointing.

(THE PRESIDENT'S DEPUTY, MR ANDREW LEUNG, took the Chair)

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According to "Monitoring of Solid Waste in Hong Kong 2011", Hong Kong generated nearly 9 000 tonnes of municipal solid waste a day. Food waste accounted for 3 500 tonnes, of which 70% came from households and 30% from industrial and commercial establishments. To reduce household food waste, the Government introduced "Food Waste Recycling Projects in Housing Estates" in 2011 to subsidize the recovery of food waste at 56 housing estates. Yet, due to insufficient efforts of promotion and the absence of a satisfactory recovery system, only less than six tonnes of food waste per day were collected at these housing estates. The result is clearly unsatisfactory. The Government needs to squarely address all the problems and identify all the shortcomings. Otherwise, even if the Secretary introduces an enhanced version of the projects, it will still be difficult to achieve the targets.

Deputy President, in "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022", the Government says it will continue to adopt the multi-tiered waste management hierarchy to guide its policies and initiatives, namely prevention and then reuse, recovery, recycling and finally disposal. I hope that the Government can really show the determination to build up such a waste management mentality, and make serious efforts to formulate and implement an integrated policy on waste reduction and recovery, so as to promote the development of the waste recovery and recycling industry in Hong Kong, and put "Use Less, Waste Less" into practice across the territory.

Deputy President, I so submit.

MR TOMMY CHEUNG (in Cantonese): Deputy President, some Members often like to stand on moral high ground and demand the introduction of mandatory waste handling measures. On the one hand, they urge that mandatory recovery of food waste must be introduced as soon as possible, and on the other, they also ask for the progressive introduction of mandatory separation of waste. Such suggestions sound very simple and easy to implement, and no listeners can possibly raise any disagreement. But with just a bit of close analysis, we will see many problems with them.

In Hong Kong today, a full-fledged waste recycling industry has yet to emerge, and green education and expertise are both lacking. If we implement any mandatory waste treatment scheme at this very time, the costs, in my view, will never be small by any standards.

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There are only four ways to handle waste: landfilling, incineration, export and recycling. But land is now scarce. The landfills will soon reach capacity according to the authorities. Incineration will give off dioxin (I know that toxic gases can now be treated by advanced technologies, but many people still oppose incineration). And, it is no longer possible to transport any rubbish to the Mainland, so Hong Kong itself must absorb all the plastic bottles and let them pile up like mountains.

If we implement any waste separation under these circumstances, where can all the food waste, glass bottles, plastic bottles and other solid waste end up after waste separation at source? The food waste treatment facilities in Hong Kong are by now saturated and unable to absorb any additional food waste. And, as Members have pointed out, there are no longer any recovery channels for glass bottles, plastic bottles, and so on. So, even if all such waste is separated at source, they will only be mixed up again for disposal at the landfills in the end. What is the point of waste separation then?

Deputy President, let me first declare that over the past few years, I have been engaged in the business of recovering and recycling various materials such as waste cooking oil. Why do people voluntarily engage themselves in the separation and recovery of newspapers, aluminium cans and waste cooking oil in the absence of any mandatory scheme? Let me use waste cooking oil as an example to explain my point. At present, while several local companies are engaged in the manufacture of biodiesel from waste cooking oil, even some overseas recyclers from afar also purchase waste cooking oil in Hong Kong, so the prices of waste cooking are always rising. Precisely because the prices of waste cooking oil are high and there is actual and effective demand in the market, there is no need for any mandatory recovery or separation. Hence, in my view, it will be a waste of time and efforts to rashly introduce mandatory recovery or separation of waste without first optimizing waste recycling or supporting the waste recycling industry, and it will be like putting the cart before the horse.

As early as 13 years ago, I already heard of the sustainable prospects of manufacturing biodiesel, only that even at this moment ― as far as I know ― the profits gained by the several biodiesel producers in Hong Kong are still very meagre due to limited sales. But the Government has not offered them any assistance. I once advised the Government to use their biodiesel for its vehicle fleet, explaining that biodiesel is surely more expensive but it is cleaner, and using it can help support their business. However, the Government has remained indifferent.

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Nowadays, we can see all sorts of new and rapid advances in green technologies practically every day. Let me take food waste handling technologies as an example. In the past two to three years, I had the chance to have an inspection in Germany, and there, I was able to see that food waste handling technologies had already undergone a total transformation. I might have discussed the adoption of a certain technology with the Government three years ago, but now, after the passage of three years, I will advise the adoption of another technology rather than recommending the same technology. As a matter of fact, food waste is now 100% recyclable. What can we get after recycling food waste? The answers are water, fertilizers for agriculture, and biogases that can be used by coal gas companies or for power generation.

During the past two or three years of political changeover from the previous-term Government and the current-term Government, I kept holding discussions with the relevant government departments on the adoption of the aforesaid technologies. I told them that I had raised the required capitals, that all the hardware equipment was already in place, and that the Government was only required to compensate the investors for the cost of handling food waste at the landfills on a per tonne basis. In this way, I told them, the pressure on the landfills could be alleviated, thus bringing benefits to all. The two Governments simply responded with empty talks, making it impossible for investors like me to make any headway at all. But this is in a way something quite good, because we can thus adopt even newer technologies.

In the final analysis, the Government must be the one to blame. More than 20 years ago, everyone was already aware that the landfills would one day reach capacity. At that time, many places and countries were already making strenuous efforts to develop sustainable recycling industries, but so far, the Hong Kong Government has not shown any awareness, not even any belated awareness. It has kept delaying the commencement of promotion, development and planning. As a result, we now face the problem of not knowing where to dispose of our waste.

Deputy President, the business sector is not against the green cause, but opponents are very often beaten by others with the batons. The Government should not ever think that simply by intimidating the public, by beating them, or even by "delving inside their pockets", it can make them generate less waste. The Government must not underestimate Hong Kong people's aspirations. What we need is a far-sighted and well-supported green policy, one which can achieve the greatest environmental benefits with the least money.

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As a matter of fact, the catering sector is a major victim. Over the past 10 years or so, we have borne some 80% of the trade effluent surcharge, and now the authorities even intend to impose a $1 levy on each glass bottle and introduce a waste levy. The industry is no longer able to stand all this pressure.

However, our reservations about mandatory food waste recovery or other waste charging schemes is not caused solely by our fear that such schemes may drive up the operating costs of the industry once again. Another reason is that we do not think that the schemes proposed by the Government so far can solve the problems.

Any sustainable green policy that comes with good support measures and adequate assistance to small and medium enterprises will have the support of the industry. But waste recovery bins and stations are installed everywhere in other places. Is this also the case in Hong Kong? In other places, sufficient approved recyclers are available to take garbage away from various areas on a regular basis. Is this also the case in Hong Kong? In other places, many advanced technologies and support arrangements are available, and many universities are engaged in relevant technological research. Is this also the case in Hong Kong? Even if people are trained up in Hong Kong, they will only lose their jobs any time. In other places, highly useful recycled products are made and marketed. Is this also the case in Hong Kong? If we are already required to spend money continuously before there is anything at all, how can we have any confidence?

Finally, I want to remind Members that they must not lightly accept any waste charging schemes because our acceptance will enable the Government to make up different excuses to force us to make continuous payment. In fact, the rates we pay already cover the cost of refuse collection by the Government.

Deputy President, I so submit.

MR VINCENT FANG (in Cantonese): Deputy President, topics on waste or garbage are very hot of late. The reason is of course the plan to extend the landfills. Nevertheless, today's motion on "Promoting the waste recycling industry to create employment opportunities" is absolutely not a new topic. In the past two terms of the Legislative Council or even earlier, other Members and I already moved similar motions, and these motions were all passed by the Legislative Council. But why has a Member still put forward another motion on LEGISLATIVE COUNCIL ─ 11 July 2013 15265 the same topic today? The obvious answer is that the Government has never responded actively to the motions passed by this Council.

The strong resistance to the landfill extension plan today is inseparably linked to the Government's failure to seriously develop the industry of recycling useful waste. The reason is that if the waste recycling industry in Hong Kong can develop well, if we are thus able to extract all recyclable waste from our garbage, then all that remains will be useless garbage. In that case, I believe even if all such garbage ends up in the landfills or an incinerator, both the public and green groups will still accept the situation.

Regrettably, the Government has all along failed to formulate an integrated and holistic plan for waste handling. It has only been introducing its measures in a piecemeal manner, giving people the impression that apart from seeking funding approval for landfill extension from this Council, it has no other plans. However, landfilling is no panacea. Its impacts and ill-effects are far-reaching. I therefore hope that the Secretary for the Environment and the public officers present today can listen seriously to what Members have to say, because they may hear from their remarks advice that can shed some light on how to help promote landfilling and incineration facilities.

I am opposed to the full-scale implementation of the plastic bag levy scheme now under scrutiny, and I am also against any extension of the landfills at this stage, but does this mean that the wholesale and retail sector and I do not support the green cause? This is of course not the truth. The truth is that I am highly likely to support the two waves of initiatives under the product eco-responsibility system, namely the waste electrical and electronic equipment (WEEE) levy scheme and also the levy scheme for glass liquor and beverage bottles. Why? Because they are both more than just levy schemes. One of them is backed up by $500 million allocated by the Government from the Treasury for establishing a factory to handle the harmful substances in WEEE. And, the proceeds from the glass liquor and beverage bottle levy will be used for subsidizing the glass recycling industry.

I have always upheld the "3Rs" for waste handling ― reduce, recycle and reuse. It is only by walking on these three legs that we can convince different stakeholders and achieve desirable results. In respect of waste recovery, the Government always talks proudly about Hong Kong's climbing waste recovery rate, saying that it has reached 48%, a figure mentioned in the original motion. But Mr KWOK Wai-keung still finds this inadequate, arguing that since South Korea has achieved 60% or so, Hong Kong should make immediate efforts to 15266 LEGISLATIVE COUNCIL ─ 11 July 2013 catch up. But this is not my concern. My concern is rather the final destination, the eventual fate of recovered waste. The Government replies that over 80% of the recovered waste is exported. But if the countries concerned do not allow the import of waste any more, what is Hong Kong going to do?

Earlier, it was reported in the news that 90% of the waste plastics recovered by three-colour waste separation bins had ended up in the landfills contrary to the original intent. When asked why this was so, the waste recovery operators explained that since Mainland China introduced the "Operation Green Fence" in February to ban the entry of polluted waste plastics, the plastics recovered locally could no longer be exported, so the recovery prices of plastics had dropped and the landfilling of such materials was the only solution.

This can explain why I have always maintained that making proper use of our limited resources is the most effective way to stop waste from seizing and polluting the environment, and this means the recovery of recyclable waste for recycling and then reuse. Exporting waste is after all not a long-term solution. The Government should learn from the South Korean Government and play the leadership role in this respect. The actions it should take include investing only a tiny portion of our enormous fiscal reserves in those waste recycling industries which require huge inputs of capital and technology but can only yield very low returns, such as the proposed plant for handling waste electrical equipment. Next, the Government should roll out various policies, such as tax and land provision incentives, so as to induce waste recycling operators to develop their business in Hong Kong. That way, we will be able to progress in the sustainable development direction of creating new industries and offering jobs. This will definitely be beneficial to Hong Kong.

I so submit. Thank you, Deputy President.

MR CHARLES PETER MOK (in Cantonese): Deputy President, let me first thank Mr KWOK Wai-keung for proposing this motion today. As we are now considering the plan to extend the West New Territories Landfill and the North East New Territories Landfill, the present debate on developing the waste recycling industry indeed happens just at the right time. I support the original motion and all the amendments proposed by Members. Since the amendments proposed by Members are concrete and specific, I hope that the Government can consider them seriously, rather than just squeezing out a little something in response to the "duress", because in the case of waste recycling, no piecemeal approach can possibly work.

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The issue of landfill extension has turned so controversial because people simply cannot understand why the Government should have adopted such a "big talks but little effort" approach to solid waste handling over the years, and why after the long years of discussions on all these waste reduction measures, only the first phase of the plastic bag levy scheme has been introduced, and the rest are still nowhere in sight. Both the present Government and its predecessor have failed to implement the related initiatives. But we are now suddenly told that time is running out and we must depend on landfilling. No wonder there is so much public "misunderstanding" about the Government.

The Government has not made enough efforts to reduce waste. It has failed to make any concrete commitments or put in place any specific measures. But the public are now asked to bear the ill consequences. As rightly pointed out by some, very few people know of the policies on waste reduction due to a lack of publicity. No wonder people are still asking whether there are any alternatives to landfilling. What I am saying is really true; I can observe that people are asking why landfilling is still being discussed. All is because no one knows of the waste reduction blueprint released by the authorities. Even if some have indeed heard of it, they will not believe the Government, because they believed the Government in the past but it has not fulfilled its undertakings.

The document "A Policy Framework for the Management of Municipal Solid Waste (2005-2014)" published in 2005 already calls for waste reduction and the promotion of the "3Rs", namely recovery, reuse and recycling. However, all these policies have never seen any progress whatsoever. The success of waste reduction at source and recycling depends entirely on efforts to educate people on voluntary participation and also the provision of incentives. The volume of waste has not shown any decline. In the "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" published by the authorities in May, there is an apparent lack of concrete timetables for attaining any ambitious waste reduction targets except for the mentioning of a consultation on the introduction of a mandatory waste levy.

If we are to put the waste reduction blueprint into practice and extend the expiry of the landfills, relying solely on people's voluntary waste reduction efforts is far from enough. The waste recovery and recycling industry is downright unprofitable. The biggest problem is that the value of recycled waste is low but the cost of recycling is high, meaning that the cost of handling is higher than the value of the waste itself. The dilemma faced by the waste recycling industry in its development can be traced back to more than 10 years ago. In the case of certain recovered materials with low market values like glass, wood, food waste 15268 LEGISLATIVE COUNCIL ─ 11 July 2013 and plastics, only very simple processing can be possible before their export to other places, because land prices and transportation costs are very high. Let me take plastics as an example. The Mainland has progressively tightened its policy on waste plastic import, requiring plastics to be shredded before entry. Recyclers without the equipment for such a process may simply stop recovering plastics. And, since the export of recovered materials is faced with increasing difficulties, recovered materials like plastic bottles may end up in the landfills.

The time wasted will never return. The most important thing is for the Government to show its determination. The mere provision of berthing places, land and a little bit of subsidies with public money cannot possible resolve the problems facing the waste recovery industry. I agree that the Government should set up a recovery fund to subsidize the industry. But what are the details? Public resources must be spent appropriately. We must discuss not only the amount of subsidies, but also the mode of subsidies and also ways to really revitalize the industry.

For example, suppose we offer direct subsidies to help waste recovery operators reduce their costs, can they thus achieve sustainable development in the long run? Suppose we use public money to cover all losses suffered by operators, will we in effect encourage their inertia, thus plunging their finances into a hopeless situation over time? What terms and conditions as well as detailed requirements should be attached, if we are to push the industry towards upgrading and transformation? How can we assist the local waste recovery industry in processing waste for export, so as to alleviate the lack of interest in those materials with low recovery values, such as wood, plastics, glass, and so on? While offering subsidies to small and medium waste recovery operators to sustain their business, how can we also benefit those workers who collect and sell waste to waste recovery operators, especially the grassroots and the elderly? How can we support the establishment of collection points for recyclable waste all over the 18 districts? What criteria will the Government adopt for evaluating the effectiveness of subsidies? Will the authorities set up any indicators relating to the target number of waste recovery operators using advanced equipment and technologies, and also a specific growth rate for local recyclable materials, for example? Will there be any policy consistency across government departments? Despite the Environment Bureau's encouragement of waste separation, the Food and Environmental Hygiene Department does not allow anyone to handle or separate the waste in refuse collection points, or to scavenge any waste there. Why?

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I hope that when the Government gives an account of the effectiveness of the fund to the public before this Council in the future, it will not tell any boastful story and focus entirely on the amount of subsidies granted ― while the mode of operation of the waste recovery industry, on the other hand, is still low-tech and low value-adding, with everything remaining unchanged, with recovered waste materials like plastics and wood still ending up in the landfills due to the same of lack of interest in them.

Of all the amendments, I support Mr LEE Cheuk-yan's amendment to Ms Cyd HO's amendment especially strongly. I agree that the Government should conduct another large-scale public consultation, particularly a consultation on the timetable for implementing measures in support of the waste recovery industry. I also support Dr Kenneth CHAN's amendment on formulating quantifiable waste reduction and recovery targets for the 18 districts, and conducting regular reviews and audits of waste recovery volumes as a basis of planning for waste reduction measures in local communities.

Deputy President, I so submit.

MR CHAN HAK-KAN (in Cantonese): Deputy President, Mr KWOK Wai-keung's motion comes as a very appropriate one in the midst of the controversies over landfill expansion.

When I spoke on the Budget earlier on, I also talked about Hong Kong's environmental protection policies or the predicament of "only recovery but no recycling" facing the industry. At that time, I urged that the Government must seriously address this problem, or else any talks on environmental protection and waste reduction would just ring hollow. Yet, it was later revealed that the waste plastics collected from three-colour bins were directly transported by contractors to the landfills for burial. We have even discovered that this has always been the case, and the Government has done nothing to plug this loophole.

It has turned out that not only is there "no recycling" in Hong Kong, but there is "no recovery" either. More ironically, we see that some organizations genuinely dedicated to the local recycling of plastics are driven to the verge of closure by a shortage of recovered waste plastics. As a Legislative Council Member concerned about environmental protection policies, I feel very disappointed.

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From the incident of "three-colour bins", we can see two deep-rooted problems. First, the Government's formulation of waste recovery policies is anything but well-thought-out. How come the Government did not prohibit subcontracting in its agreement with the contractor? Even if subcontracting is to be allowed, it should still specify in detail the workflow of recovering and exporting waste plastics, rather than leaving a loophole enabling the principal contractor to subcontract the work and then deny any responsibility and watch with folded arms when the subcontractor dumps all the waste plastics into the landfills. If the Government allows these things to happen, one can say that the existing "three-colour bins" are really nothing but ruses put in place to deceive the public. I think that like me, many people have had the experience of walking for over 10 minutes past several blocks of buildings in search of three-colour bins to deposit a plastic bottle. How could we have known that the plastic bottles we threw into three-colour bins were likewise dumped into the landfills in the end? Deputy President, you can easily image how despairing we are, and why people think that the Government has been playing a trick on them. If Hong Kong is really an Asia's world city, how can it make such an elementary error? In that case, how can we encourage people to sort and recycle waste?

Deputy President, there is also the second problem. After the "three-colour bins" incident came to light, a television news programme covered an inspection of the plastic bottles inside three-colour bins. It was found that many plastic containers there were dirty and not suitable for recycling. Actually, before depositing such beverage bottles into any recovery bins, people should first rinse them. This is only a common sense requirement in environmental protection. Waste recovery for the green cause has been promoted for more than 20 years, but it turns out that the masses still do not understand this common sense requirement, and many people are not aware of it at all. This shows clearly that the Government's implementation of environmental protection policies very often emphasizes the "hardware" only and slights the "software", that is, education. It has just kept installing three-colour bins without educating the public on how to use them, or on the need for proper cleansing before sorting and recycling.

Deputy President, the "three-colour bins" problem is just the tip of the iceberg. The Government's emphasis on the "hardware" instead of the "software" over all these years has been manifested time and again in many LEGISLATIVE COUNCIL ─ 11 July 2013 15271 respects. The EcoPark project is a case in point. We see that the Government has provided nothing but just a piece of land to the green industry. Such inadequate support leads to two consequences. First, many environmental protection companies are on the brink of closure because of financial difficulties. Second, due to the shortage of capital and technologies, insufficient recyclable waste and the absence of a domestic market for recycled products, most recycling companies can only engage in the low-skill work of "recovery, baling and export". Recently, the Mainland has put in place the Operation Green Fence, prohibiting the import of unprocessed waste plastics. This operation has cut off our last remaining avenue of "baling and export". The waste recovery industry is literally dying.

As far as I can observe, the Government should have noticed this problem already. The Government has recently announced the setting up of a recycling fund to support the development of the green industry and to subsidize the recovery of materials which are of low economic benefit, such as waste plastics. As some scholars put it, the Government has finally "come to its senses" and stopped spending public money only on dumping rubbish. However, I hope the Government will not stop at setting up a recycling fund and then do nothing else. Rather, the Government must ensure the proper use of the fund. More importantly, it must ensure that the public money from the fund will only be used to subsidize locally recovered materials instead of any "foreign waste".

In fact, if the Government can comprehensively review Hong Kong's environmental protection policies and inspect every detail, it will be able to avoid incidents similar to the "three-colour-bins blunder" I mentioned just now. The Government must ensure that all materials capable of recovery are handed over to recovery operators directly, so that after processing, such materials can be sent to recycling operators for recycling into consumer products which can be put onto the market again. It is only at this point that our green industry and environmental protection work can claim to have completed their missions. The most important first step, of course, is to educate and encourage members of the public on waste separation and recycling, and to give them knowledge in this regard. This is what I mean by "software" efforts.

Deputy President, as rightly pointed out in Mr KWOK Wai-keung's motion, the Government should continue to learn from the successful experience 15272 LEGISLATIVE COUNCIL ─ 11 July 2013 of other countries with a humble mind, rather than treading the same old path. According to press reports, the Government may still have various worries about the launching of the fund. However, let me advise the Secretary that while great accomplishments must be preceded by prudence, one must not allow any worries to lead one into inaction in the process. I hope that the Government can continue to keep its mind open and proceed daringly and with determination, so as to do many more beneficial and constructive things for the future of the green industry and green cause of Hong Kong.

Deputy President, I so submit.

MISS CHAN YUEN-HAN (in Cantonese): Deputy President, I have been listening attentively to this debate, whether in this Chamber or in my office upstairs. Deputy President, after hearing Members' speeches, I cannot help lamenting. Members have already raised such opinions time and again. Counting in those four years when I left the Legislative Council, I should have talked about this topic for a total of 18 years, including this year. We have repeatedly discussed this topic for many years. I think the Under Secretary should have the same feeling too. Thanks to the Under Secretary for her nod of approval. I really have many thoughts and feelings about it.

Last night, I watched the programme "This Day in History", which was broadcast after the night news. Both the Under Secretary and I appeared in the footage shown in this programme, which was about the then Legislative Council's relationship with the Government. I raised some opinions at the time. If asked the same question again today, I would still say the same things. During the times of the British Hong Kong administration, whenever we raised any questions for discussion, the Government would certainly give a response as a matter of routine. "Fei Pang" was really something; he came up with a self-reliance scheme when we got vocal and introduced measures like the Youth Pre-employment Training Programme when we got even more vocal. However, in my opinion, the Government should devise a holistic policy to tackle the employment problem, the youth unemployment problem, and the whole series of problems in the aftermath of the handover.

Let me talk briefly about the greatest concern of the labour sector ― working poverty, that is, the issue of how to enable all to have employment LEGISLATIVE COUNCIL ─ 11 July 2013 15273 opportunities. As the green industry was already a study area of the Hong Kong Federation of Trade Unions in the 1990s, we once dragged chains of bottles and cans along the streets to demand the development of the green industry at that time. However, this morning, when I heard various Members talk about the Government's achievements, many kinds of feelings welled up in me. So, I asked my staff to get these government publications out for me quickly. Deputy President, these publications are more or less the same in content. This one was by Dr Sarah LIAO and that one by the current-term Government. I could have been able to find an even older one, published in 1998, but I was in such a hurry, so I could not find it in the end.

All old wine in a new bottle. Secretary, you may not know clearly what I mean. However, the Under Secretary should know very well that we have just been turning round and round without any achievement. I earlier asked my colleague, Mr KWOK Wai-keung, "Where on earth can you find a place which asks an official as high-ranking as a cabinet minister to take charge of waste management?" I am not hinting at anything. But, let me put it that way ― it is just the simple job of waste management, after all. Speaking of waste, I suppose lawyers like Mr Alan LEONG or those in the business sector must know very well that the market serves to supply resources, and where there are resources, there will be waste. After waste is recycled into products, is there any market for them? Yes, they do. I will go into details on this in a moment.

Having listened to so many Members' speeches and urged by my feelings over the past two decades, I really must say that it is meaningless for the Government to make all these piecemeal efforts. Secretary, you talk about landfills today and incineration tomorrow. I do not know what you may talk about the day after tomorrow. But none of these things can work out. For example, the last time when I was still a Member, the Legislative Council was deliberating the plastic bag levy, and when I was asking the then Secretary, Edward YAU, a question, Mr Vincent FANG and a number of other Members left the meeting. At that time, I denounced Mr Vincent FANG for trying to delay the introduction of a plastic bag levy; Members on my side, however, hoped that the motion on introducing a plastic bag levy could be passed more quickly. Although Mr Vincent FANG and I had completely different positions on this issue, we both questioned whether the Government had sought to address the issue at source. I already asked this question at that time, but government 15274 LEGISLATIVE COUNCIL ─ 11 July 2013 officials said that the plastic bag levy must be dealt with first, and both this question and the issue of recycling should be discussed at a later time. However, this document from Sarah LIAO clearly sets out all these targets, and the time frame even stretches to the year 2014. I should have allowed myself to "lose my temper" and produced this document to him at that time.

I must tell the Secretary that we have been discussing these problems for many years. In the 1990s, we already dragged chains of bottles and cans along the streets in protest. We have taken many different actions, but the Government is still …… The residents of all the three districts are against the Government's proposed landfill expansion, and the reason is precisely their lack of confidence in the Government. If the Government is confident that such problems can be resolved, it should make determined efforts.

Let me sum up the discussion held by colleagues today. First, the Government must of course have confidence in itself. Speaking of this, I suppose it may think that an official above the rank of Bureau Director, or an official of an even higher rank, is required to take charge of this task. What should we do regarding the development of the green industry? We should start by tackling the source, and we must also provide land. But while providing land for the development of the green industry, we must not repeat the mistake made in the EcoPark project, that is, the mistake of developing the EcoPark purely from the perspectives of a conservation official without any plan of running the EcoPark as a commercial business. Second, with the availability of land, how can we make the task a success? I think there are many ways. I shall come back to this a moment later. Next, we must ensure that having made so many efforts to collect all the dirty garbage and food waste for recycling, people will not end up having no buyers of their products. The problem now is that even the Urban Renewal Authority does not buy any recycled products. People do not buy such products. Even if people need fertilizers and soil for their gardens, they just will not buy any recycled products. Environmental enthusiasts have recycled waste into bricks, but does the Housing Department buy such bricks? Will road maintenance contractors buy them? No one will do so.

My thinking is that as we have so much rubbish, and if we uphold the "3Rs", all such rubbish can in fact be turned into useful products in the end. This is exactly the kind of cycle we talk about. To all industries in this cycle, LEGISLATIVE COUNCIL ─ 11 July 2013 15275 the Government must offer support during the periods of their inception. Secretary, you need not fear that this will set a precedent for supporting individual industries, because the Government has long since put in place many policies to support small and medium enterprises, as well as the creative industry. So, what is the reason for refusing to support the green industry?

I have finished all the points in my scripted speech. But I am afraid I have not given you enough details. What I want to say is that the Government has changed the title of its environmental protection paper from "policy framework" to "blueprint". But no matter which title is used, the most important thing remains that in the process, the Government must proceed with all the tasks step by step under a satisfactory plan. Take Taiwan as an example. The practice there is very clear-cut due to the presence of a producer responsibility scheme. Taiwan imposes separate and pre-paid levies on importers and consumers of electronic and electrical appliances. The levies for television sets and refrigerators are respectively NT$60 and NT$80, and the levies for different categories of computer products are also clearly specified. In the case of our Government, does it have the courage to do such things when faced with the intricacies of industrial and commercial interests? Please show your enterprise because doing so will create lots of employment opportunities.

Another issue is waste charging. I heard Mr Tommy CHEUNG say just now that he opposed waste charging. We the grassroots are in support of waste charging, however. But I must stress that the grassroots should be exempted from waste charging. This is not a new idea first put forward by me just today. Mr IP Wai-ming already raised such an idea in the last-term Legislative Council. Waste charging is necessary, but the grassroots must not be the targets. Actually, in the past, the grassroots were time and again the victims of such charges. The sewage charge is one example.

To sum up my speech, Secretary and Under Secretary, let me throw down the gauntlet to you both. Do you have the enterprise to take the lead in building a large-scale green industry that can offer abundant business opportunities, help people secure employment and resolve the waste management problem? If you do, please discuss with the Chief Executive after the meeting. Frankly speaking, rather than repeatedly saying that "our city will be besieged by waste" in case the landfill funding is not passed, they should really ask CY to show his enterprise 15276 LEGISLATIVE COUNCIL ─ 11 July 2013 and provide land for promoting the development of the green industry. That way, people from the industry will not need to complain to the Legislative Council one after another. How should we support the green industry? What should be the final criteria? The criteria, of course, should not be set by the Government or CY. We must let the entire community decide on how to allocate land to the green industry and develop recycled products. All this is completely feasible.

Deputy President, I so submit.

MR KENNETH LEUNG (in Cantonese): Deputy President, I thank Mr KWOK Wai-keung for putting forward this motion on promoting the waste recycling industry.

From 2007 to 2011, Hong Kong's municipal solid waste recovery rate hovered around 45% and 48%. Although this was better than the 41% recorded in 2003, there was still much room for improvement when compared with the successful cases in overseas places. Meanwhile, it is worth noting that some 3 500 tonnes of the solid waste generated every day in Hong Kong are food waste. Of this, one third comes from the industrial and commercial sectors and the rest from households. And, all food waste makes up about 40% of the overall municipal solid waste. In recent years, the food waste disposed of by the industrial and commercial sectors has shown a trend of continuous rises, up from 400 tonnes in 2002 to 1 056 tonnes in 2011. Therefore, we must bear in mind that the promotion of waste recycling aside, waste reduction at source is also important. Reducing food wastage should even be treated as one of the most important missions of our environmental policies.

I know that many Members have been to South Korea on a duty visit, during which they learnt of a whole series of waste management measures put in place there, such as a producer responsibility scheme, the prohibition of food waste disposal in landfills, and a quantity-based waste charging programme. Following the implementation of all the aforesaid basket of measures, South Korea saw its household waste recovery rate rise from 21% in 1995 to 60% in 2011.

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The Environment Bureau has just published the "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" (the Blueprint), setting out the target of boosting Hong Kong's waste recovery rate to 55% after 2022. Such a percentage increase looks ambitious, but the Blueprint in fact has failed to look into one core issue, the issue of developing a consumer market for the recycling industry. Apart from providing assistance to the waste recycling and recovery industries, we should also check whether the consumer products produced by the recycling industry are marketable. In addition, the Government really has to put in more efforts to help promote such consumer products.

Many Members have recently mentioned one incident, and this incident has also been covered by the media ― the Government's outsourced recovery contractors was found to have directly transported the waste collected from recycling separation bins to refuse depots. In fact, over the years, people have always been doubtful of the waste recovery rate of such separation bins. The Government mentioned last week that it would set up a steering committee in a few months' time to provide cross-department support to the waste recovery industry, and establish a waste recovery fund in the long run to supply land and use public fund to directly subsidize the acquisition and processing of materials with low market values by waste recovery operators, but the aforesaid measures in fact cannot address one problem, the problem of how to assist the industry in increasing the appeal of its recycled products in the consumer market.

As shown in the report "Monitoring of Solid Waste in Hong Kong 2011", recovered materials can be roughly divided into 20% of paper, 26% of metals and 25% of plastics. Non-ferrous metals account for 21%. It is worth noting that a considerable 98.5% of the recovered materials are for export. Relying on export as a way to handle recyclable materials will make our targets and effectiveness of waste reduction hamstrung by the policies of importing countries and their demands for such materials. For example, when the financial tsunami struck in 2008, the recovery price of one tonne of waste paper dropped to $700 from the peak price of about $2,000. As the export values of recovered materials cannot even cover the recovery costs, recovery operators simply cannot make any profits, so they will not spend any money on hiring workers to perform waste recovery work. From the perspective of economic benefit, we can see that such an export-led operation mode, apart from reducing the significance of the local recycling industry, will also make the local recovery and recycling industries marooned in the low-value adding operation mode of "recovery, baling and 15278 LEGISLATIVE COUNCIL ─ 11 July 2013 export", thus failing to have any sizeable impacts on the creation of employment opportunities and the economy.

The Policy Framework for the Management of Municipal Solid Waste (2005-2014) published by the previous Government set out a waste management strategy focusing on waste reduction and recovery, with the EcoPark providing land for long-term use by the environmental and recycling industries. At that time, it was aimed at encouraging and promoting waste reuse, recovery and recycling, so that wasteful resources can be put back into the consumption cycle to help bring the local recycling industry into full play and reduce the current over-reliance of locally generated recyclables on export. However, it looks like the existing predicament of "only recovery but no recycling" ― but even with recycling, there will be no market ― will go on. Our recycled materials and products still lack a strong and large consumer market.

Deputy President, a comprehensive analysis of all factors can show that if the recycling industry is to "take off", the Government must provide different types of support. Apart from providing land, it should also work on the consumer market. For example, it should consider expanding the existing green procurement policy. At present, there are only 103 types of products on the Government's green procurement list. I think that the Government can expand its green procurement strategy, or even implement full-scale green procurement. Besides government departments, many public organizations can also adopt this strategy. Once the market for recycled products is effectively opened up, I believe that it is indeed just a matter of time for the recycling industry to see technological advancement and market growth.

Deputy President, I so submit.

MR CHRISTOPHER CHUNG (in Cantonese): Deputy President, let me give you a small quiz. What does the blue colour stand for? The yellow colour? And, the brown colour? "The blue bin for waste papers, the yellow bin for aluminium cans and the brown bin for plastic bottles" is a slogan that most Hong Kong kids can chant fluently and well understand. It looks like ever since the then Environment, Transport and Works Bureau introduced the measure of installing three-colour waste separation bins in 1998, the Government's resource recovery efforts have come to a halt. All initiatives ― the recovery of waste LEGISLATIVE COUNCIL ─ 11 July 2013 15279 electrical equipment, producer responsibility schemes, and the support for the waste recovery and recycling industries ― have since remained in the same cycle of consultation followed by studies, and then further consultation followed by further studies. Is it really true that once three-colour waste separation bins are placed in the streets, we can already catch up with the global trends of environmental protection, and the Environment Bureau can thus be satisfied and stop doing anything else?

Today, many Members belonging to the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) have talked about the plight of waste plastics recovery operators. In fact, we will immediately realize the plight of the waste plastics recovery industry once we have a look at any three-colour waste separation bins, because the two bins for waste papers and aluminium cans are forever empty, but the waste plastics in the remaining bin is never wanted by anyone. Well-intentioned people all believe that depositing plastic bottles into waste separation bins can help protect the environment. But this is not the case in reality. It has been reported by the press that such plastic bottles are either dumped in the landfills as ordinary rubbish, or "reused" by unscrupulous fruit juice merchants, after simple rinsing, for storing the fruit juice sold to food establishments regardless of the resultant public health hazards.

This phenomenon can aptly reflect the problem that the recovery of materials such as waste plastics, which involves complicated procedures and requires large land sites, cannot possibly survive if the Government does not offer any land, resources and other ancillary measures as support. The Mainland has now barred the import of waste plastics from Hong Kong, so over 10 000 tonnes of waste plastics are stranded in Hong Kong. But the SAR Government is still indifferent to all the waste plastics besieging our city, adopting no contingency measures to assist the industry in overcoming the difficulty, and leaving private waste recovery operators to perish on their own. If this 10 000 tonnes of recyclable waste plastics are dumped in the landfills, their already critical situation will only turn even more critical. It is said that a plastic bag buried in a landfill will take 100 years to disintegrate; the disintegration of a plastic bottle will take several dozen times longer, thus causing even greater environmental damage than a plastic bag. The Government should seriously figure out a solution to this problem indeed.

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In fact, I believe that the existing problem of unwanted waste plastics has stemmed from the Government's "3 Noes": first, no attempts to assist the green industry in tackling the difficulties arising from the Mainland's prohibition of waste plastics import under the Operation Green Fence; second, no actions to develop a waste plastics recycling industry in Hong Kong; and third, no in-depth public education on how to conduct waste separation.

Plastic bottles are large in size, dirty and not easy to compact. The Mainland now requires that only waste plastics that has been cleansed and crushed into small cubes can be allowed entry for recovery. Such procedures are labour intensive and require extensive land for operation. Sadly, the Government has never put in place any measures to assist the industry in handling recovered waste plastics, with the result that local waste plastics recovery operators have only been able to export heaps of waste plastics that have undergone initial compacting. So, once anything like the Operation Green Fence of the Mainland is implemented, such heaps of waste plastics will be barred from entry as "foreign refuse".

Deputy President, in order to turn waste plastics into something like waste papers and aluminium cans which are extensively sought after by waste recovery operators, the key must be enabling waste plastics to have a reasonable recovery value. It is only in this way that we can "turn plastics into gold". The key processes are the separation, cleansing and crushing of recovered waste plastics. After such processing, waste plastics are turned into plastic cubes that can be exported as raw materials of recycling. The existing government policy only focuses on recovery, failing totally to consider the treatment required afterwards, and also ways to assist recovery operators in exporting the recovered waste materials. If the Government really wants to achieve any effective reduction of waste plastics, it must expeditiously implement various measures such as the provision of land, human resources and training to recovery operators. Besides, public education in this regard must be provided, because different kinds of plastic materials can be recycled into different green products after the separation process. For example, PET can be recycled into non-woven reusable bags or soft drink bottles; PP can be recycled into litter bins, stationeries, and so on. Consequently, if the Government can provide the necessary training and support to recovery operators, it will be possible to turn waste plastics into something valuable.

Under the Government's existing policy, huge resources are given to non-governmental organizations (NGOs) for the conduct of waste recovery and LEGISLATIVE COUNCIL ─ 11 July 2013 15281 education work in the community. The Government has completely avoided its responsibility of supporting the recovery industry. A beautiful excuse for this policy is the avoidance of any funnelling of commercial benefits, but the Government has thus been able to turn a blind eye to the immense difficulties faced by the industry and refuse to give it a helping hand. The Government is totally unable to realize the importance of assisting the waste recovery and recycling industries to the generation of social benefits and waste reduction. We can in fact easily imagine how much an NGO can do per day. Perhaps it can handle several tonnes of waste plastics a day, but this is simply nothing and cannot be of any help to waste plastics recovery. Educating the community is naturally very important, but do not forget that we are at present faced with a very pressing problem posed by over 10 000 tonnes of waste plastics, a problem we must handle promptly and properly. If waste recovery operators stop the recovery of waste plastics, cleaning service providers will dump all waste plastics in landfills together with domestic and commercial waste, passing the environmental disaster to our future generations.

I hope our government officials' brains will not turn into anything like the landfills ― something due to be filled up and clogged. The most pressing task of the Government is a complete policy reversal in the direction of providing strong support to the waste recovery industry and perfecting the entire value chain of the industry, so as to make it less vulnerable to the impacts of Mainland policies. This is the only ultimate solution to the waste problem faced by Hong Kong.

Deputy President, I so submit.

MR ALAN LEONG (in Cantonese): Deputy President, tomorrow afternoon, the Finance Committee will handle the Government's funding application regarding the extension of the two landfills. The Civic Party has already made it very clear that unless the Government can clearly account for the prospects of waste handling in Hong Kong, we will not render our support. Actually, what we ask for are only waste reduction at source and recycling, followed by landfilling and incineration as the end-of-pipe methods.

Just now, several Members have told the ridiculous story of three-colour waste separation bins. Honestly, nowadays, more and more Hong Kong people are taking the trouble to store plastic bottles at home, and then deposit them into the brown bin of a set of three-colour waste separation bins which they can find at 15282 LEGISLATIVE COUNCIL ─ 11 July 2013 a later time, so that the bottles can be recovered and recycled. But ironically, the media have discovered that the company hired by the Government to handle three-colour waste separation bins simply transferred such plastic bottles to another contractor related to it, just like passing something effortlessly from the left hand to the right hand or from the husband to the wife, and the latter simply transported the bottles straight to the landfills for dumping ― and for this, Deputy President, the company charged the Government $530,000 a month, which is not a small sum of money.

So, what has the Food and Environmental Hygiene Department (FEHD) done so far? During the period from August 2012 to March 2013, the FEHD only issued one warning letter and six default notices to the contractor responsible for handling three-colour waste separation bins. The truth is, according to the contract, the FEHD has the right to contract termination in case of any major default by the contractor. Nonetheless, the FEHD has not dealt with the contractor sternly. This is tantamount to winking at the contractor and allowing it to continue to transport waste to the landfills after separation. This causes people's well-intentioned efforts to go down the chute, making them feel cheated, disappointed and disheartened, and lament the Government's incompetence. But this single case can already enable us to know how the Government is like. If we can ascertain from this single case that the Government is really so unwilling to do anything, how can we support the extension of the landfills tomorrow afternoon? If the Government's funding application for extending the landfills by over 200 hectares is approved this time around, all the pressure on it will disappear, and it will have no incentive to take any immediate actions to draw up a comprehensive plan to clear our doubts.

Deputy President, the Civic Party has along requested the Government to learn from the successful experience of our neighbouring places, so as to expeditiously and effectively reduce waste at source. For example, in recent years, Taipei and South Korea have both done remarkably well in waste recovery and reduction, but Hong Kong is lagging far behind. During the period between 2000 and 2011, Taipei City successfully reduced its per capita domestic waste disposal by 65% from 1.11 kg to 0.39 kg; South Korea likewise reduced its per capita domestic waste disposal by 40% within the several years after 1995. Both places have managed to reduce waste through various means, including quantity-based charging for municipal solid waste, mandatory food waste recovery, producer responsibility schemes, and so on.

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Satisfactory waste recovery and separation will not only ease the burden on the landfills and thus protect the environment, but will also bring forth substantial economic benefits. Let us look at Greater London as an example. Many years ago, in Britain, one certain report on waste management options for London made a conservative estimation ― assuming that the population in the Greater London region was 6 million and totally 9.6 million tonnes of municipal waste were generated a year, the full-scale implementation of waste separation and recycling, as opposed to the traditional handling of municipal waste by landfilling and incineration, would directly create 14 000 jobs within nine years, and even the jobs indirectly created would number 21 000, not to mention an annual revenue of at least £100 million for London.

The Environment Bureau released a document entitled "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" in May this year, yet obviously, the Government's attitude towards waste reduction at source is too conservative and passive. Deputy President, the Civic Party's view is that the Government should, based on the principle of sustainable development, proactively promote waste reduction at source and step up recycling efforts, instead of resorting to a blind extension of the landfills, a method that can only treat the symptoms but cannot cure the disease. Our advice includes: first, using the experience of neighbouring regions as reference, and striving to reach the eventual waste recovery target of over 60%; second, injecting no less than $5 billion for the establishment of a fund on food waste recovery, and setting up more food waste recovery centres or raising their technology standards with a view to boosting the food waste recovery rate in Hong Kong to 50% by 2022; third, setting up a fund to support the recovery industry, and enhancing the manpower of the industry with a view to boosting the waste recovery rate; and fourth, reducing waste at source. In case the Government finally decides to construct an incinerator, the Civic Party would champion the construction of an anion plasma gasification incinerator. I believe both the Secretary and Under Secretary are well aware that the construction for this type of incinerator can be completed within one or two years, which is much shorter than the construction time for traditional incinerators.

I genuinely hope that the Government can accept the good advice expressed in today's debate, and perform better in environmental protection and recycling. I so submit.

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MR ALBERT CHAN (in Cantonese): Deputy President, first of all, I would like to take this chance to thank Dr KO Wing-man and Dr KWOK Ka-ki for helping "Slow Beat" just now. He passed out probably due to discomfort, and is now in hospital. On behalf of the People Power, I express our gratitude to them for helping to take care of "Slow Beat" in the Ante-Chamber.

Deputy President, like Hong Kong's constitutional reform, the issue of waste recycling or waste handling has been discussed for over 20 years without any progress but with lots of repeated arguments. I think after so long, I have already turned into a "human audio recorder" when discussing this issue again. The discussions have been going on for more than two decades since the 1980s, when a number of consultation exercises were conducted. When I look at all those documents again …… Let us not look at those published in the 1980s. In the 1990s alone, there were already talks on a waste reduction scheme in 1994 and 1995; in 2005, there was the document entitled "A Policy Framework for the Management of Municipal Solid Waste (2005-2014)"; in 2006-2007, consultation on plastic shopping bags was conducted; in 2010, there were the measures on the management of waste electrical and electronic equipment; a scheme on the further reduction of waste was put forth in 2012; a New Producer Responsibility Scheme on Glass Beverage Bottles was proposed in 2013; and the document entitled "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" was issued in May 2013.

All the schemes on this long list are examples of "big talks but little effort" ― I have only just started talking, but even the Secretary has left the Chamber. I can remember that when Edward YAU was Secretary for the Environment, I once went after him in the Ante-Chamber of the former Legislative Council Building, questioning him on the Government's wasteful use of garbage bags, especially the use of black plastic garbage bags for carrying the weeds and twigs after trimming, but he simply lost his temper and left. Now, even the new Secretary hastened to leave the Chamber as soon as I started speaking.

Returning to the issue of waste, I think if we compare Hong Kong with its neighbouring countries, we will immediately realize our backwardness and the incompetence and ignorance of the Government. The Government frequently claims that landfills are necessary. But in Singapore and Taiwan, the waste disposed of at landfills accounts for only 1% of their total waste disposal. In Hong Kong, the rate is 52%. In other words, if we learn from Taiwan and Singapore, we will no longer need landfills, because in that case, only 1%, rather than 52%, of our existing waste volume will need landfilling. Besides, the LEGISLATIVE COUNCIL ─ 11 July 2013 15285 average daily waste generation of Hong Kong people is two times higher than the corresponding figures in Taiwan and South Korea. Over the years, the Government has been reminded of this information again and again. Other countries have achieved success because they have implemented mandatory waste separation at source; with waste separation at source, many problems related to the shortage of landfills can be solved.

Let me cite some simple statistics here. In 1995, the average per capita waste generation of Taipei was 1.2 kg, which was roughly the same as the corresponding figure of Hong Kong. At present, it is about 1.1 kg in Hong Kong, which is roughly the same as 1.2 kg. But meanwhile, the figure of Taiwan has already dropped to 0.38 kg. After the passage of 18 years, Taiwan has succeeded in drastically reducing its waste generation by means of mandatory waste separation at source and waste recovery, and as a result, only 1% of all the waste in Taipei is now handled through landfilling. In contrast, Hong Kong's rate of waste disposal at landfills still stands at 52%, not to speak of the fact that its waste generation is almost three times that of Taiwan. In the 1990s, when we visited Taipei, CHEN Shui-bian was its mayor, and his successor was MA Ying-jeou. At first, we guessed that due to all those bad habits of the Chinese, Taipei would not make it. We thought that very few Chinese communities in the world could make it, with the exception of those living in overseas countries. When we saw Taipei taking the lead to implement waste reduction, we were sort of sceptical. But in our subsequent visits to Taipei, we saw noticeable progress every time. Today, Taipei's waste reduction standards are a par with the standards in the advanced cities of the world, but Hong Kong still lags far behind them. The waste management of Hong Kong, like its constitutional development, is so backward and undemocratic.

Hong Kong's constitutional system is just like rubbish. So, the question asked by Mr CHAN Chi-chuen just now is a very good one: "When will the Chief Executive, "689", step down?" This piece of "political rubbish" should be dumped at a landfill or simply incinerated, so that it cannot affect the political environment and society, bring disgrace to Hong Kong people and continue to make them suffer. Over the years, I have persistently told the Hong Kong Government that unless mandatory waste separation at source and recovery is implemented in Hong Kong, they must not mention any other proposals to me because all will just be a waste of public money and our time.

Deputy President, speaking of plastic bags again, I must say that the Government should be condemned or even strongly condemned. In the last two 15286 LEGISLATIVE COUNCIL ─ 11 July 2013 weeks, I visited Tung Chung and Nam Sang Wai. I drove to Tung Chung and cycled to Nam Sang Wai. On my way, I saw over a hundred large black plastic bags on the roadsides, all used to contain weeds and branches pruned from roadside plantation. Nowadays, no advanced cities in the world still use large black plastic bags to contain green waste. None of them still follows this practice except Hong Kong. Also, I actually talked about this issue with the then Secretary Edward YAU for years, to the extent that he lost his temper. I would like Under Secretary Christine LOH to look into this matter as well; I already raised this issue with her before she joined the Government. I will continue to mention this issue until the Government makes changes. I have taken some photographs, and I can forward them to her by WhatsApp. I hope the Government can improve this practice, and avoid such waste (The buzzer sounded) ……

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

DR CHIANG LAI-WAN (in Cantonese): I am glad to hear that Mr Albert CHAN said waste reduction and recycling should be made mandatory. His meaning is obvious, Secretary. He wants you to enact legislation as early as possible. He is in support of legislative enactment.

Deputy President, 15 years ago, I sent a "waste reduction" proposal to the then Secretary for Planning, Environment and Lands, and my major suggestions included waste reduction at source, resources recovery, the construction of incinerators, the development of an environmental protection industry, and so on. Fifteen years have passed; when I read my proposals once again today, I find that they are still appropriate in the present-day context. In fact, over the past few years, the Government has done a bit for everything in respect of the suggestions I proposed then, such as those on reusable shopping bags, strengthening the environmental protection awareness in society, schools and families, installing waste separation bins in all districts, promoting recovery efforts and formulating preferential policies for the recycling industry. We cannot say that the Government has done nothing at all; we can only say that its efforts are not thoroughgoing enough, especially in respect of waste recycling.

At present, Hong Kong generates 6.3 million tonnes of waste a year, around 3 million tonnes of which can be recycled. However, of the 3 million tonnes of waste recovered, 98.5% is exported and only 1.5% is locally recycled. LEGISLATIVE COUNCIL ─ 11 July 2013 15287

In other words, Hong Kong only has a recovery industry, but not a recycling industry. Earlier on when I discussed with my friends, we wondered, "If the Mainland bans the import of waste from Hong Kong one day, what are we going to do?" Soon after that, in February this year, the Mainland really launched the Operation Green Fence to prohibit the import of all sub-standard foreign waste. Hong Kong has been the hardest-hit. Large quantities of waste plastics and waste metals are now stranded in Hong Kong, with their final destinations remaining unknown. If such waste plastics and waste metals are not sent to the landfills, they must continue to be stacked aside under the hot sun.

I know that between March and May this year alone, 70 tonnes of domestic waste plastics were already sent to the landfills as there was literally no more storage space. In fact, the problem of having only recovery but no recycling is already bad enough for Hong Kong. But now, even the recovery industry has developed problems. To the best of my knowledge, the waste plastics recovery industry has almost come to a halt. For that reason, I believe the Government is not joking when it says that if we do not construct any landfills, we will be besieged by garbage, Deputy President.

Yesterday, someone told me that at present, several million plastic bottles were piled up in the New Territories, and more than 200 million glass bottles were sent to the landfills every year. What are we going to do? In fact, we have two options: first, to hold G2G discussions with the Mainland Government, so as to see if a provisional agreement can be concluded to offer Hong Kong exemption or suspension under the Operation Green Fence, because Hong Kong is not a foreign country after all. But even so, I must still say that every city should deal with its own waste. This leads us to the second option, the option of driving the development of the waste recycling industry, as proposed in the motion today.

Earlier, the Chief Secretary for Administration Carrie LAM announced that a steering committee would shortly be set up to support the sustainable development of the waste recovery industry. Please excuse me for being so upfront, but I must say that while there is nothing wrong with the underlying spirit and direction, the focus is, however, somewhat misplaced because the present problem is actually about the absence of any recycling prospects for recovered waste. Therefore, the right direction should instead be the setting up of a steering committee to promote the development of the recycling industry in the short run.

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Deputy President, Hong Kong people are noted for their keen business acumen. The biggest paper manufacturing plants on the Mainland are founded with the investment of Hong Kong people, and the annual business turnover amounts to tens of billions. Why don't they make any investment in Hong Kong? Because the Hong Kong market is small and the costs are high, so people do not consider it commercially viable to do so. Therefore, if the Government agrees that we should have our own recycling industry, it must first solve the problem of market sales. The solution is quite simple: the Government only needs to require all its departments to give priority to locally recycled products. This will already be a very effective means.

Members who are present today have actually said a lot. Everybody says that we should deal with waste by adopting the three-pronged approach of waste reduction at source, landfilling and incineration. But why didn't the Government start working on this at a much earlier time? I suppose some Members should likewise be held responsible. I remember that the Government once proposed to introduce a garbage levy, but some Members said no. The Government also proposed the building of landfills in remote country parks, but some Members again said no. Many years ago, the Government expressed the thought of building incinerators, and people said no. Deputy President, not only did these people say no, they also succeeded in securing legal aids to initiate judicial reviews of the Government's environmental assessment reports and works permits at taxpayers' expense .

At present, about 40% of the waste sent to landfills is food waste. I also remember that the wife of the Chief Executive also tried to help the promotion of food waste reduction last year, but as soon as she proposed that, she was brutally criticized. Deputy President, to solve the waste problem, I already made detailed proposals 15 years ago, and I will only mention four points today: first, to strengthen the awareness of waste reduction; second, to study the feasibility of imposing a garbage levy; third, to build more incinerators in various districts (The buzzer sounded) ……

DEPUTY PRESIDENT (in Cantonese): Dr CHIANG, your speaking time is up. Please stop speaking.

DR CHIANG LAI-WAN (in Cantonese): …… fourth, the sales problem ……

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

DR CHIANG LAI-WAN (in Cantonese): Thank you.

MISS ALICE MAK (in Cantonese): Deputy President, I must say a few words for the Secretary for the Environment to do him justice. The Secretary's departure shortly after Mr Albert CHAN started to speak was caused not so much by any dislike on his part for Mr Albert CHAN's opinions, but by the need for him to go with the Chief Secretary for Administration to a Tuen Mun District Council (TMDC) meeting for gauging TMDC members' views on the funding request tomorrow. I really hope that when they are gauging district opinions, they can listen carefully and respond to the aspirations of the district, rather than approaching District Council (DC) members only in times of need or requests and ignoring them totally during any other times. Actually, why is the Government always criticized by people in the course of policy implementation? In some cases, the government policy may well be very good, but why is it still criticized by people? I suppose the reason should be the inadequate communication between the Government and the public, as a result of which the general public are unable to understand the rationale behind the policy concerned and also its good intention and underlying principles. In the end, the Government is criticized all along the way. This is not satisfactory to the Government, and residents will not feel good either. Therefore, we hope the DC meeting today can give a chance to the Secretary or the entire Government and remind them that they must squarely address district opinions and must not ignore the views of the districts in the course of implementing any policies.

Deputy President, there is this saying in Chinese: "Everything is difficult in the beginning". I believe people who are in the green industry should know what this saying means. In fact, is it really true that Hong Kong's green industry has only just started to emerge? Not exactly so, I must say. The green industry has been in operation for more than a decade, only that it has not left the "learning" stage so far , and is still unable to make any further progress. What is the reason for that? The reason is that the Government has never changed its approach and strategy of supporting the green industry, thus making it impossible for the green industry to gain any progress.

Deputy President, I wish to point out some problems relating to the Government's strategy of promoting the green industry. A decade ago, also in 15290 LEGISLATIVE COUNCIL ─ 11 July 2013

Tuen Mun, the Government set up the EcoPark with the purpose of supporting the development of the sector. It is undeniable that the intent of setting up the EcoPark is good; nevertheless, the operation of the EcoPark can precisely show that the Government's policy is completely hollow despite its appealing look.

Even now, tenants of the EcoPark are still battered by prolonged losses. The reason for such losses is not bad management, but the problem of having machines but no raw materials. One of the waste plastics recycling centres inside the EcoPark can only receive less than 10% of the total waste plastics recovered in Hong Kong every day. On the other hand, as reported by the press, the Government would rather transport waste timber to the landfill in Tuen Mun every day at a cost of $10 000 in public money, instead of sending the waste timber to the EcoPark for recycling. It is small wonder that the Tuen Mun landfill is now filled to capacity and must be extended. If the Government does not change its practice, we will still fail to cope even with several more landfills.

Deputy President, success in promoting the development of the waste recovery and recycling industry will require much more than the establishment of an EcoPark. If we are to promote the green industry with any success, we need a coherent scheme of policies; if we are to resolve the problem of having machines but no raw materials, we must properly implement waste separation at source.

Members of this legislature have kept mentioning Taiwan as an example. Taiwan has indeed achieved very satisfactory results in waste separation at source. The waste recovery rate of Taiwan in 2011 was already as high as 52%, or over half of the total volume of ordinary waste. In the case of Taipei City, for example, the authorities have thoroughly divided waste into different categories for the purpose of waste separation. Residential buildings are generally equipped with more than 10 plastic bins for the separate collection of various kinds of waste such as waste papers, aluminium cans, waste batteries and even paper diapers. Taiwan is not the only example. In some of the housing estates we have visited on the Mainland, there are some waste recovery bins for the recovery of lithium or common batteries. However, Hong Kong is still using three-colour waste separation bins (three-colour bins). What is even more deplorable is that such three-colour bins are often ransacked. Also, many people do not understand the rationale behind the use of these three-colour bins, and even throw litters into these bins.

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Source separation and recovery of household waste is an important segment of the waste reduction process. At present, more than 40% of the waste dumped in the landfills is household waste. In view of this, we are of the view that as long as we can achieve proper separation for household waste, we will be able to provide the industry with sufficient raw materials and resolve the problem.

Just now we have said that we must have a coherent set of policies. But honestly, success cannot be achieved easily, and all must depend on the determination of the Government. Today what we support is the "recycling industry", and "recycling" is also a factor very important to the sustainable development of this industry.

Hong Kong's recycling industry is presently faced with the problem of having recovery but no recycling. In April this year, a green group disclosed to the press that the majority of our recyclable waste is exported to China and other countries, and only 1% of the total recyclable waste is processed locally and manufactured into useful products. In other words, the recycling industry is still operating at the very elementary level of recovery for export.

Deputy President, in order to dovetail with the development of the recycling industry, we must formulate a comprehensive policy to provide it with support. When the industry is faced with high operating costs, the Government must consider the provision of subsidies, rental allowance, and so on. When the industry is faced with land shortage, the Government must consider how best to make use of available space to provide the industry with land. When the industry is faced with a shortage of raw materials, the Government must achieve proper waste separation at source. When the industry is faced with the absence of market prospects, the Government must consider whether it should take the lead in implementing a full-scale green procurement policy. Otherwise, everything will just be mere empty talk.

I think the landfill extension funding request can provide a very good opportunity for all Policy Bureaux to squarely address this problem. Our recovery and recycling industry must need raw materials, recipients of recovered materials and market prospects for its products. The Government's procurement policy is important; we do not want Director PESCOD to always say that he is only responsible for the Housing Department (The buzzer sounded) …… and he is not responsible for the Environmental Protection Department, so he needs not care about the environmental protection policy. Thank you, Deputy President.

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MR YIU SI-WING (in Cantonese): Deputy President, the Government has all along paid insufficient attention to its environmental protection policy, and has failed to draw up any long-term and comprehensive planning, thus making our waste recovery and recycling efforts lag behind the situation in countries and places which lay emphasis on environmental protection. And, the disparity is rather wide too. Recently, in an eager attempt to solve the landfill problem, the Government has been canvassing for support all around. Had the authorities planned well ahead, they would not have been plunged into such a passive situation.

Although Hong Kong's waste recovery volume has increased in recent years, the volume of waste recycled and processed locally has remained low all the time. According to a report entitled "Monitoring of Solid Waste in Hong Kong" published by the Environmental Protection Department, the volume of solid waste recovery stood at 3.02 million tonnes in 2011, and 98.5% of these recyclable materials were exported to China or other countries. Only 44 000 tonnes were recycled locally, accounting for 1.5% of the total volume. In 2004, 200 000 tonnes of recyclable materials were recycled locally, and this accounted for 8.7% of the total waste recovery volume. The recyclable materials which are recycled locally have shown marked decline in both recovery volume and rate. This shows that the local recycling industry is shrinking.

Deputy President, a recovery industry that relies too much on export through intermediaries is easily affected by uncontrollable factors. The 2008 financial tsunami caused a drastic drop of 65% in the recovery price of waste papers in Hong Kong. This was compounded by rises in rents and wages. Seeing that there was no profit to reap, recovery operators gradually downsized their business. Moreover, due to the Operation Green Fence recently launched by the Mainland to tighten the import of waste, the waste originally for export to the Mainland was transported back to Hong Kong by recovery operators through a process of subcontracting for dumping in the landfills. Our situation is rather passive. If the Government clings to the policy of positive non-intervention and the local recovery industry also sticks to its traditional practices, we frankly fail to see any possibility of improvement to Hong Kong's waste handling problem, and the pollution problem will only get worse.

Secretary for the Environment Mr WONG Kam-sing has recently disclosed for the first time that the Government will set up a steering committee to provide cross-department support to the recovery industry, and will establish a recovery fund with public money to provide land or direct subsidies to recovery operators LEGISLATIVE COUNCIL ─ 11 July 2013 15293 for purchasing and handling waste materials of low market value, such as waste plastics and timber. The Government's attitude towards the recycling industry has finally undergone a breakthrough. I must express my support here. The authorities have finally come to regard recovery operators and garbage collectors as scavengers of our city and decided to provide them with appropriate subsidies. Such a change in mentality is of very great importance, because it will enable the Government to adopt an even more open attitude and discard any unnecessary fear in the course of taking forward its environmental protection policies. Regarding the support measures due to be launched, I have the following suggestions:

First, the provision of subsidies by the authorities to the recycling industry must be coupled with a comprehensive tracking and monitoring mechanism, so as to ensure that the enterprises or organizations in receipt of government subsidies will spend all of the public money on waste recovery and recycling. The authorities may even set down severe penalties to punish those recovery and recycling operators who do not discharge their responsibility after receiving subsidies.

Regarding recycled products, the Government should establish an assessment mechanism. The purpose is to ensure that recycled articles or products can all be put to use, and will not end up in the landfills and cause a second round of resource wastage. In order to avoid the manufacturing of any recycled products that go against the green cause and ensure the proper use of public money, the Government should draw up a comprehensive certification and tracking system.

Second, the Government should draw on the strength of the community to promote waste recovery and separation. Hong Kong is a tiny and densely populated place. Its population is concentrated in the 18 districts, and in each district, there are a DC and various non-profit-making organizations. They have all been making silent contribution to the green cause. In the absence of any government funding, many of them have been raising their own funds or depending on voluntary workers to sustain their operation. They have in fact amassed substantial experience in waste recovery and handling. With government subsidies, they will be able to expand their existing scales of waste recovery. They may also hire a greater number of low-income and underprivileged people to take part in waste recovery, thus helping those in need to resolve the unemployment problem.

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To support the abovementioned non-profit-making organizations, the Government should consider the formulation of some preferential policies, such as increased funding and provision of land. If each district can identify suitable sites under government co-ordination for the establishment of several or even many waste recovery centres, it will be possible to reduce waste transportation cost on the one hand, and boost in-district employment and show the Government's commitment to the green cause on the other.

Deputy President, waste recovery is not a responsibility of the Government alone; it is also a responsibility of the general public. Any sole reliance on public money to provide subsidies cannot be a long-term solution. The experience of the plastic shopping bag levy can show us that the public are willing to contribute to the green cause. As long as the Government can come up with an appropriate policy, it will not be difficult to forge a social consensus on requiring people to support waste separation at source or even to pay an appropriate levy. There are many successful overseas examples which Hong Kong can follow. It is not quite so true that there can be no solution to the waste problem in Hong Kong. The only problem is whether the Government can make proactive commitment, formulate early planning and take active and effective actions.

Deputy President, I so submit.

MR FREDERICK FUNG (in Cantonese): Deputy President, the topic of promoting the waste recycling industry has been discussed in the Legislative Council for many years. The proposals set out in the original motion and the amendments today have all been put forward to the Government over and over again, and numerous times. But the Government has always turned a deaf ear to us, totally ignoring us, using "free market" and "not yet ready" as its shield, as a means of fending off our requests. It has never really sought to deal with this issue, and has just left the sector to perish on its own. Deputy President, since it must now apply to the Legislative Council for funding to support the extension of the landfills, it has put the recycling industry on the stage. I think the Government is just using the industry as a means of hiding its embarrassment, and it does not really have any intention to resolve the problem. Its craftiness and ulterior motive are just all too obvious.

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Deputy President, my only feeling is that by talking about "a city besieged by rubbish" and about the extreme urgency of the issue, the Government is just trying to intimidate Hong Kong people, create a sense of crisis among them, and then force them to accept the landfill extension scheme. The DAB Chairman similarly talks about "a city besieged by rubbish" as a means of defending his blind support for landfill expansion. The Government is really very cunning; it has sought to oversimplify the problem and put the cart before the horse, trying to convince the public that landfilling and incineration will be able to solve all problems, that waste reduction at source is simply unnecessary, and that once the landfills are extended, Hong Kong people can continue with their present life style of high consumption. In this way, when tackling the waste problem, the Government will be able to choose options that are the easiest, the most convenient, the quickest and the most unfriendly to the environment. Is all this what the Government means by enterprise, commitment to the environment and proaction?

Had the Government also sought to vigorously promote waste reduction at source, recycling, reuse and sustainable development using "a city besieged by rubbish" and an impending crisis as reasons, the outcomes would have been very different: people would have changed their wasteful life style; there would have been more avenues for reusable waste and food waste; the volume of waste generation would have drastically declined; and the scales of landfilling and incineration would have seen shrinkage rather than extension. This is the only proper way to tackle the problem. Had all this been the case, the Government's present landfill extension plan would not have met such fierce resistance.

Deputy President, some may argue that waste reduction at source is just a stalling tactic, something totally unattainable. Members should really listen to this: "We will adopt policies based on reduction of waste at source to ease the demand for more landfills and incinerators. Where necessary ……". This is an extract from LEUNG Chun-ying's election manifesto. Isn't this extract yet another proof of LEUNG Chun-ying's lies or tall stories? In fact, since he took office, there has not been any achievement in waste reduction at source. Having failed to achieve any progress in waste reduction, he now even proposes a landfill extension proposal which is equal in scale to the one proposed by the last-term Government, and asks for the Legislative Council's passage. LEUNG Chun-ying, what exactly are you doing?

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Deputy President, people all know that LEUNG Chun-ying virtually stopped at nothing in a bid to get the position; he told lies to deceive green groups, and to deceive grass-roots people. If a child tells a lie, we can ask him not to cry wolf again. But if the Chief Executive is such a big liar, he will severely impair the trust between the people and the Government, and undermine our social values as well as the excellent systems long in existence. The resultant damage can be unbearable, rendering it impossible for the Government to govern the place.

The present controversy over landfill extension has stemmed precisely from LEUNG Chun-ying's inability or unwillingness to honour his undertakings. During the election, in a bid to please green groups, LEUNG Chun-ying avowed that he would first promote large-scale waste reduction at source, and landfills and incinerators would only be the last resort. But what has turned out to be the case in the end? Owing to LEUNG Chun-ying's opposite view, the last-term Government was forced to withdraw its proposals on extending the landfills and constructing incinerators, and leave the whole matter to the new Government ― in fact, the last-term Government also put forward such proposals. However, green groups and various Members who all expected the new Government to usher in a new era have come to realize that the acts of LEUNG Chun-ying since his taking office are in fact exactly the same as the proposals of Henry TANG, his election rival. He has simply reproduced the entire proposals. He has failed to honour a cheque issued by himself. Not only this, he has even issued another cheque which is exactly the same as the one issued by the last-term Government.

When compared with waste reduction at source, landfill extension and incinerator construction require a larger input of time, money and planning efforts in respect of hardware provision. But how much money is actually required for launching the policy of waste reduction at source, and is there any timetable? I am sorry to say that no answer whatsoever is available. The "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022", a document devoid of any policy and legislative support, is yet another attempt to deceive green groups. Its real intent is just to pave the way for landfill expansion and silence green groups. Frankly, no one could have expected that even after his assumption of office, LEUNG Chun-ying still plays the same old trick and has attempted to score an easy goal on landfill extension. I hope the green groups in Hong Kong and even the public at large can all open their eyes to see what LEUNG Chun-ying has been doing. Let us brush aside our personal interests, and ask ourselves whether his practice is good to Hong Kong people, to Hong Kong and LEGISLATIVE COUNCIL ─ 11 July 2013 15297 even to the earth. The green cause requires commitment. Together, we must force the Government to give priority to waste reduction at source and drive the development of the recovery and recycling industry, so as to reduce the scale of landfill extension and the need for incinerator construction.

Deputy President, I have mentioned many times when discussing the promotion of the waste recovery and recycling industry that the authorities must undergo a "brain surgery" and fundamentally change their mindset, so as to discard the age-old shackles of "a free economy, a market-led approach and economic benefits" and embrace the concept of environmental cost. All government policies and even resource investments must take account of environmental damage abatement and the furtherance of environmental benefits, in complete contrast to LEUNG Chun-ying's skin-deep description in his election manifesto, which is totally empty and hollow in essence. He brags about creating a "circular economy to vigorously develop the recovery industry. But he does not have the heart and the power to do so. Nor does he have the required knowledge and measures.

Deputy President, I so submit.

MR CHAN KIN-POR (in Cantonese): Deputy President, these days, there have been endless arguments over landfill extension in Hong Kong. Honestly, our need to rely on landfilling to handle our waste even today is largely attributable to the fact that like many other policies, our waste management policy has never seen any progress ever since the reunification. As a result, society must now suffer the bitter consequences. We frequently say we must learn from Taiwan. But actually, Taiwan's waste management was once upon a time more backward than Hong Kong's policy, and Taiwan people even came to Hong Kong to learn our experience. Subsequently, Taiwan made determined efforts in this regard and introduced various producer responsibility schemes. And, in 2000, they even introduced quantity-based waste charging, thus achieving a waste reduction rate of 65% in the following 11 years. Today, it has even become an example Hong Kong wants to learn from.

Hong Kong is now forced to extend its landfills, but this is in fact due to the lack of any alternative. And, this also brings home to us that we must make determined efforts to introduce a new waste management policy, one which can enable us to reduce our landfilling volume as soon as possible. In fact, the "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" published 15298 LEGISLATIVE COUNCIL ─ 11 July 2013 by the Environment Bureau puts forward a waste management policy with the theme of "use less, waste less". This document proposes to reduce the per capita disposal rate of municipal solid waste (MSW) from 1.27 kg per day at present to 0.8 kg per day by 2022. Besides, the document also proposes the adoption of incineration technologies for waste handling and the expansion of rubbish recovery.

The Government's target is to achieve a 40% waste reduction rate in 10 years. Many people fear that this target may be too aggressive. But Taiwan and South Korea could both achieve significant waste reduction within a decade. They could make it, so if we have the determination, we will likewise make it. But understandably, if we continue to focus on political struggles, neglect social and economic reform, and allow our society to simply mark time, Hong Kong will sooner or later become a "stinky harbour".

The Secretary for the Environment has recently disclosed that the Government will shortly set up a steering committee on sustainable development to study and promote the long-term development of the recovery industry. Thoughts will be given to using the present Environment and Conservation Fund to subsidize development schemes for the recovery industry. And, in the long run, a recovery fund may also be set up to provide recurrent subsidies. I am pleased that the Government has made such a decision because it used to leave the recovery industry to perish on its own. The recovery industry has been faced with prolonged operational difficulties mainly because operating costs are very high. Rents are exorbitant and the need for manpower is very great. On the other hand, most recovered materials can only be exported at very low prices. Under such circumstances, it is simply impossible for the recovery industry to survive.

The Government has at long last come to its senses. It has decided to discard the "big market" principle and the traditional practice of not using any public money to subsidize private enterprises. Frankly speaking, if we are to require any industries with low competitiveness, such as the recovery industry, to boom and serve the community, the Government must provide the impetus and some subsidies, otherwise there will not be any results. What is more, the Government will not be subsidizing the recovery industry alone, but will also be subsidizing the green cause in all Hong Kong because the recovery industry performs the very important social function of promoting the recycling of waste. And, the industry will also create large numbers of elementary jobs. Even if this LEGISLATIVE COUNCIL ─ 11 July 2013 15299 will mean an input of billions a year, the Government should still go ahead. I long forward to the early establishment of the steering committee and also hope that the scope and conditions of subsidies can be formulated as soon as possible, so that the recovery industry can launch its work expeditiously. That way, the Government's blueprint will stand a chance of realization.

Furthermore, I also wish to talk about food waste. According to the Environmental Protection Department's statistics, at present, 40% of the total MSW is food waste. This is really scary and reflects that Hong Kong people's waste of food has reached an alarming extent. Also, food waste is the major source of stench in waste, causing very great nuisance to society and resulting in hygiene problems. For this reason, the quickest and most effective way to reduce waste is to encourage the public to waste less food. The Government has launched the Food Wise Hong Kong Campaign to urge Hong Kong people to waste less food. Recently, an Announcement of Public Interest has been shown on television. This is quite a good video, able to give a deep impression on people. But the effects of other publicity functions are not quite so impressive.

I think if we want these campaigns to achieve the best results, we should upgrade their levels, inviting top government officials to join the steering committee and take the lead in publicizing the message of the Food Wise Hong Kong Campaign. The Chief Executive, the Secretaries of Departments and Directors of Bureaux may also teach by example and formulate "food wise" principles to be adopted for meals hosted by the Government. At the same time, efforts should also be made to induce society to hold discussions on the issues related to eating less, such as resource wastage, waste generation and hygiene. Actually, I even think that the messages of the Food Wise Hong Kong Campaign and waste reduction should be included in the Liberal Studies curriculum of schools, in the hope that we can thus directly impart the values of eating less and wasting less to students. The reason is that unlike publicity functions which can only achieve short-term effect, education can instill in our students long-lasting values and ensure the passing down of the message of eating less.

Lastly, I wish to talk about the landfills. The row on landfill extension this time around has highlighted the conflict of territory-wide interests and district interests. Everybody understands that there are practical needs for landfill extension, but no district will want any landfill extension in its own areas. In fact, similar problems also exist everywhere in the world. Foreign governments will usually provide compensation to affected places, so as to ease the 15300 LEGISLATIVE COUNCIL ─ 11 July 2013 dissatisfaction of the residents; we can also consider the provision of new swimming pools and libraries to affected districts, or even provide electricity tariff and rates concessions to residents. I hope the Government can communicate with residents with maximum sincerity and offer satisfactory compensation, with a view to minimizing the impact and alleviating the resentful sentiment in these districts.

I so submit.

MS CLAUDIA MO (in Cantonese): Deputy President, this morning, Mr CHAN Chi-chuen said loud and clear: "Discard this rubbish Government to reduce waste at source". Well, actually, he was not quite so loud because he was having a hunger strike and did not have too much strength. "Discard this rubbish Government to reduce waste at source" sounds like the expression of a political aspiration. But one issue in the green cause of Hong Kong has been subjected to very great political limitations. I believe the Secretary, the Under Secretary and the persons concerned all know what I mean.

When it comes to implementing waste reduction at source in Hong Kong, the first thing must be educating the public on waste separation. This is especially important because waste recovery and recycling must need proper waste separation. Then, the second thing, if possible, is to introduce waste charging ― a waste charge. The grassroots will certainly put up fierce resistance if ever anyone mentions such a charge to them. They would say, "We don't even have enough to eat. How can you still want us to pay a waste charge?" Yes, they do not even have enough to eat, so how can they possibly generate any food waste? They will say the Government has let them down and completely ignored the basic livelihood of the grassroots in Hong Kong. The point here is that so many community organizations are asking for basic livelihood protection for the grassroots every day, but instead of working on such protection, people even want to impose a waste charge …… Oh, there is a heap of rubbish here, but I am not the one who put it here. Dr KWOK Ka-ki is.

We have in fact briefly explained that waste reduction at source must begin with waste separation. Sadly, Hong Kong people's environmental awareness is extremely crude, so crude that it is merely about sticking separate labels on waste separation bins to show where waste paper and metals should be put, and also about putting aluminium cans into the bins for metals. And, worse still, it has LEGISLATIVE COUNCIL ─ 11 July 2013 15301 never occurred to people that the waste papers deposited into such bins must not be mixed with any chewing gum. Also, cigarette butts are most definitely found in all those beer cans deposited into waste separation bins. What then is the point of talking about recovery and recycling? It is pointless to do so.

Yet, a more important point is that the Government has also failed to promote environmental awareness. The Government's Announcements of Public Interest often teach people how to wash their hands, or how to maintain a balanced diet. Do we really need you to remind us of these? Do we really need you to remind us to lock our doors and windows properly to prevent burglary? But then, as far as we can observe, the Government has never made any genuine and appropriate attempts to impart any latest environmental protection information to the public. Such work must need social cohesion. Apart from social consensus, strong trust between society and the Government is also needed. That way, once the Government has rolled out a policy, all in society will do their level best to render support. There will be people's support, in other words. In this way, it will be possible to achieve better results.

As we all know, when South Korea was likewise hit by the Asian financial turmoil and other factors, many South Koreans ― particularly housewives ― all lined up outside banks for their turns to donate golden ornaments, such as golden necklaces and bracelets, to the national treasury. With such cohesion …… We cannot expect this to happen in Hong Kong, because it is not a country but just a small city with an absurd mayor. Many grass-roots people …… If you had watched the broadcast of the so-called Question and Answer Session of the Chief Executive this morning, you would have seen that as he went on and on, no one could know what he was saying, and he simply could not make his points clear.

When in South Korea, we had the chance to see a film on waste separation they made for us. A film like this will understandably contain pre-arranged scenes, yet I have reasons to believe that the South Koreans had not really made up anything to deceive overseas visitors. In one scene, the housewife clears the table after the meal. She first puts the chicken bones aside, and then does the same to all the used paper towels. To facilitate food waste management, South Koreans no longer use the wooden toothpicks we use; instead, they use toothpicks made of tapioca flour, so that they do not have to pick out the toothpicks mixed in food waste. Toothpicks are usually made of wood, but they now use tapioca flour, and this is a very good idea.

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Their waste separation is so thoroughgoing. In contrast, if we ask Hong Kong housewives to do waste separation after meals and dispose of two bags of separated waste out on the streets …… In that case, the Government must first make good preparation for waste separation. I think officials from the Environment Bureau and the Environmental Protection Department all know that the waste found in the three-colour separation bins is all in a mess, with everything mixed together. Or, when workers from the Food and Environmental Hygiene Department come to collect the messy heaps of waste, they will just do their job carelessly. When asked where the heaps of waste will be sent to, they will probably say landfills. In other words, three-colour separation bins cannot serve the desired purpose. People may thus think that no matter how hard they try to sort waste, the final destination of all rubbish will still be the landfills all the same. But I must say this is a misconception and definitely not the policy intent of the Government. But since this misconception is already here, we really cannot help feeling a bit afraid.

I definitely do not doubt the sincerity of our environmental officials, Christine LOH in particular, in promoting environmental protection in Hong Kong. This morning, Secretary WONG Kam-sing said that there was a huge consumption desire in Hong Kong, and it was thus necessary to transform people's mentality. However, the authorities should not talk so confidently about any success in this regard, and should not ever think that the only problem is just Hong Kong people's unawareness, and that with more publicity, they will begin to understand. The entire green cause in Hong Kong has by now become the victim of politics. The authorities should really work harder on the political fronts. Thank you.

MR CHUNG KWOK-PAN (in Cantonese): Deputy President, in the past few days, when I listened to the views of those people who talked to the hosts of phone-in programmes, I came to realize that people's environmental awareness was in fact very clear. Many people even suggested different policy options to the Government. As rightly pointed out by Members who talked about three-colour separation bins just now, many people have voluntarily participated in waste separation these days. But the question is: how should we handle the waste after separation?

A few weeks ago, during my chat with Mr Martin LIAO, he told me that his son studied in an international school. He said that this international school had been teaching its students how to properly separate different types of waste LEGISLATIVE COUNCIL ─ 11 July 2013 15303 such as glass bottles and plastic bottles. All students hence tried to sort their rubbish properly, but only to find out one day that the garbage collectors would only put all types of rubbish together and put them into the garbage truck, just as many Members have said. The students were taught how to separate different types of waste, but in fact, all the different types of waste were thrown into one single pail. Mr Martin LIAO has told me that his son is very disappointed at finding out that what is taught in school is completely different from what is happening in the outside world; all rubbish is similarly dumped at the landfills. What does this phenomenon show? It shows that the next generation is extremely concerned about environmental protection. However, the Government has failed to provide any support, and since there are no waste recovery operators to collect the sorted waste, the waste will eventually be sent to the landfills. Therefore, although we frequently say that the public must be educated on how to separate different kinds of waste in order to achieve waste separation at source, we must bear in mind that all such talks will be useless if the Government does not provide any ancillary facilities as support or encourage shop operators to install waste separation facilities.

Moreover, the Government has recently rolled out a glass bottle levy scheme. I think this scheme is something that puts the cart before the horse. The Government says that a levy of $0.7 or $1 per bottle will be imposed on suppliers, such as importers of red wine and soft-drinks. What is the point of imposing such a levy? Does it mean that the environment can thus be protected? Those who dispose of glass bottles in the end are users, the public in general. If no facilities or support measures are in place, the public will still throw glass bottles into ordinary rubbish bins after drinking even though a glass bottle levy is imposed on suppliers. What is the point of imposing the levy then? It is pointless. I think the policy as a whole simply puts the cart before the horse, and is simply baffling to the public.

Recently, the government personnel concerned and the Secretary for the Environment paid a duty visit to South Korea, and probably Japan before that. The circumstances in South Korea, Japan, Taiwan and Singapore are similar to Hong Kong's situation. But why are their waste facilities so excellent, particularly their incineration installations? At present, their incineration facilities or technologies are already so advanced that renewable energy can be generated after waste incineration. The incineration facilities in Sweden of Northern Europe, for example, can still have spare capacity to burn the waste bought from Norway after burning their own waste. All this can show that the incineration technologies of these Northern European countries are already so 15304 LEGISLATIVE COUNCIL ─ 11 July 2013 advanced that the 7 million people in Hong Kong can consider following their practices without any worries. Therefore, after all these repeated discussions, we will still come back to the very same point, the point that if no environmental protection or waste recovery policies are in place, it will be useless for the Government to extend the landfills in any way.

Though I am a Member returned by a functional constituency election, I still found time to visit Tseung Kwan O and meet with the residents there a couple of days ago. The residents told me that when they purchased their flats, they already knew there was a landfill, bad smell and the frequent movements of garbage trucks. However, they also had one reasonable expectation: the landfill in Tseung Kwan O would not be further expanded, because the Government had already so promised at that time. Therefore, I think the request of Tseung Kwan O residents is reasonable. Finally, what I still want to say is that if the Government wants to perfect its policies on the green industry and environmental protection, it must seriously consider the formulation of a holistic plan, instead of relying solely on landfilling and levies on glass bottles and plastic bags.

Thank you, Deputy President. I so submit.

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

MR LEUNG KWOK-HUNG (in Cantonese): Deputy President, motions on such topics are moved practically every year. However, due to the extension of landfills, the motion this year have drawn the concern of more people.

When I discussed this issue with Secretary WONG Kam-sing, Under Secretary Christine LOH and civil servants, I already told them this was a political issue. People who first hear this comment may think that I am politicizing the issue, and suspect that I am not objective and impartial. Why do I consider this a political issue? Politics is frankly very simple. It is just about the exercise of public power to distribute resources, or to use public funds for the purpose of implementing policy objectives. This is a political process.

One must admit that the Government's handling of environmental protection and waste recycling is not without any policy objectives. In this regard, LEUNG Chun-ying made a very famous remark when he was competing with his election rival, Henry TANG: it is impossible to rely solely on LEGISLATIVE COUNCIL ─ 11 July 2013 15305 incineration. This is somewhat similar to "my mother is a woman" and the response "not every woman is your mother". But having said so, he thinks he is omnipotent.

When assessing a government's standard of governance …… It is of course true that for historical reasons, a government may have to deal with the legacy of the previous government. We all know that the governance of the previous Government was poor. Yet can the new Government tell us here how it is different from the previous Government? The answer is no. I have only heard Secretary WONG Kam-sing and Under Secretary Christine LOH repeat their arguments over and over again. However, will the Government be responsible for carrying out the relevant work? Where is the Chief Executive? To be fair, I must say that he was in this Chamber today, and after staging a protest here, I went outside to ask him to start reducing waste at source by first eliminating himself. At the Question and Answer Session today, what did he say? Nothing but stock answers from bureaucrats. Has he ever expressed any insight or expectation concerning the remarks made by the Secretary, the Under Secretary, the Political Assistant and civil servants?

Under Secretary, I already mentioned this during my discussion with you last Friday. Secretary WONG Kam-sing handed me a pile of pamphlets when he discussed the issue with me. I asked him, "This is only a blueprint. When are you going to achieve the objectives? Do you have a timetable? Do you have a roadmap? Are there any commitments?" I think Secretary WONG Kam-sing may need to count the votes, so even up to this moment, he has not told me of any commitments ― which is why I say he is being very political on this issue ― on, for instance, where the recycling plants under the blueprint are to be built, the budget concerned and the mode to be adopted. There is no answer to any of these questions. I am not blaming them. Nothing can be done. Isn't this a political issue? All is because the authorities must obtain enough votes of support. Nothing can be done. So, I have no alternative but to filibuster. The authorities have made no commitment.

As I have pointed out repeatedly, suppose the authorities think that public education is now the greatest problem, they should apply for funding to conduct education. If even education fails to work, the concept of incentives and penalties should be instilled in the public. In other words, the public should be told that they must pay for the handling of the waste generated by themselves. And, for the waste which can generate profit at source, levies should be introduced. The public cannot possibly resist such measures. If it is 15306 LEGISLATIVE COUNCIL ─ 11 July 2013 considered necessary to offer any levy remission in regard to waste reduction measures at the consumption end, he should approach this Council. Secretary WONG Kam-sing has told me that the most difficult task is the setting up of a legal framework, saying that he cannot possibly bypass this big mountain. My advice is that he should approach this Council!

For all these reasons, how can it be possible to avoid the politicization of this issue? The Government has already made clear its policy objectives, but the community simply tells the Government that the problem will only become more serious, and that they have had enough. "Have had enough" is just a panicky response. For instance, Under Secretary, if I punch you several times now, you will give this panicky response: "Enough, stop punching me!" One more example. Suppose I now sear you with a piece of red-hot iron, you will also give this panicky response "Stop searing me!" Would you in that case still ask me a very sensible question like this: "Longhair, are you perverted? Do you have any alternative to searing me like this?" Or, would you say something like this: "If you want me to change my mind, you can tell me so!" You will not ask such sensible questions, will you?

Now, Members should understand the crux of the problem. Last time, the Government already came under challenge when this Council voted down its application for using certain sites in country parks for landfill extension. Why does it still continue to do so? Why does the Government insist on making futile struggles? Even if the Government obtains the support of the Tuen Mun District today, what is the point anyway? Will the problem thus be solved? However determined the Bureau may be, it will still be impossible to solve the problem if the Government does not implement waste reduction at source to remove this "useless" Chief Executive, who take empty talks for concrete actions.

I want to filibuster because I want to help the Government. The Secretary should ask the Secretaries of Departments, the Chief Executive or his other supervisors what he can possibly rely on as a means of convincing and persuading the people of Hong Kong in this political process. There is nothing he can rely on. He surely must come back here in October. However, during the summer recess, he must double his efforts and do more "homework". During the summer holidays of our school years, we revised our lessons and made new friends when cicadas chirped all around. So, go and do it, Secretary! I have told him that I will definitely filibuster.

Last week, Secretary WONG Kam-sing told me that no civil servants would give any verbal undertaking without the assurance of government financial LEGISLATIVE COUNCIL ─ 11 July 2013 15307 commitment. What kind of financial commitment has the Government made so far? There is none. Any policy commitment then? There is none, too. No site is set aside. None of the "6 plus 1 infrastructure works" has been carried out. As such, I will definitely do the filibuster. Let us see how he will charge through the barrier!

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

MR WONG YUK-MAN (in Cantonese): Deputy President, the landfill problem has developed to the present state largely because of the mediocrity of those officials responsible for running Hong Kong. WONG Kam-sing is a simple example. According to basic public relations knowledge or common sense, he should have bundled the three landfills into one application and submitted it to the Legislative Council for approval. If the application is voted down, he should give up and admit his inability to persuade Members. But very strangely, after some counting, he thought that there would not be enough votes for the passage of Tseung Kwan O landfill application, so he voluntarily withdrew it. But he continued to pursue the proposal on Tuen Mun. Does he think that Tuen Mun residents are easier to browbeat? He is definitely doomed. It is only common sense, man. He is the Secretary for the Environment, but why does he lack such common sense? How can he withdraw the proposal on Tseung Kwan O but continue to pursue the proposal on Tuen Mun? His action has put the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) in a dilemma. If the DAB supports the Government, it will be digging its own grave. I suggest that the DAB should read carefully an article in the Hong Kong Economic Journal on 8 July titled as "建制'有辱無榮 ' 說法不攻自 破" (The saying that the Pro-government camp is taking all insult and no glory is invalid per se).

(THE PRESIDENT resumed the Chair)

Why has the DAB abandoned Tuen Mun instead of Tseung Kwan O? I mean that they have abandoned the residents of Tuen Mun rather than the residents of Tseung Kwan O. To put it in another way, they have defended Tseung Kwan O but neglected Tuen Mun. There are three seats in the New Territories East constituency and three seats in New Territories West. The 15308 LEGISLATIVE COUNCIL ─ 11 July 2013 whole thing will appear very strange if it is viewed from the political perspective. I am only talking about public relations knowledge. A conspiracy theory in the community has it that upon the completion of LOHAS Park, 100 000 residents will be living there, and they will have three seats in the District Council, and this will have a bearing on the direct election of the Legislative Council. This may explain their move. If it is really for this reason that they have abandoned Tuen Mun and defended Tseung Kwan O, then there are reasons for serious concern. I of course hope that it is not the case.

The DAB has a lot of insiders' information. Mr IP Kwok-him may respond later whether he knows the re-delineation of constituencies will be favourable to the DAB. The DAB is now a well-developed election machine which will take into consideration a lot of factors. Am I right? I am now talking about a conspiracy theory, quoting the comments from the press and others.

(Mr Paul TSE raised his hand to indicate a wish to speak)

PRESIDENT (in Cantonese): Mr Paul TSE, what is your question?

MR PAUL TSE (in Cantonese): I do not want to interrupt the Member's speech, but I must raise a point of order. The motion today is "Promoting the waste recycling industry to create employment opportunities". Will Mr WONG Yuk-man please express his opinions on the motion. Thank you.

PRESIDENT (in Cantonese): Mr WONG, please speak on the motion.

MR WONG YUK-MAN (in Cantonese): President, I am already speaking on the motion, and it is just a matter of weighting. Mr Paul TSE sometimes also digresses from the topics under discussion. Anyway, since he has raised this point, I will focus on the motion. It is no big deal. It does not matter so much to me. I can start from the beginning again if need be. I will not respond to him, because I have only a few minutes left for my speech.

Last year, during the election, LEUNG Chun-ying put forth three lofty approaches for addressing the waste problem in Hong Kong. The first approach is to adopt policies based on waste reduction at source to ease the demand for LEGISLATIVE COUNCIL ─ 11 July 2013 15309 more landfills and incinerators, and where necessary, adopt new technology and co-ordinate their construction with provision of other community facilities. The second approach is to vigorously promote the development of the recovery industry. The third approach is to promote the reduction of food waste. However, the Policy Address announced in January this year and the so-called report on the work of the Government in its first year merely provoked the panic that the landfills would be filled up, without putting forth any waste reduction measures. Man, what kind of Chief Executive is he? What a Government is it? It simply fails to walk its talk.

According to government papers, the proposal on the expansion of the three landfills at Tseung Kwan O, Ta Kwu Ling and Tuen Mun will respectively involve sites each measuring 43, 70 and 200 hectares. In terms of additional landfill capacity, the expansion will provide 6.5 million cu m, 19 million cu m and 81 million cu m respectively. In other words, the expansion of the Tuen Mun landfill alone will be equal to the expansion of 12.5 Tseung Kwan O landfills. That is why WONG Kam-sing has given up the expansion of the Tseung Kwan O landfill so easily. Members should have understood the reason behind.

In the debate of the motion today, many colleagues have touched on the subject of landfills. Though the title of today's motion is "Promoting the waste recycling industry to create employment opportunities", so far, I have not heard many Members speak on this subject. Members are all talking about the landfill expansion proposal to be discussed or examined by the Finance Committee tomorrow. Deception will definitely be detected sooner or later. This is destined to happen.

President, as I come to this point, I have to digress once again from the subject slightly. Recently, when the convenor of the Executive Council, LAM Woon-kwong, appeared in a radio programme, he said that the governance situation faced by the current-term Government had been the most difficult throughout history. The filibustering of a Member or two could already lead to the collapse of a policy. Certain political parties originally intending to reach a compromise had found themselves having to go for the extreme in order to protect themselves. He said that the crux of the problem was our out-dated constitutional system, and it was best to replace the proportional representation system. We can understand how a stupid man thinks, but I think people like LAM Woon-kwong are extremely shameless.

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PRESIDENT (in Cantonese): Mr WONG, you have digressed from the subject.

MR WONG YUK-MAN (in Cantonese): It is the same words once again. I want to say "waste reduction at source", which is the most popular motto in the meeting today. This is also what Mr CHAN Chi-chuen said: the Government is the source of waste, so waste reduction should begin with the Government by getting rid of incapable officials.

Many amendments to the motion today are technical in nature, and we will support most of them. The waste management policy in Hong Kong has been lagging far behind our neighbouring regions. This Council has sent a number of deputations on duty visits to draw reference from the successful experience of waste management in neighbouring regions including Japan and South Korea, and I have participated in one of the deputations. Since a report on this will be published later, I will not dwell on this now. The Secretary has also taken part in our duty visit, so he should have a clear understanding of the situation. As for colleagues from the Environmental Protection Department, they should know thoroughly the difficulties encountered in waste reduction and the success achieved by the neighbouring countries. The Under Secretary is in the Chamber now. Let me tell her that the authorities had better withdraw the discussion paper for tomorrow's meeting and make a better plan during the summer (The buzzer sounded) ……

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

DR HELENA WONG (in Cantonese): President, according to the paper provided by the Bureau, the daily per capita domestic waste generation volume in Hong Kong shows an extremely sad and shameful phenomenon: our daily per capita domestic waste generation volume is far higher than those of other major cities in Asia, including Tokyo, Seoul and Taipei. The figure of Hong Kong is 1.36 kg per day, whereas the figure for Taipei is 1 kg, and for the other cities which I have just mentioned, the figures are below 1 kg.

I believe that all Hong Kong people should be held accountable for the generation and management of waste. Obviously, we should ask ourselves why we are generating more waste than residents in other cities. I think this is the ill result of the undue promotion of consumption in this capitalist society of Hong LEGISLATIVE COUNCIL ─ 11 July 2013 15311

Kong over all the years. And, it is not just consumption but also wastage. Worse still, what is involved is not just consumption and wastage at the level of individuals; even businesses have developed such a culture.

Certainly, the Government has long failed to show a clear intention to formulate any waste management policy. There is no support in respect of many macro-level facilities, and the Government has not made any vigorous efforts in education either. This explains why we must all face the consequence now. When we compare Hong Kong with other cities, we will feel shameful, not knowing why we have generated so much waste. Therefore, if we are to reverse the situation, we must realize that while policies are definitely important, the most important question must be how we can reverse the consumption mindset of individuals and even the business sector.

If we are to reduce waste, we must stop buying on impulse and behave as a responsible consumer. However, if we do not encourage consumption, the business and industrial sector may feel worried, because if people do not spend, the catering sector and the services sector will be in trouble, and the economy of Hong Kong will also be affected. Therefore, the important point is to ascertain, on the basis of not affecting the economy, how we can promote responsible consumption at the individual and business levels, and how we can enable the economy and the overall environment of Hong Kong to enjoy sustainable development. I would say that this is a formidable challenge.

Any change in people's mentality of course cannot be achieved overnight. Yet, I believe that we have been heading towards this direction for quite some time already. We are grateful to Mr KWOK Wai-keung for proposing this motion today. Regarding some of the contents of Mr WU Chi-wai's proposed amendments, Members have already held some discussions, so I will now focus on the part on food waste.

According to the figures provided by the Environmental Protection Department (EPD), Hong Kong generates 9 000 tonnes of municipal solid waste every day. Of these 9 000 tonnes of waste, 3 550 tonnes are food waste, which is about one third of the total. Of the 3 550 tonnes of food waste, how many tonnes are generated by households and the business and industrial sector respectively? It is noted that 2 550 tonnes of food waste are from households and 1 050 tonnes are from the business and industrial sector. That means a total generation of 3 550 tonnes of food waste a day.

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We have learnt from the information provided by the Government that the authorities have proposed and planned to establish food waste recovery facilities in two phases, one in Siu Ho Wan and the other in Sha Ling. However, according to the proposal of the Government, even if the funding applications of the two plans in Siu Ho Wan and Sha Ling are approved, the facilities will only come into operation after 2017. What is the expected effect of the facilities? They will be able to handle 500 tonnes of food waste per day. I have mentioned that 3 550 tonnes of food waste are generated every day. The existing Kowloon Bay Pilot Composting Plant and these two food waste recovery centres will only be able to handle around 500 to 600 tonnes of food waste a day. This is still far behind the 3 000-odd tonnes of food waste generated every day. The remaining 2 000 to 3 000 tonnes of food waste must still be sent to the landfills for disposal.

In this connection, the amendment proposed by Mr WU Chi-wai of the Democratic Party actually aims to point out that we do not know the extent to which the facilities to be built in Siu Ho Wan and Sha Ling will be used for treating domestic food waste, nor do we know how much of the food waste generated by the catering industry in the business and industrial sector will be handled by these two centres. The point is that if there are only two to three large-scale food waste recovery centres, some 2 000 to 3 000 tonnes of food waste must still be sent to the landfills every day. This explains why the Government is so anxious, claiming that the expansion of the landfills in Tseung Kwan O, Tuen Mun and the North District is essential. But why don't we consider increasing the recovery and treatment capacity of food waste, bringing it to a level well above some 500 to 600 tonnes?

Hence, we propose that the Bureau should conduct new studies, with the aim of establishing more food waste treatment centres or facilities in various districts. In particular, they should consider whether the provision of food waste treatment depots and facilities should be made mandatory in the plans for constructing new public housing estates. If this idea is put into practice, we can enable each housing estate to handle the food waste generated from within itself as much as possible, and then use the organic fertilizers thus manufactured for beautifying the landscaping facilities in the housing estate. All these proposals must require planning support.

On the other hand, what should we do with private buildings that are outside the scope of public housing? Can these two to three food waste LEGISLATIVE COUNCIL ─ 11 July 2013 15313 treatment centres alone handle the food waste generated by private buildings? Hence, I hope the Secretary will vigorously examine and explore the development of the food waste recovery industry.

MR ANDREW LEUNG (in Cantonese): President, the first motion I proposed after my first joining the Legislative Council in 2004 was on waste recovery and recycling. Actually, I also intended to propose a motion on the recycling industry today, but I have subsequently proposed a motion on another subject which the public and the trade are similarly concerned about. Hence, I am very glad that Mr KWOK Wai-keung has proposed this motion today. Besides, I can also see that many Members of the Legislative Council share my concern about the development of the industry.

President, disputes about landfills have continued over the past week. Many people criticize that Hong Kong has long failed to look after the waste recovery and recycling industry properly, and has also failed to provide support to the development of the industry. In February this year, the Secretary for the Environment visited the Federation of Hong Kong Industries (FHKI) to exchange views with members on environmental protection policies. On this occasion, the Secretary also discussed recovery and recycling with us. However, the policies and measures he mentioned were only repetitions of the proposals put forth by the authorities over all the years: encouraging the public to do waste separation at source, putting up tenders for short-term leases for recovery operators, the promotion of green procurement, and so on. President, we have heard such replies since 2002, for more than 10 years. The direction is broadly correct, but the intensity is inadequate and the effectiveness is not quite so obvious. In my view, since the Government has the intention to promote the recycling industry, it should adopt a forward-looking perspective. It should adjust the intensity of the measures and adopt innovative approaches to encourage the public and the industries to participate in waste reduction, recovery and recycling. It should also review its procurement policy with a view to promoting the local recycling industry.

All along, when we talk about recycling, we will think of three-colour waste separation bins, and the recovery of plastic bottles, papers and metals. In recent years, glass bottles have been added to the recycling list. In fact, many people in Hong Kong can frequently come across recycled products. For 15314 LEGISLATIVE COUNCIL ─ 11 July 2013 instance, the eco-bricks used for paving sidewalks are made from waste glass, and playground tiles are made from recycled waste tyres. According to the information of the Government, Hong Kong's waste recovery rate is not low at all, and with people's increasing environmental awareness, the recovery rate is even rising on average. However, regarding the handling process after recovery, no significant progress has been made over the years. Most of the materials collected by three-colour separation bins are simply packed and exported, mostly to the Mainland. However, the Mainland now refuses to accept such materials. As for waste glass, due to the limited demand for recycled glass products, large-scale recovery of waste glass cannot be introduced. In recent years, as the Mainland tightens its requirement on "foreign refuse", trucks and trucks of sorted recyclable materials have to be sent to landfills for disposal, because recovery operators can hardly find buyers of such materials.

The industrial sector has been urging the Government to introduce policies to encourage the development of the recycling industry in Hong Kong. The reason is that the industrial waste recovered is of recycling value; if industrial waste can be transformed back into metals and plastics through the process of extraction, manufacturers will definitely be benefited because this will help them identify sources of raw materials in Hong Kong.

Construction waste is a type of waste which Members have not talked much about today. At present, large amounts of construction waste are sent to the landfills every day. Materials such as concrete and asphalt found in such waste can be recycled for use. But since the authorities do not have any policy that requires construction companies to use recyclable materials, many construction sites would choose to pay the construction waste disposal charge ranging from $27 to $125 per tonne, rather than going for the recovery and reuse of such materials. Does the Secretary think that he should consider introducing some incentive schemes, or even making it mandatory for construction projects to use a certain percentage of recyclable materials?

Over the past one or two years, people have shifted their attention to the recovery of food waste. Sometime in the past, the FHKI once tried actively to persuade the Government to implement a scheme on turning food waste into fuel gas at Tai Po Industrial Estate. They hoped that the Government would allocate a suitable site, so that the industry could try out a food waste recovery and recycling scheme in the housing estates in Tai Po. Regrettably, they failed to get LEGISLATIVE COUNCIL ─ 11 July 2013 15315 the support of the Government. Now, Hong Kong generates 3 200 tonnes of food waste every day, accounting for 37% of the total volume of waste. We all know that given treatment, food waste can be used for the production of fertilizers as well as animal feed, and also the generation of biogas. Members of the FHKI once advised the Bureau that in the absence of any large-scale agriculture and farming industries, the market would not be large enough to absorb the animal feed and fertilizers produced from food waste. They thus suggested that if we could fully utilize food waste and turn it into biogas, we would be able to use the biogas thus produced to generate electricity or produce fuel gas. Moreover, the dregs left from the conversion of food waste to biogas could also be used as fertilizers. This will be a desirable method that can achieve two objectives at the same time.

There are only three companies engaging in food waste recovery in Hong Kong at present. These companies can only focus on serving hotels, food production establishments and lunch caterers of schools. One reason for this is that these companies impose monthly charges, and many Chinese restaurants do not want to pay such charges for budget reasons. Another reason is that since Chinese restaurants usually face the problem of tight manpower, it is difficult for them to ask their employees to change their work procedures and habits despite their awareness of environmental protection. The companies concerned have pointed out that they feel like the food waste recovery is not treated as quite a decent business. According to these companies, they must apply for a business registration certificate on the one hand, and an offensive trade licence on the other as required by the Food and Environmental Hygiene Department. But since there is no specific licensing system and regulatory regime for the food waste industry, they are often at a loss when referring to the various guidelines and executing the requirements to follow.

I hope that the authorities can take follow-up actions to formulate clear guidelines and even introduce measures to further encourage the recovery of food waste, so as to attract hotels, food establishments and food manufacturers to use the relevant services. The trade proposes that following the establishment of a formal licensing system, the Government should introduce a certification system, whereby hotels and food establishments co-operating with those food waste recovery operators recognized by the Government may apply for sewage charge concessions on the strength of such certification. I think the proposal can encourage the business and industrial sector to participate in food waste recovery without adding to their costs.

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President, unlike the recovery of ordinary waste, food waste recovery needs greater attention to the stink and waste water caused in the course of transportation, and this has become a cause of concern again. I hope that the Government can accept the views of the trade on setting up food waste transfer stations with government funding and land grants for the centralized handling of food waste and the adoption of biochemical filtration technology.

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

MR PAUL TSE (in Cantonese): President, when we compare Hong Kong with many other advanced countries or places, we will see that its results in many ways are not bad at all. However, the one thing we may not necessarily like, I am afraid, is being called a city with the greatest abundance of waste in the whole world. Just now, Dr Helena WONG made a comparison of Asian cities. In fact, we are on the top, not only in Asia but also in the whole world.

I have recently read an article on this topic carried by the 16 December 2010 issue of TIME magazine, in which Hong Kong is described as quite special, in the sense that its annual per capita waste generation is as large as 2 000 lb, which is equivalent to 921 kg, or 1.36 kg per day, as pointed out by Dr Helena WONG just now. President, this is a very "impressive" result. The article also says that just by looking at how Hong Kong people love to buy fast food everywhere they go, thus consuming huge quantities of packaging paper, one will need no further evidence to conclude that they must generate a lot of waste. What is more, the many free newspapers which have sprung up in recent years, and which are shoved into the hands of passers-by, have also contributed to Hong Kong's "impressive" result.

President, many Members have put forward various methods and proposals to deal with the waste problem. I wish to use the remaining time to say a few more words on one or two points only. President, I remember I was a boy scout when I was small. Article 6 of the Scout Law reads, "A Scout makes good use of time and is careful of possessions and property". This is not about anything lofty, but I have since benefited immensely from it. Making good use of time and being careful of possessions and property means that nothing must be squandered, nor used indiscriminately.

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President, as also pointed out by Mr Andrew LEUNG in his speech just now, people rarely talk about industrial waste. In fact, in recent years, I have been thinking hard why we must produce so much industrial waste. President, statistically, industrial waste currently accounts for one quarter, or 25%, of the waste disposed of in landfills. We must not underestimate the construction waste left by internal renovation either. I have often asked myself why we cannot do some sort of co-ordination for office relocations and home removals to facilitate the handing down of internal fittings and fixtures. At present, when taking back rented facilities or units, both property developers and the Government will insist on their lawful right and demand outgoing tenants to dismantle all internal fittings and fixtures with nothing left. If any Members cannot be re-elected, they must likewise dismantle all internal fittings and fixtures of their offices, leaving behind nothing, before surrendering them for allocation to incoming Members. In fact, this practice of leaving nothing behind is unnecessary. A compromise can actually be reached through negotiation, so that resources can be saved.

If I can remember correctly, some large landowners, such as the Swire Group, have taken the lead to implement measures allowing a tenant to discuss with the property owner, or to obtain the consent of the incoming tenant, so that the internal fittings and fixtures in the property can be retained without the need for demolition. Actually, especially in the case of room partitions, they can basically be retained because with the same floor plan, all alternative layouts and partitions are bound to be essentially identical. And, even if some sort of alterations are still necessary, major works will not be involved. Demolition and reconstruction will actually generate large quantities of industrial waste. I fail to understand why more efforts cannot be made in this regard.

Food waste is of course also a kind of waste that warrants our attention. But it involves the more complicated problems of disposal, recovery and recycling. So, since industrial waste alone already accounts for one quarter of the waste generated in Hong Kong, the handling of such waste will be a simple and direct way to save more social resources. In this respect, I hope property developers can make attempts to follow this direction. The Government, in particular, must take the lead to draw up tenancy agreements with more flexible terms, so that the outgoing and incoming tenants can negotiate with each other and reach a mutual agreement under which the former can avoid the total dismantling of everything during relocation as far as possible. Of course, this is outside the portfolio of the Under Secretary, who is present today. But I still think she should remind the Government to consider this suggestion.

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President, in January 2012, a very large facility in Edmonton, Canada, commenced operation. This facility handles many different types of waste, including construction waste and municipal solid waste. The key issue highlighted by this facility is how we can identify a suitable site and construct a suitable facility for streaming waste.

President, I am afraid that in the absence of appropriate waste streaming or separation, it will not be possible to implement many recycling or waste reduction measures. Regarding the motion topic on recycling facilities today, the Government must take the lead to provide land or incentives to the industry, so that it can develop in Hong Kong. If not, all waste collection methods and three-colour separation bins will be unable to tackle the very crux of the problem, that is, the issue of waste separation at source for subsequent handling. If waste separation is in place, it will definitely be easier to handle the problem.

President, time is running out, but I still wish to say a few words about an article of Mr LAM Hang-chi published yesterday. The main point of the article is that landfilling and incineration are not necessarily the only two options. In fact, many European countries have already opted for waste incineration at the high temperature of 2 000°C for the production of energy. In some such countries, there is not even enough garbage for incineration, and garbage has to be bought from the United Kingdom and all over Europe for the purpose. It is time for Hong Kong to consider other options in addition to landfilling and incineration, isn't it?

The authorities may not have actively considered other options, or it may not have actively encouraged any relevant private consortia to do so either. Hong Kong people frequently talk about collusion between business and the Government. But in fact, business and the Government can always work in collaboration. In this regard, I think there is no harm for the authorities to discuss with the private sector the feasibility of collaboration.

Thank you, President.

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

(No Member indicated a wish to speak)

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PRESIDENT (in Cantonese): Mr KWOK Wai-keung, you may now speak on the amendments. The speaking time limit is five minutes.

MR KWOK WAI-KEUNG (in Cantonese): First of all, I would like to thank the six Members for their amendments and the 35 Members for their enthusiastic speeches. I will now focus on giving responses to the various amendments.

Ir Dr LO Wai-kwok's amendment specifically proposes the provision of hardware and software support to the industry, the development of green collar industries and co-operation with the Mainland for promoting a "regional circular economy". As I pointed out in my speech last night, without any massive government investment, green collar industries will only stay where they are, unable to become industries with any advantage. We hold that in the long run, local green collar industries must proceed in the high-end direction. Apart from engaging in local waste recovery, the industries must also conduct technological and product research, so as to dovetail with the industrial development of Hong Kong and the Mainland. It is only in this way that green collar industries can turn themselves into high-value adding industries with clear advantages.

The respective amendments proposed by Dr Kenneth CHAN and Mr Gary FAN both seek to attach specific measures to my origin motion, including organizing community waste reduction and recovery programmes in the 18 districts, territory-wide promotion of green living, regulating "excessive packaging" of goods, and increasing recovery facilities for food waste on building floors. Although it is very difficult to introduce the last measure in old buildings, we think it is worthwhile to study the provision of relevant ancillary measures in new buildings or new housing estates, particularly in public housing estates, with a view to enhancing waste recovery and reduction at source. Hence, we approve of these amendments.

Ms Cyd HO's amendment seeks to propose specific ratios for recovery, incineration and landfilling and requests additional resources to provide support for green collar industries on all fronts. We think that the relevant ratios are consistent with Hong Kong's actual circumstances. Increasing the waste recovery ratio can provide waste recovery operators with a steady supply of waste, and in turn dovetail with other assistance measures on promoting the development of green collar industries. To the Government, landfilling and 15320 LEGISLATIVE COUNCIL ─ 11 July 2013 incineration are the most convenient methods for waste disposal, but in view of Hong Kong people's general aversion to such end-of-pipe waste disposal facilities as landfilling and incineration …… Increasing the proportion of reuse and recovery can lower the proportion of landfilling and incineration, and in turn reduce the demand for end-of-pipe waste disposal facilities, thus demonstrating the Government's commitment to promoting waste reduction at source in response to public aspirations.

Lastly, item (9) of Mr WU Chi-wai's amendment requests the Government to "step in" the waste recovery market. We think that this can enhance the Government's commitment to resources recycling, and make it fulfil its undertaking of waste reduction at source. Hence, I express support for the amendments proposed by the five Members mentioned just now.

Regarding Mr LEE Cheuk-yan, who proposes an amendment to Ms Cyd HO's amendment, we cannot agree to his amendment for the time being because of his inclusion of some restrictive provisions in the $2 billion fund.

Thank you, President.

UNDER SECRETARY FOR THE ENVIRONMENT (in Cantonese): President, I would like to begin with a few words on how we look at the original motion and the amendments today. After this, I will spend a little time on responding to the views put forward by Members.

The motion debate and the amendments proposed by Members today are all very rich and meaningful in content. We are not going to comment on the details of the various amendments and the original motion, because the latter already contains a lot of views. I believe all Members are concerned about the handling of waste in the future, which is why they have expressed so many different views. Our attitude is to consider all these views one by one very carefully because they may help us implement our policies in the future and also assist us in conceiving different projects for implementation within the Government, or even for collaborating with different stakeholders at the district level.

Some of the views expressed are very specific, such as the amount of financial assistance, the number of jobs to be created, and even concrete tasks at LEGISLATIVE COUNCIL ─ 11 July 2013 15321 the district level. I do not think there is any need for me to express approval or disapproval regarding each and every view. I will only focus on the underlying significance. We accept that Members can put forward different opinions and viewpoints, so I will not indicate whether I fully agree to their amendments. I believe Members need not argue too much over all this.

When delivering her speech just now, Dr CHIANG Lai-wan handed me a document containing some of the views conveyed by her to the Legislative Council in 1999. Furthermore, a number of Members whom I consider more senior, such as Mr Albert CHAN, Miss CHAN Yuen-han, Mr MA Fung-kwok, Mr TAM Yiu-chung and Mr Andrew LEUNG, appeared to be rather helpless and resigned when speaking just now. They talked about the views they already expressed in the past, and they were happy that they could have a new opportunity to reiterate the pieces of advice they previously put forward, that is, the advice which they think the Government has failed to implement.

I hope Members can treat the debate today as a watershed. Members may think that there are all sorts of inadequacies and things that the Government has failed to do, but I suppose Members should be most concerned about how we are going to make improvements and bring forth the implementation of various ideas as from today.

Many Members have touched upon and even specifically referred to the "Hong Kong: Blueprint for Sustainable Use of Resources 2013-2022" (the Blueprint) published by the Environment Bureau, and some of them may think that the blueprint is not detailed enough. Let me point out that this is just a strategic blueprint. If Members turn to pages 12, 13 and 14, they will realize that we have used the most concise presentation to set out the tasks which we know we must do.

Members will probably look at the Blueprint from two perspectives. First, does the Environment Bureau know what it should do? Is the Environment Bureau aware of Hong Kong's actual circumstances? Just now, quite a number of Members quoted our data (such as the data on Hong Kong's waste disposal volume, the amount of garbage generated daily, and so on). They also talked about the experience of those places that we have studied as examples, such as the experience of Taipei and South Korea. Hence, I can say that we are aware of Hong Kong's present circumstances, otherwise we will not have disclosed the relevant data.

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Second, we admit that Hong Kong has not done enough. The challenge facing us today is whether the relevant work can be expedited. I believe we have reached a consensus on the broad direction. This is why I have expressed the hope that a multi-pronged approach can be adopted at the present stage, and that a number of waste-related policies can be formulated and put into practice all at the same time. Nevertheless, we sometimes need to submit legislative proposals one by one to the Legislative Council, or submit one funding applications one by one to the Finance Committee because we are still at the starting point. Hence, this may give Members the feeling that the Government is merely engaging in empty talks and incapable of doing what it is supposed to do.

The recovery industry is the focus of the motion debate today. Members are right in saying that we are for the time being unable to submit a paper that gives a comprehensive account of a new policy on the recovery industry. Besides, although a number of Members have expressed special concern about food waste in their speeches, we are likewise unable to present a paper on our food waste policy for the time being. But our Blueprint highlights many different areas and points out the need to make efforts in all waste-related areas. Indeed, it takes time for us to put things into practice one by one. So, I accept Members' criticism in the meantime.

Members will probably ask a number of questions ― in fact, they have already done so today. They will ask whether we know what we should do, when a policy can be proposed and whether resources will be provided. Things like this are going to happen. Today, I only wish to point out that we will treat the Legislative Council, District Councils and even other stakeholders in the commercial sector as our key partners when giving our explanation.

Just now, Miss CHAN Yuen-han queried whether we had the courage and enterprise to take forward the required tasks. I believe Members already know that for the sake of effective resources recycling, we no longer adopt the simplistic perspective of "waste management". We have pointed out in the Blueprint that a new perspective should be adopted to treat waste as resources. Hence, we will formulate our policy based on the concept of "resources recycling".

There are many types of waste and resources, and a thoroughgoing policy must be formulated for each of them. We talked about food waste just now, and in the case of this type of waste, for example, we need to make efforts to deal LEGISLATIVE COUNCIL ─ 11 July 2013 15323 with the many different aspects of its handling. Waste plastics, which Members have discussed for so long since yesterday, is another type of resources. We must consider how best to proceed with its recycling in Hong Kong.

Members have also talked about how we should build a suitable market for recycled materials. A Member has even remarked that this is a whole body of complex and professional expertise in its own right. This is certainly true. Honestly, the Government has not yet gained a full grasp of how the various trades and industries related to such resources operate, nor does it have a full understanding of the local and global markets. But we nonetheless have both the courage and enterprise, and we are also supported by our partners, so we will be able to formulate the required policies.

I wish to raise a few questions here, in the hope of benefiting from Members' collective wisdom, because these questions are not easy to answer. First, some people opine that we should provide assistance in building a market for recycled products through the procurement policies of the Government or the public sector. We certainly need to consider this idea and work hard on it. Some Members have criticized the steering committee to be established for focusing its work on the Government only. But I must say that this will be the case for the time being only, and even so, the steering committee will not be rendered useless. These Members have also questioned the usefulness of changing the procurement policy. They have further asked whether a steering committee should first be set up to have communications with the industry. This can be our next step. But after their discussions, government departments all agree that it would be useful to make some efforts in respect of the procurement policy.

Members have also talked about waste export. I can sense that many Members actually want to see the establishment of our own factories in Hong Kong, so that certain types of resources, such as plastics, can be handled locally. Are Members saying that the export of certain locally recovered resources, such as paper, copper, aluminium and iron, is something very undesirable? My view is that since Hong Kong is such a tiny place, it is difficult for us to establish any high-tech industries to recycle locally generated garbage. Hence, I would like to ask Members whether they are really not prepared to tolerate the export of even just a portion of our locally generated "resources".

The Mainland's new law on waste plastics is tighter than before. This is something good, and as the case should be. The impact on Hong Kong, the 15324 LEGISLATIVE COUNCIL ─ 11 July 2013 immediate impact, is that our recovery industry must change their mode of operation. In the debate today, some Members have therefore talked about the need for the Government to formulate support measures, probably allocation of land or resources, on helping the industry. But Members must bear in mind that somehow, the industry must eventually change its practices. Likewise, we must all change our practices. Waste plastics is not without any export avenues, but we must treat it properly before our neighbours are willing to accept them. The message that this new law imparts to Hong Kong is very positive. We can discuss later how we should respond and what specific work should be done.

Should we refrain from exporting waste papers? I am asking this question because our recovery volume of waste papers is really not small at all. But, is the export of waste papers to the Mainland or our neighbours something really unacceptable? I hope Members can come up with a clear view.

As Hong Kong is a tiny place, waste separation is possible, and in case there are any export channels for certain types of waste, we must first handle them properly before export. The export of waste is not anything bad. As regards our collaboration with the recovery industry, some members of the industry have expressed the hope that efforts can be made to improve and facilitate the process of export. That is why we have recently drawn up a policy on the provision of a special pier to facilitate the operation of the recovery industry. Hence, Members cannot say that we have not done anything at all.

Another point is also very important …… Both waste reduction at source and assistance to the industry are very important, so we hope that the waste charging scheme can be implemented expeditiously. The experience of different places in Asia and North America shows that waste charging is very effective in reducing waste at source and can assist the industry to add new values to the relevant resources.

Secretary WONG Kam-sing once told Members here that a new consultation paper would be released in the near future, probably sometime between August and September after summer, to explain how waste charging could be introduced in Hong Kong, where high-rise buildings are found everywhere. I realize that this measure is controversial, so as soon as we complete the consultation and review following the publication of the consultation paper, we will come back to the Legislative Council for discussion. I suppose there will be many heated debates when the time comes. But I hope Members can hold all such debates as partners.

LEGISLATIVE COUNCIL ─ 11 July 2013 15325

Lastly, I would like to say a few words about the issue of time. As I pointed out just now, the generation of new resources through recycling will require the formulation of appropriate policies and implementation methods by the authorities, and this invariably takes time. In the case of incineration technologies and landfill extension, for example, the major problem is precisely about the question of time. When delivering their speeches just now, Members criticized us for making a late start. Well, anyway, we cannot possibly travel back in history and then move faster. We can only examine what can be done to speed up everything simultaneously from now on.

How can we achieve all the abovementioned things? Enterprise and courage aside, we must need Members' co-operation. I am standing here today as a representative of the Administration ― I used to sit among Members prior to 2000 ― but I feel that Members and I are just one single entity, and we can never well do with Members. We must formulate policies and secure their passage. We must grasp the views of the districts. We must make decisions, seek funding and execute our work through the political process. The Government must be supervised in the course of its work. All these are the segments of an integrated process. We all belong to one single political entity and system. Therefore, however much we argue with you, we cannot afford losing you.

I can only say that during the remaining four years in the present Government's term of office, we will come to the Legislative Council every several months to bother Members on issues relating to waste and resources recycling. I believe every debate we are going to have in the Legislative Council will probably be in-depth, extensive and complex. If our ultimate goal is to attain the good standards found in places such as Taipei, South Korea and Japan, all of us, all Members' offices, all political parties, all districts and all building floors of government departments must undergo a change in habit. Such a change will inevitably affect the daily work pattern of everyone, and many stakeholders will be affected, too.

The development of the resources recycling industry will definitely entail both pros and cons. When the Government rolls out a more integrated policy to regulate the operation of the industry in the future, disputes will certainly arise. In that case, how can we proceed hand in hand? I hope that apart from enabling Members to recap the past inadequacies of our work, this relatively thorough debate today can also serve as a watershed.

Thank you, President.

15326 LEGISLATIVE COUNCIL ─ 11 July 2013

PRESIDENT (in Cantonese): Ir Dr LO Wai-kwok, you may move an amendment to the motion.

IR DR LO WAI-KWOK (in Cantonese): President, I move that Mr KWOK Wai-keung's motion be amended.

Ir Dr LO Wai-kwok moved the following amendment: (Translation)

"To delete "Government" after "That the" and substitute with "SAR Government already"; to delete "to expeditiously" after "(6)" and substitute with "in order to"; to delete "for stepping up the recovery of waste with low recycling values" after "producer responsibility scheme" and substitute with ", to offer financial incentives to support the industry's construction of modern recycling facilities for stepping up the recovery and recycling of waste requiring higher processing costs and technologies"; to delete "and" after "local green products;"; and to add "; (11) to set up a 'centre for industrialization and development of environmental protection technologies' to support the development of environmental protection technologies, vet new technologies, and promote technology transfer and co-operation; and (12) to support the industry's non-local sale of local green products and technologies for promoting a 'regional circular economy', and enhance the co-operation with the Mainland in the areas of waste recovery, handling and recycling, etc" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment, moved by Ir Dr LO Wai-kwok to Mr KWOK Wai-keung's motion, 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)

LEGISLATIVE COUNCIL ─ 11 July 2013 15327

Mr Tommy CHEUNG rose to claim a division.

PRESIDENT (in Cantonese): Mr Tommy CHEUNG 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 Frederick FUNG, Dr Joseph LEE, Mr Jeffrey LAM, Mr Andrew LEUNG, Mr WONG Ting-kwong, Dr LAM Tai-fai, Mr CHAN Kin-por, Dr LEUNG Ka-lau, Mr IP Kwok-him, Mr NG Leung-sing, Mr Steven HO, Mr YIU Si-wing, Mr Charles Peter MOK, Miss CHAN Yuen-han, Mr Kenneth LEUNG, Mr KWOK Wai-keung, Mr Dennis KWOK, Mr Christopher CHEUNG, Mr IP Kin-yuen, Mr POON Siu-ping, Ir Dr LO Wai-kwok and Mr Tony TSE voted for the amendment.

Mr Tommy CHEUNG, Mr Frankie YICK and Mr CHUNG Kwok-pan abstained.

Geographical Constituencies:

Mr LEE Cheuk-yan, Mr CHAN Kam-lam, Ms Emily LAU, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Ms Cyd HO, Mr CHAN Hak-kan, Mr WONG Kwok-kin, Mr Paul TSE, Mr Alan LEONG, Mr LEUNG Kwok-hung, Mr WONG Yuk-man, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Dr Kenneth CHAN, Mr LEUNG Che-cheung, Miss Alice MAK, Dr Fernando CHEUNG, Dr Helena WONG, Dr CHIANG Lai-wan and Mr Christopher CHUNG voted for the amendment.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

15328 LEGISLATIVE COUNCIL ─ 11 July 2013

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 22 were in favour of the amendment and three abstained; while among the Members returned by geographical constituencies through direct elections, 23 were present and 22 were in favour of the amendment. 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.

MR ANDREW LEUNG (in Cantonese): President, I move that in the event of further divisions being claimed in respect of the motion on "Promoting the waste recycling industry to create employment opportunities" 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 Mr Andrew LEUNG be passed.

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

(No Member indicated a wish to speak)

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.

LEGISLATIVE COUNCIL ─ 11 July 2013 15329

I order that in the event of further divisions being claimed in respect of the motion on "Promoting the waste recycling industry to create employment opportunities" 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): Dr Kenneth CHAN, as Ir Dr LO Wai-kwok's amendment has been passed, you may now move your revised amendment.

DR KENNETH CHAN (in Cantonese): President, I move that Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok be further amended by my revised amendment.

Dr Kenneth CHAN moved the following further amendment to the motion as amended by Ir Dr LO Wai-kwok: (Translation)

"To add ".; (13) to organize community waste reduction and recovery programmes in the 18 districts, formulate waste reduction and recovery indicators for various districts, and set up a waste reduction promotion group to audit the volumes of community waste reduction and recovery, conduct planning for district waste recovery and reduction facilities, and plan and carry out waste reduction and recovery work in communities; and (14) to install more waste separation bins in various public premises and streets, and set an appropriate ratio of the number of waste separation bins to the number of rubbish bins" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Dr Kenneth CHAN's amendment to Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok 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)

15330 LEGISLATIVE COUNCIL ─ 11 July 2013

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 amendment passed.

PRESIDENT (in Cantonese): Mr Gary FAN, as the amendments of Ir Dr LO Wai-kwok and Dr Kenneth CHAN have been passed, you may now move your revised amendment.

MR GARY FAN (in Cantonese): President, I move that Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok and Dr Kenneth CHAN be further amended by my revised amendment.

Mr Gary FAN moved the following further amendment to the motion as amended by Ir Dr LO Wai-kwok and Dr Kenneth CHAN: (Translation)

"To add "; (15) to encourage the industry to increase the recycling and reuse of construction waste, so as to reduce the amount of construction waste at landfills; and (16) to research on regulating 'excessive packaging' of goods to encourage simple goods packaging" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr Gary FAN's amendment to Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok and Dr Kenneth CHAN 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)

LEGISLATIVE COUNCIL ─ 11 July 2013 15331

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

(Members raised their hands)

Mr Tommy CHEUNG rose to claim a division.

PRESIDENT (in Cantonese): Mr Tommy CHEUNG 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 stop now and the result will be displayed.

Functional Constituencies:

Mr Frederick FUNG, Dr Joseph LEE, Mr Jeffrey LAM, Mr Andrew LEUNG, Mr WONG Ting-kwong, Mr CHAN Kin-por, Dr LEUNG Ka-lau, Mr IP Kwok-him, Mr NG Leung-sing, Mr Steven HO, Mr YIU Si-wing, Mr Charles Peter MOK, Miss CHAN Yuen-han, Mr Kenneth LEUNG, Mr KWOK Wai-keung, Mr Dennis KWOK, Mr Christopher CHEUNG, Mr IP Kin-yuen, Mr POON Siu-ping and Ir Dr LO Wai-kwok voted for the amendment.

Mr Tommy CHEUNG, Dr LAM Tai-fai, Mr Frankie YICK, Mr CHUNG Kwok-pan and Mr Tony TSE voted against the amendment.

Geographical Constituencies:

Mr LEE Cheuk-yan, Mr CHAN Kam-lam, Ms Emily LAU, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Ms Cyd HO, Mr CHAN Hak-kan, Mr WONG Kwok-kin, Mr Paul TSE, Mr Alan LEONG, Mr LEUNG Kwok-hung, Mr WONG Yuk-man, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Dr Kenneth CHAN, Mr LEUNG Che-cheung, Miss Alice MAK, Dr Fernando CHEUNG, Dr Helena 15332 LEGISLATIVE COUNCIL ─ 11 July 2013

WONG, Dr CHIANG Lai-wan and Mr Christopher CHUNG voted for the amendment.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 20 were in favour of the amendment and five against it; while among the Members returned by geographical constituencies through direct elections, 23 were present and 22 were in favour of the amendment. 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): Ms Cyd HO, as the amendments of Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN have been passed, you may now move your revised amendment.

MS CYD HO (in Cantonese): President, I move that Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN be further amended by my revised amendment.

Ms Cyd HO moved the following further amendment to the motion as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN: (Translation)

"To add "; (17) to continuously increase the proportion of recovery, reuse and recycling in waste management, with the aim of attaining no less than 72% for recovery and recycling, no more than 23% for incineration, and no more than 5% for landfilling; (18) to allocate an annual recurrent expenditure of $2 billion for creating 10 000 elementary posts for sorting and recovery, promote waste-sorting-at-source activities in communities, support the academic sector and the industry to conduct research on recycling technologies, product designs and the development of business opportunities, and subsidize the relevant business operation when the market values of recycled products fall short of the recycling costs" immediately before the full stop."

LEGISLATIVE COUNCIL ─ 11 July 2013 15333

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Ms Cyd HO's amendment to Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN be passed.

PRESIDENT (in Cantonese): I now call upon Mr LEE Cheuk-yan to move an amendment to Ms Cyd HO's amendment.

MR LEE CHEUK-YAN (in Cantonese): President, I move that Ms Cyd HO's amendment be amended.

Mr LEE Cheuk-yan moved the following amendment to Ms Cyd HO's amendment: (Translation)

"To add "on ways to achieve the aforesaid aim by the Government, to immediately conduct large-scale public consultation on the waste management policy, and formulate relevant policy measures, including: (i)" after "(18)"; and to add "; (ii) to make concrete funding arrangements in next year's Budget for the aforesaid recurrent expenditure of $2 billion, and before that, to withdraw the funding applications for landfill extensions submitted to the Legislative Council; and (iii) when granting lands for public and private development plans in the future, to add provisions on reservation of land for waste recovery" after "recycling costs"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment, moved by Mr LEE Cheuk-yan to Ms Cyd HO'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)

15334 LEGISLATIVE COUNCIL ─ 11 July 2013

Mr IP Kwok-him rose to claim a division.

PRESIDENT (in Cantonese): Mr IP Kwok-him 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 Frederick FUNG, Dr Joseph LEE, Mr Dennis KWOK and Mr IP Kin-yuen voted for the amendment.

Mr Tommy CHEUNG, Mr Jeffrey LAM, Mr Andrew LEUNG, Mr WONG Ting-kwong, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr IP Kwok-him, Mr NG Leung-sing, Mr Steven HO, Mr Frankie YICK, Mr YIU Si-wing, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr Tony TSE voted against the amendment.

Dr LEUNG Ka-lau, Mr Charles Peter MOK, Miss CHAN Yuen-han, Mr Kenneth LEUNG, Mr KWOK Wai-keung and Mr POON Siu-ping abstained.

Geographical Constituencies:

Mr LEE Cheuk-yan, Ms Emily LAU, Ms Cyd HO, Mr Alan LEONG, Mr LEUNG Kwok-hung, Mr WONG Yuk-man, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Dr Kenneth CHAN, Dr KWOK Ka-ki, Dr Fernando CHEUNG and Dr Helena WONG voted for the amendment.

LEGISLATIVE COUNCIL ─ 11 July 2013 15335

Mr CHAN Kam-lam, Mr TAM Yiu-chung, Mr CHAN Hak-kan, Mr LEUNG Che-cheung, Dr CHIANG Lai-wan and Mr Christopher CHUNG voted against the amendment.

Mr WONG Kwok-hing, Mr WONG Kwok-kin, Mr Paul TSE and Miss Alice MAK abstained.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, four were in favour of the amendment, 15 against it and six abstained; while among the Members returned by geographical constituencies through direct elections, 24 were present, 13 were in favour of the amendment, six against it and four 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): I now put the question to you and that is: That Ms Cyd HO's amendment to Mr KWOK Wai-keung's motion, as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN be passed.

PRESIDENT (in Cantonese): 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 Tommy CHEUNG rose to claim a division.

PRESIDENT (in Cantonese): Mr Tommy CHEUNG has claimed a division. The division bell will ring for one minute.

15336 LEGISLATIVE COUNCIL ─ 11 July 2013

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 Frederick FUNG, Dr Joseph LEE, Dr LEUNG Ka-lau, Mr Charles Peter MOK, Miss CHAN Yuen-han, Mr Kenneth LEUNG, Mr KWOK Wai-keung, Mr Dennis KWOK, Mr IP Kin-yuen and Mr POON Siu-ping voted for the amendment.

Mr Tommy CHEUNG, Mr Jeffrey LAM, Mr Andrew LEUNG, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr NG Leung-sing, Mr Frankie YICK, Mr YIU Si-wing, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr Tony TSE voted against the amendment.

Mr WONG Ting-kwong, Mr IP Kwok-him and Mr Steven HO abstained.

Geographical Constituencies:

Mr LEE Cheuk-yan, Ms Emily LAU, Mr WONG Kwok-hing, Ms Cyd HO, Mr WONG Kwok-kin, Mr Alan LEONG, Mr LEUNG Kwok-hung, Mr WONG Yuk-man, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Dr Kenneth CHAN, Miss Alice MAK, Dr KWOK Ka-ki, Dr Fernando CHEUNG and Dr Helena WONG voted for the amendment.

Mr CHAN Kam-lam, Mr TAM Yiu-chung, Mr CHAN Hak-kan, Mr Paul TSE, Mr LEUNG Che-cheung, Dr CHIANG Lai-wan and Mr Christopher CHUNG abstained.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

LEGISLATIVE COUNCIL ─ 11 July 2013 15337

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 10 were in favour of the amendment, 12 against it and three abstained; while among the Members returned by geographical constituencies through direct elections, 24 were present, 16 were in favour of the amendment and seven 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 WU Chi-wai, as the amendments of Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN have been passed, you may now move your revised amendment.

MR WU CHI-WAI (in Cantonese): President, I move that Mr KWOK Wai-keung's motion, as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN be further amended by my revised amendment.

Mr WU Chi-wai moved the following further amendment to the motion as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN: (Translation)

"To add "; (17) to set up food waste recovery centres in the 18 districts of Hong Kong for handling food waste produced in the districts, so as to manifest the principle of all people bearing the responsibility for waste handling; (18) through establishing community canteens in the 18 districts of Hong Kong for receiving foods that are still eatable (including food materials), to provide needy people with inexpensive food, so as to reduce food waste and alleviate the pressure on landfills; (19) to establish a government-funded body corporate for operating the waste recycling industry on its own, so as to reduce the existing reliance on overseas markets for absorbing recovered waste, and ensure the long-term operation of the relevant business; and (20) by making reference to the practices under the New Producer Responsibility Scheme on Glass Beverage Bottles, to provide market values for recyclable waste with low market values (e.g. plastics), so as to promote source separation of waste and foster the development of the waste recycling industry" immediately before the full stop."

15338 LEGISLATIVE COUNCIL ─ 11 July 2013

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr WU Chi-wai's amendment to Mr KWOK Wai-keung's motion as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN and Mr Gary FAN, 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 Tommy CHEUNG rose to claim a division.

PRESIDENT (in Cantonese): Mr Tommy CHEUNG 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 Frederick FUNG, Dr Joseph LEE, Mr WONG Ting-kwong, Mr CHAN Kin-por, Dr LEUNG Ka-lau, Mr IP Kwok-him, Mr NG Leung-sing, Mr Steven HO, Mr YIU Si-wing, Mr Charles Peter MOK, Miss CHAN Yuen-han, Mr Kenneth LEUNG, Mr KWOK Wai-keung, Mr Dennis KWOK, Mr IP Kin-yuen and Mr POON Siu-ping voted for the amendment.

LEGISLATIVE COUNCIL ─ 11 July 2013 15339

Mr Tommy CHEUNG, Mr Frankie YICK and Mr CHUNG Kwok-pan voted against the amendment.

Mr Jeffrey LAM, Mr Andrew LEUNG, Dr LAM Tai-fai, Mr Christopher CHEUNG, Ir Dr LO Wai-kwok and Mr Tony TSE abstained.

Geographical Constituencies:

Mr LEE Cheuk-yan, Mr CHAN Kam-lam, Ms Emily LAU, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Ms Cyd HO, Mr CHAN Hak-kan, Mr WONG Kwok-kin, Mr Alan LEONG, Mr LEUNG Kwok-hung, Mr WONG Yuk-man, Ms Claudia MO, Mr WU Chi-wai, Mr Gary FAN, Dr Kenneth CHAN, Mr LEUNG Che-cheung, Miss Alice MAK, Dr KWOK Ka-ki, Dr Fernando CHEUNG, Dr Helena WONG, Dr CHIANG Lai-wan and Mr Christopher CHUNG voted for the amendment.

Mr Paul TSE abstained.

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 25 were present, 16 were in favour of the amendment, three against it and six abstained; while among the Members returned by geographical constituencies through direct elections, 24 were present, 22 were in favour of the amendment and one 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 KWOK Wai-keung, you still have two minutes and 43 seconds for your reply.

15340 LEGISLATIVE COUNCIL ─ 11 July 2013

MR KWOK WAI-KEUNG (in Cantonese): Me included, totally 36 Members have spoken on the motion, evidencing that the motion topic has aroused the concern of society at large. All Members who have spoken basically agree that the problem of waste cannot be solved through the free-market approach. Hence, the Government's conventional mindset of "big market, small government" is not suitable for the green industry. Members' concern about the topic stems in the main from the pressure on the landfills. But I believe Members all agree that if we are to ease the pressure on the landfills, all must begin with waste reduction at source. Of course, the revitalization of the green industry will reinforce the impetus for waste reduction at source. I believe that in respect of the green industry, Members generally support the request for the establishment of an industry fund by the Government to step up the assistance for the industry. Moreover, the Government should help provide additional posts for low-skill workers and increase the investment in scientific research, so as to develop the green industry into a high-value added industry with a clear advantage.

The responses of the Secretary and the Under Secretary tell me that they do realize that Hong Kong is now lagging behind others because it has done very little and the speed is rather slow. Some of the amendments moved by other Members have been passed. Although the motion does not carry any legislative effect, I hope the Government can still respond swiftly. I hope that as Ir Dr LO Wai-kwok said earlier, the authorities can strike while the iron is hot and work hard on waste reduction at source and reduce our waste volume, thus developing Hong Kong into a desirable green city.

Thank you, President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr KWOK Wai-keung, as amended by Ir Dr LO Wai-kwok, Dr Kenneth CHAN, Mr Gary FAN and Mr WU Chi-wai, be passed.

PRESIDENT (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

LEGISLATIVE COUNCIL ─ 11 July 2013 15341

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 as amended passed.

PRESIDENT (in Cantonese): Third Member's motion: Impact of the United States' ending the quantitative easing measures.

Members who wish to speak in the motion debate will please press the "Request to speak" button.

I now call upon Mr Andrew LEUNG to speak and move the motion.

IMPACT OF THE UNITED STATES' ENDING THE QUANTITATIVE EASING MEASURES

MR ANDREW LEUNG (in Cantonese): President, I move that the motion as printed on the Agenda be passed.

The quantitative easing measures of the United States have always set the nerve of the global economy on edge. The latest indication by Federal Reserve Chairman Ben BERNANKE is that the United States will still stick to its ultra-loose monetary policy in the foreseeable future. But as can be inferred from the press conference following last month's meeting on interest rates, the line of phasing out quantitative easing is increasingly evident, only that a concrete timetable has not been announced. We can actually see that the investment sectors all over the world have already started to re-assess the return risks of different investment products and markets. Markets across the world are seriously concerned about the return of American overseas investments to the United States, thus plunging stock markets in the Asia-Pacific Region into turbulence. These days, due to news about the phasing out of quantitative 15342 LEGISLATIVE COUNCIL ─ 11 July 2013 easing and the anticipation of an improving American economy, the US dollar has turned stronger and commodity prices have dropped, thus accelerating the return of American overseas investments to the United States. If the Federal Reserve Board tightens its monetary policy at this point, the impact will be even greater. In order to stabilize their exchange rates, the central banks of many countries have taken various actions, bringing heavier impacts and increasing risks to emerging economies.

The latest figures from EPFR Global, which tracks capital flows across the world, show that during the three weeks ending 12 June, as much as US$19 billion was withdrawn from emerging markets, a figure which is the third highest in the records of weekly capital withdrawal and close to the highest record in the wake of the Lehman Brothers minibond incident in 2008. In this age of economic globalization, Hong Kong as an Asian financial centre will inevitably be affected if the economies of emerging markets turn unstable. The Financial Secretary has warned that the end of quantitative easing in the United States may lead to a massive withdrawal of monies from Hong Kong, driving up local interest rates sooner than the United States. That is why our market is especially volatile.

In view of this, the Business and Professionals Alliance for Hong Kong suggests that the Government should learn the experience in 1997 and 2008 and make preparations well in advance. It should study in depth the possible fluctuations in the global market caused by the end of quantitative easing and the impact on Hong Kong. It should also devise measures to be adopted by Hong Kong when its trade, real estate and finance sectors come under any impact. In addition, as a responsible government, it should care more about the people at such times of difficulties and help them cope with the highly likely onset of inflation or deflation.

As a matter of fact, after the news of a possible end of quantitative easing has broken, the banks in Hong Kong have made adjustments to their medium- to long-term fixed interest products. A leading bank in Hong Kong has substantially increased the interest rates for its three-year and four-year fixed interest products respectively by 50 basis points and 85 basis points, from the original 2.3% and 2.4% to 2.8% and 3.25%. In the case of another bank, its promotion of fixed interest rate mortgage plans finished in late June, but no new plan has been launched. Market analysts think that the reaction of the local banks is related to the expected end of quantitative easing in the United States. LEGISLATIVE COUNCIL ─ 11 July 2013 15343

It is only natural for banks to adjust their credit strategies to cope with the risk brought about by the end of quantitative easing in the United States. But the rising costs of borrowing and the tightening of property mortgage loans and business financing resulting from the banks' change in credit policies will all impact the Hong Kong economy and people's livelihood. In addition, the 10-year yield rates for Treasury Note and Exchange Fund bonds in Hong Kong have risen by close to 100 basis points in a month. This reflects the medium- to long-term interest rate movement.

President, those who will be hardest-hit by the ending of quantitative easing in the United States are the business and industrial sector and people with a mortgage loan to repay. At present property prices are chiefly supported by the low interest rate and low mortgage repayment. If the serious funds shortage faced by the banks continues and interest rates thus climb to the threshold of a stress test, then property prices must slide by about 25% to 30% if the same affordability ratio is to be maintained. The "harsh measures" successively launched by the Government have led to a massive shrinkage of property transactions. Moreover, the tightening of mortgage loans by the Hong Kong Monetary Authority earlier has indirectly forced the banks to increase interest rates for mortgage loans. As a result of all this, market sentiments regarding the prospects of the property market have changed. Some experts even predict that by the end of this year, property prices will fall by 10%.

Decline in property prices will be good news to prospective homebuyers. But to those people making mortgage repayments, this is extremely bad news. In the first quarter of 2013, the mortgage/income ratio climbed to 56%, a ratio which not only surpasses the corresponding ratio during the property peak in 1997, but also exceeds the 20-year average of 48% for the period from 1993 to 2012 and the lofty 20-year average of 53% between 1989 and 2008. If the mortgage interest rate goes up from the present P - 2% to P + 2 % in the stress test, the increase in monthly repayment will be $4,000. To a family with a monthly income of $30,000, this will be a very heavy extra burden. In order to prevent homebuyers from being subjected simultaneously to the risks of falling property prices, interest rate rises, drastic increases in mortgage repayment and even negative equity assets, the Government must seek to reduce the burden of government fees and charges on the middle class, having regard to the end of quantitative easing in the United States.

Moreover, plummeting of property prices will trigger a domino effect and inflict harms on the local economy. Falling property prices will deal a blow to 15344 LEGISLATIVE COUNCIL ─ 11 July 2013 real estate-related trades and industries, such as banks, the construction industry and property agents. Small and medium enterprises (SMEs) will be victimized by property market adjustments, and the Government's property-related revenue will also shrink drastically as a result. Therefore, we must not underestimate the problems caused by any fall in property prices.

The Business and Professionals Alliance for Hong Kong has long urged the Government to learn a lesson from the previous financial tsunami and make early preparations. In times of economic slowdown, it should launch anti-cyclical measures to support SMEs and take the opportunity to launch infrastructure projects as long-term investment, so as to amass the "ammunitions" for the future development of enterprises.

Since the news of ending quantitative easing in the United States was first heard, local banks have hastened to increase their interest rates for long-term fixed interest products. Increases in interest rates will add to the borrowing costs incurred by SMEs. And, as the banks turn more cautious in approving loans, SMEs' liquidity will be affected. The stamp duty measures implemented by the Government earlier have come to impede SMEs' realization of properties in this environment of increasing interest rates, thus worsening their already tight cash flows. The authorities should formulate plans to extend the concessionary measures under the SME Financing Guarantee Scheme, and keep a close watch on the market situation, so that when SMEs face rising borrowing costs and financing difficulties due to the banks' tightened credit policies, immediate support can be offered to them to prevent them from closing down due to liquidity problems. Also, the authorities should examine the existing stamp duty measures and abolish the double stamp duty charged on properties owned by enterprises for self-use, so that enterprises can sell their properties to cope with liquidity problems and reduce the pressure on operating funds.

In the 21st century, the development of innovative and high technology is very important. For this reason, and also because of the further shrinkage of our export markets, the authorities should encourage enterprises to develop high value-added industries. We have stressed repeatedly in this Council that the Administration should provide a tax deduction triple the present amount to encourage enterprises to invest more resources in the research and development related to high value-added products, design and brand name building. In times of economic downturn, the Government can offer triple tax deduction to encourage enterprises to make good preparations in these respects, so that they can pick the fruit as soon as there is a new upswing in the regional economy.

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In recent years, the Korean pop culture has come to win worldwide appeal and popularity, and a number of K-pop stars have made inroads on the international stage. Such an achievement is not the result of any sheer luck but the outcome of the Korean Government's efforts after the financial turmoil in 1997 to invest heavily in creative and cultural industries and assume the most important role of a back-stage promoter. In Korea, they adopt a top-down approach, with the government serving as the leader to formulate policies on technological innovation, building the country's own brand name and designs. And, all this is coupled with system support. As for enterprises, they are the main forces engaged in technological innovation. Korean nationals, on their part, all pitch in by purchasing Korean products and supporting Korean enterprises.

With the policy and funding support of the government, Korea has succeeded in building up a unique technological innovation system over a very short span of time. The Korean Government has spared no effort to promote the cultural industry. In May 2009, the Korean Creative Content Agency (KOCCA) was set up with the responsibility of co-ordinating all matters related to creative and cultural activities, including policies, systems, research, planning, training of professional talents, providing support to start-up businesses and protecting the rights and interests of cultural product users. The Korean Government has also enacted laws on the creative industry, rolled out various forms of assistance such as tax concessions, and sought to encourage the active participation of enterprises.

In 2012, the Korean cultural and creative industries accounted for 31.2% of the GDP. The Korean Government said earlier that it planned to create an additional 2.4 million jobs related to the creative and cultural industries before 2017. We recall that there was a time when Hong Kong movies and television serials also blew up quite a craze in Southeast Asia. Hong Kong is quite a famous brand name in the region. This is precisely the advantage we have if we want to open up markets and build up our own brand name. The authorities should refer to the Korean example and set up a quasi-official agency to play the leadership role, and build up some dedicated platforms in emerging markets for enterprises for the purpose of making focused efforts to forge a brand name for Hong Kong manufacturers, and build up contacts and networks. All these will help SMEs to find business opportunities.

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President, enterprises in the Pearl River Delta have now entered the stage of rebuilding and consolidation. I therefore hope that the authorities can amend section 39E of the Inland Revenue Ordinance as early as possible to allow Hong Kong enterprises to enjoy depreciation tax allowance in respect of the machinery and industrial facilities used on the Mainland for processing imported raw materials.

In recent years, the economy has improved and the tourism industry has revived. The total number of visitors to Hong Kong showed a year-on-year increase of 16% in 2012. Totally 48 million visitors came to Hong Kong. The Kai Tak Cruise Terminal was commissioned in June, and Hong Kong hopes to develop itself into a cruise centre in Asia. But our support facilities are still insufficient. I hope that the authorities can build more hotels and shopping malls, and adopt the mode of "one location, two shows" to increase the venues for exhibitions. In addition, on-shore power supply facilities should be built to reduce air pollution. And, they should give a clear assurance that there will be sufficient support facilities in Hong Kong to accommodate visitors.

With the gloomy prospects of the end of quantitative easing measures in the United States, inflation in Hong Kong may stay high and the life of the grassroots will be harder than ever. Although the handing out of sweeteners may ease the inflation problem for a while, this can only treat the symptom but cannot cure the disease in the long run. So I would suggest to the authorities that apart from opening up new economic areas and sustaining economic growth, short-term preferential measures and long-term policies should be launched to help people fight against inflation and promote upward social mobility.

In order to facilitate young people's upward social mobility, the authorities should provide them with chances to move up the social ladder. The young people in Hong Kong have bright ideas, only that they lack the experience and funds to start up a business. But if we can merge things like angel funds and young entrepreneur parks, we will be able to provide young people with advice on doing business, share experience with them and help them build up their business networks, thereby enhancing their ability to secure employment and start up a business. This move can help reduce the unemployment rate in times of economic downturn and bring forth benefits to Hong Kong as a whole.

The end of quantitative easing in the United States will entail many uncertainties and risks, the process of ending quantitative easing may not be LEGISLATIVE COUNCIL ─ 11 July 2013 15347 smooth. In case the economy declines, Hong Kong will be plunged into great turbulence and foreign capitals will move out of Hong Kong. The authorities should therefore plan well ahead, increase the assistance given to the people and SMEs, with a view to helping them turn the crisis into an opportunity.

President, I so submit.

Mr Andrew LEUNG moved the following motion: (Translation)

"That, as the Federal Reserve Board of the United States will gradually end the quantitative easing measures, this Council urges the HKSAR Government to closely keep in view the impacts of the incident on the global economic and financial environment, ensure the stability and robustness of Hong Kong's financial system, maintain sustainable economic growth, and when necessary, introduce appropriate measures to assist members of the public and small and medium enterprises in facing a new market order."

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

PRESIDENT (in Cantonese): Three Members will move their amendments respectively to this motion. We will hold a joint debate on the motion and the three amendments.

I will first call upon Mr Christopher CHEUNG to speak, to be followed by Mr NG Leung-sing and Ir Dr LO Wai-kwok. But they may not move their respective amendments at this stage.

MR CHRISTOPHER CHEUNG (in Cantonese): President, after a meeting of the Federal Reserve Board late last month, Federal Reserve Chairman Ben BERNANKE disclosed for the first time a time frame for ending the quantitative easing policy. He said that depending on economic conditions, the Federal Reserve Board might slow down its bond purchase later next year, and bond purchase would come to an end in the middle of next year at the soonest. Huge market fluctuations immediately ensued. This, coupled with the possible 15348 LEGISLATIVE COUNCIL ─ 11 July 2013 slowing down of the Mainland economy, has added to the turbulence of the local capitals market. In a way, the motion moved by Mr Andrew LEUNG today has come just at the right time, serving to remind us that we must take precautionary actions.

Since Hong Kong is an externally-oriented economy, it is susceptible to outside impacts. The Asian financial turmoil in 1997 was one example. The financial tsunami in 2008 was equally fierce in its impact. Countries in Europe, the United States, Japan and so on have launched various quantitative easing programmes to rescue their markets, thus boosting asset values and leading to inflation in Hong Kong. Suppose the United States begins to end its quantitative easing programme at a later time, the Hong Kong economy will sustain heavy impact. This point must not be overlooked.

The University of Hong Kong has earlier released a report on Hong Kong's economic outlook. In this report, the projected economic growth for Hong Kong this year is adjusted downwards from the original range between 3.5% and 4.3% to somewhere between 3.3% and 4.1%. Also, the projected growth in the second quarter this year is revised downwards to 4.7%. It is estimated that the growth in the third quarter will go further down to 3.6%. In other words, given the present trend of slowing down economic growth, coupled with the rising storm blown up by the termination of quantitative easing by the United States, we are now facing the onslaught of a super financial turmoil. If we do not take any precautionary actions right now, we may suffer very heavy casualties when the storm does hit. I therefore agree very much to the wording of the original motion that we must ensure the stability and robustness of Hong Kong's financial system.

President, as the saying goes, "Past experience, if not forgotten, is a guide for the future." Since the reunification, we have experienced two financial tempests which caused great devastation to our property and stock markets. So, the amendment I propose today is made in the hope of enabling our stock and property markets tide over a possibly imminent financial turmoil.

Before touching upon my amendment, I wish to discuss the stability of the financial market. Although the United States has not formally ended its quantitative easing policy, BERNANKE's advance notice on ending quantitative easing has already triggered off an exodus of capital from emerging markets, leading to waves of turbulence in financial markets, the repercussion of which is also felt even in Hong Kong. No one can predict at this moment the seriousness LEGISLATIVE COUNCIL ─ 11 July 2013 15349 of the storm to be blown up by the formal ending of quantitative easing in the United States.

I must say that Hong Kong's present situation is different from the circumstances surrounding the attacks by "predators" during the Asian financial turmoil in 1997. The reason is that there are now many derivative products in the market, all with huge issuance and trading volumes. In some cases, the volume is even greater than those of the Government. In the past, it was like our front door and back door being blown open. But now, not just the front door and the back door are blown open, but all the windows and the side door are likewise blown away. There are no shields and barricades left. If ever we must fight any "predators" again, I am afraid victory for us in this war of defence may not come as easily as it did in 1997. We therefore hope that the authorities can step up the risk management for derivative products lest any problems with them may fan the flame and add to the market turbulence.

Let me now return to the property market. Members are probably aware that this Sunday, many real estate agents and victims of the "harsh measures" came out to ask the Government to adjust these measures. One particular reason for their protest is that the rounds of measures implemented by the Government have led to a drastic shrinkage of property transactions and impacted real estate agents and other related trades such as internal decoration and renovation. Thousands of people now face a "rice bowl" problem, and the situation merits our concern. Let me point out that my amendment does not aim to fight for any particular trade. Rather, it aims to further the common good of Hong Kong, because due to the two "harsh measures" rolled out last October, that is, the Buyer's Stamp Duty and the enhanced version of the Special Stamp Duty, and also the 200% stamp duty implemented prior to the announcement of this year's Budget, the entire property market has been seriously distorted and investors have basically all disappeared.

We naturally do not want to see the soaring of property prices. But I am afraid that in case the property market reverses, the presence of the "harsh measures" with the aim of curbing property price rises will only intensify the adjustments of the property market. I am sure that Members will not want to see the re-emergence of any negative equity assets like those which appeared as a result of the housing production target of 85 000 units many years ago. Therefore, the Government should gauge the needs of the times and revoke or adjust the "harsh measures" on the property market at the right time.

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The Chief Executive said this morning in the Chief Executive's Question and Answer Session that he would not consider abolishing the "harsh measures" until the problem of land supply had been properly tackled. I do not know when the Government can succeed in properly tackling the land supply problem. But I must remind the Chief Executive that if he does not respond to the needs of the times, and instead sticks rigidly to his principle without taking any precautionary actions, then in case the property market really reverses, all will be useless even if he has already properly tackled the land supply problem.

I hope Members can support my amendment. I so submit. Thank you, President.

MR NG LEUNG-SING (in Cantonese): President, the motion proposed by Mr LEUNG has come just at the right time. Since the subprime mortgage crisis first broke out in the United States in early 2007, it has hitherto remained unresolved. It is now really necessary for us to recap our experience and look into the future, so as to meet the challenges at the different stages in the time to come.

We recall that on 12 March 2007, the second-largest subprime mortgage provider in the United States, the New Century Financial Corporation, announced that it would stop issuing any new loans due to tight liquidity. Its share prices plummeted immediately, thus setting the stage for a global financial crisis. On 15 September 2008, the bankruptcy of the investment bank Lehman Brothers triggered another climax. Financial systems worldwide came under attack and stock markets vaporized. On 10 October that year, the Dow Jones Industrial Index dropped to 7 774 points, or just about half of the index a year ago. Many large banks and insurance companies in the United States and Europe managed to survive only with the help of nationalization efforts and the massive pumping of funds by their governments.

The central banks and governments across the world provided cash in thousands of billion US dollars both directly and indirectly to the wholesale financing market in order to maintain the normal operation of the financial system. The Federal Reserve Board revised the interest rate for federal funds down by 425 basis points in 2008 to just 0% to 0.25%.

(Mr Jeffrey LAM pointed out that a quorum was not present)

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PRESIDENT (in Cantonese): Mr NG, please stop for a while. Will the Clerk please ring the bell to summon Members back to the Chamber.

(After the summoning bell had been rung, a number of Members returned to the Chamber)

PRESIDENT (in Cantonese): Mr NG Leung-sing, please go on.

MR NG LEUNG-SING (in Cantonese): This super low interest rate level has remained ever since. At the time, former Federal Reserve Chairman GREENSPAN once described the gravity of the financial crisis as once-in-a-century.

In order to boost the sagging economy, the Federal Reserve began the massive purchase of bonds in 2008. It "prints banknotes" by means of account crediting, and thus pumps cash into the financial system. This is quantitative easing. As at March this year, the Federal Reserve has injected a total of US$2,300 billion. The main purpose of this capital injection is to pull the unemployment rate down to less than 6.5%. In June this year, the jobless rate in the United States dropped to 7.6% from 10% in late 2009.

This financial crisis, which has spanned six years, can be traced back to the 1980s. At that time, both the United Kingdom and the United States were under the influence of New Liberalism, and they thus relaxed their regulation of the financial market. In 1997, the Secretary of the Treasury of the CLINTON administration, Robert RUBIN, who was formerly in the top management of Goldman Sachs, and the Federal Reserve Chairman GREENSPAN joined hands to oppose the regulation of over-the-counter credit derivatives. They also worked together to bring forth the combination of commercial banking business and investment banking business.

Financial innovation and lax regulation eventually resulted in those "toxic products" associated with the abovementioned financial crisis. Through the process of securitization, the two mortgage agencies of the United States Government managed to remove mortgage loans from the balance sheets of banks, thus making it possible to transform them into special investment tools which were not subject to any regulation, and which could be transacted 15352 LEGISLATIVE COUNCIL ─ 11 July 2013 worldwide. At the same time, the CLINTON administration encouraged people to buy their homes. The "zero down payment" policy at that time enabled people without the means to also buy their homes. As property prices kept rising, these people refinanced their homes to get more money for spending, thus creating an economic bubble in the end, and their assets became bad debts.

President, the financial crisis has very little effect on the financial system of Hong Kong. First, mortgage loans in Hong Kong are always kept at 70% of the property price or even below. There is a very low default rate for mortgage loans. At the end of March 2013, the default rate was only 0.23%. Second, Hong Kong has adhered strictly to the currency board system, meaning that the banknotes issued must be backed up by equivalent amounts of foreign exchange in US dollars. The monetary base cannot be enlarged at anyone's will. Third, the banks in Hong Kong have sufficient financial strength. Their liquidity ratios and capital adequacy ratios are always above the requirements of law. Fourth, the public finances of Hong Kong are sound. The Government issues bonds only for the purpose of adjusting liquidity in the market, and the scale of bond issuance is small. There is no quantitative easing as such in Hong Kong and there is no need for the Government to stop pumping cash. However, since Hong Kong is a free economy open to the world, money can enter and leave Hong Kong freely. And, the interest rates in Hong Kong are affected by the interest rates in the United States due to the linked exchange rate system. Therefore, when the United States puts an end to its quantitative easing programme, Hong Kong is bound to be impacted to a certain extent.

On 21 June, the Financial Secretary made some comments on the possible end of quantitative easing in the United States. He called upon market players to be cautious and put in place proper risk management. I would think that we can add some appropriate suggestions to the Financial Secretary's comments from the perspectives of macro-economic regulation and financial system management, including the three areas mentioned in my amendment: first, closely monitoring capital flows; second, ensuring the normal operation of the financial system; and third, giving appropriate assistance to enterprises.

I wish to talk about capital flows first. As at 7 August, the Aggregate Balance of the banking system in Hong Kong was $163.9 billion, accounting for 13.3% of the monetary base. Most of the money is hot money from overseas. If we check the records of the Hong Kong Monetary Authority, we can find that the Aggregate Balance in August 2008 was only $4.7 billion. Then, in October LEGISLATIVE COUNCIL ─ 11 July 2013 15353

2008, the amount surged to $158 billion and has remained high ever since. But in 2006 before the outbreak of the subprime mortgage crisis, the average Aggregate Balance of the banking system for the entire year was only about $1.3 billion. If the Aggregate Balance of the banking system returns to the level in 2006, the interest rate in Hong Kong will go up markedly. I therefore suggest that the authorities responsible for financial affairs should now begin to gradually regulate the Aggregate Balance of the banking system lest the financial market may come under the impacts of short-term fluctuations.

Moreover, the financial infrastructure in Hong Kong is becoming increasingly comprehensive and satisfactory, and regulatory bodies also require financial institutions to undergo regular stress tests, so as to ascertain the maximum degree of risks they can bear. The authorities should follow the same direction, and require the financial system of Hong Kong to undergo stress tests of varying intensity at different stages in response to the possible end of the quantitative easing programme in the United States. The Government should appropriately carry out such tests on the basis of the territory-wide data it has obtained.

Lastly, since the interest rate in the United States was revised downwards to almost zero in late 2008, Hong Kong's interest rate has followed suit and remained at the same low level for five years. If we look back, we will see that this is the longest period of super low interest in the last 30 years. As a result, the three-month inter-bank rate is now as low as 0.4%, and mortgage loan interests have persistently remained at low levels. We can say objectively that there is room for the interest rate in Hong Kong to go up. Once the interest rate in Hong Kong goes up, the financing costs for enterprises, especially SMEs, will be greatly affected. The repayment ability of enterprises will certainly decline. Financial institutions will inevitably tighten their credit policies, thus resulting in spates of business closures and unemployment. Therefore, besides giving the community prior reminders, the Government should study and devise suitable measures to cope with the impact caused by the next wave of financial instability, so as to maintain the prosperity and stability of Hong Kong.

President, I so submit.

IR DR LO WAI-KWOK (in Cantonese): President, I strongly support the original motion of Mr Andrew LEUNG. Actually, since the Federal Reserve 15354 LEGISLATIVE COUNCIL ─ 11 July 2013

Chairman Ben BERNANKE announced in June this year that the quantitative easing programme will be phased out, financial markets all over the world have undergone a series of turbulence. This Council really needs to urge the SAR Government to think about the perils ahead, closely monitor the impact of the move on the global economic and financial environment, and devise suitable strategies accordingly. The SAR Government must make preparations, and formulate timely policies and measures to sustain the momentum of the local economy and the industries, so as to assist the public and SMEs in coping with the new market order.

I also support the respective amendments proposed by Mr Christopher CHEUNG and Mr NG Leung-sing, which request the SAR Government to ensure the stability and robustness of Hong Kong's financial system, maintain economic growth and when necessary, introduce appropriate measures, including a timely review or even abolition of the two "harsh measures" targeting on the property market, that is, the Buyer's Stamp Duty and the Special Stamp Duty, so as to prevent the re-emergence of the negative equity assets.

The end of quantitative easing in the United States will clearly produce vastly different economic impacts on Hong Kong and the United States. The Federal Reserve Board says that the pace of ending quantitative easing depends on the economic statistics of the United States, and it puts forward two quantifiable indicators. First, the dropping of the unemployment rate to 6.5% or below. Second, the rise of the inflation rate to 2.5% or above. Therefore, in the United States, the end of quantitative easing will be based on the resumption of real economic growth, so the market will actually look upon it as a good sign. However, Hong Kong as an open and externally-oriented economy is easily affected by external economic conditions. The ending of quantitative easing by the United States may lead to a series of chain effects in Hong Kong, including the quick retreat of hot money, a credit crunch, the re-emergence of rising interest rates and marked adjustments of property prices. One more factor is that the Mainland has likewise started to adjust its economy in the direction of gradually slowing down economic growth lest prolonged periods of growth may cause the over-heating and over-expansion of the economy. Consequently, Hong Kong may come under attack on both fronts. Some in the market describe this as "attacks by two ghosts". Enterprises, especially small and medium enterprises (SMEs), may thus face a deteriorating business environment. If the situation really turns very serious, people may become jobless, and some may even be plunged into helplessness due to their ownership of negative equity assets.

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Besides the suggestions of the three Members mentioned above, are there any other measures which the SAR Government can adopt to assist the general public and enterprises in coping with the new market order? My amendment today aims to urge the Government to take precautions by fully evaluating the impacts of a market reversal as a result of the end of quantitative easing in the United States, once occurred, on Hong Kong's overall economy and labour market, push forward infrastructure projects in a timely manner to minimize the adverse impact so caused and to maintain sustainable economic growth and momentum in the labour market.

President, why do I have to stress the importance of pushing forward infrastructure projects in a timely manner? As its name suggests, "infrastructure" refers to the basic constructions or facilities required for social and economic operation, and it will bring forth benefits to different trades and industries. Infrastructure investment may take the forms of hardware and software constructions. They can spur economic growth. In the course of its implementation, an infrastructure project can bring forth additional employment opportunities, and after its completion, it can promote the development of various trades and industries and hence improve people's livelihood.

According to basic economic theory, monetary policies and fiscal policies are basically the two means used by a government to regulate the economy. Since the currency of Hong Kong is pegged with the US dollar, what we can do with monetary policies is very limited. This explains the special significance of fiscal policies to Hong Kong. The economic benefits generated by government investment are of immense significance to Hong Kong society. Each dollar spent by the Government on infrastructure construction can bring forth economic benefits on a multiplier basis. Infrastructure construction can also help upgrade the development and integrated competitiveness of a city and promote sustainable social progress. This is much better than taking any stopgap measures to boost the economy or handing out any one-off "sweeteners". Governments all over the world therefore regard infrastructure investments an important means of boosting economic growth.

The latest example is the £100-billion infrastructure project announced by the Chancellor of the Exchequer of the United Kingdom in late June. This infrastructure project covers transport systems, housing and flood control. In Hong Kong, there was also one such example in the past. I think Members can still recall that in 1989, the British Hong Kong administration announced a whole 15356 LEGISLATIVE COUNCIL ─ 11 July 2013 series of major infrastructure works mainly involving the building of a new airport and the required ancillary facilities: the Hong Kong International Airport at Chek Lap Kok, the Airport Express, the Lantau Link, the North Lantau Highway, the West Kowloon Reclamation, the Western Harbour Crossing, Route 3, the West Kowloon Highway, the Central Reclamation Phase I and the North Lantau New Town Phase I. For reasons of the rosy prospects depicted, all such works came to be known collectively as the "Rose Garden Project". To be fair, the implementation of the project has really brought forth benefits to Hong Kong's society and economy.

Another example was in 2007. The then Chief Executive announced in his policy address the launching of 10 major infrastructure projects, including transport infrastructure projects like the South Island Line, the Shatin to Central Link, the Tuen Mun Western Bypass and the Tuen Mun to Chek Lap Kok Link; cross-boundary infrastructure projects like the Guangzhou-Shenzhen-Hong Kong Express Rail Link, the Hong Kong-Zhuhai-Macao Bridge, Hong Kong-Shenzhen Airports Co-operation, and Hong Kong-Shenzhen Joint Development of the Lok Ma Chau Loop. In addition, there are also new urban development projects like the West Kowloon Cultural District, the Kai Tak Development Plan and the North East New Territories New Development Areas. Some of these 10 major infrastructure projects are already near completion, while others are still in the planning stage. One such example is the development of North East New Territories, which is still under dispute.

President, by urging the authorities to push forward infrastructure projects in a timely manner, I do not mean to encourage the Government's quest for grandiose achievements and ask it take forward other major infrastructure projects in great haste. Quite the contrary, I only hope that the Government can plan ahead and draw up proper planning. For example, at this very time when the construction of five major railway projects is in full swing, it is necessary to decide on which railway projects should follow. This is because in the case of major railway projects, the whole process covering the formation of an initial idea, design, construction and eventual commissioning will invariably take more than 10 years. I suggest that while formulating long-term infrastructure planning, the authorities should also expeditiously review and consolidate the existing list of major, medium and small infrastructure projects and determine the priority of implementation on the basis of importance and urgency.

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In the case of those projects that are already on the agenda, or those with riper conditions for implementation, the authorities should conduct studies on how preparations can be made, so that once required by market demands, they can be implemented in good time. Before deciding to roll out these projects, the authorities should also fully consider the shop tenant arrangements under existing infrastructure projects, so as to ensure that there are sufficient resources and manpower as full support. Also, active consideration should be given to appropriately splitting up certain major infrastructure projects which have already been finalized. This can speed up the implementation of projects, and at the same time give a fairer chance of participation to all enterprises, large, medium and small alike.

I consider that the SAR Government must plan well ahead, draw up proper planning and react to changes in a timely manner before the launching of infrastructure projects can produce positive effects, boost the economy, create employment, better people's livelihood, and promote the prosperity and stability of society.

With these remarks, President, I call upon Members to support my amendment.

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, Hong Kong is an open and externally-oriented economy. It is susceptible to the effects of external economic conditions and the impact of the monetary and fiscal policies adopted by major economies in the world.

The quantitative easing measures of various overseas central banks all aim to boost the growth of their real economies, and the economic recovery of developed countries should logically benefit other economies. But the point is that quantitative easing measures have boosted asset prices but may not necessarily increase the confidence of enterprises in economic prospects. The persistently low levels of interest are not congruent with the economic cycles of many Asian economies, including Hong Kong. This has brought instability to the financial markets in the region and Hong Kong.

In recent months, the market has shown increasing concern about when and how the highly accommodative monetary policies adopted across the world are to return to relative normalcy. On 19 June, after a meeting of the Open Market Committee, the Federal Reserve Chairman Ben BERNANKE disclosed the 15358 LEGISLATIVE COUNCIL ─ 11 July 2013

Federal Reserve Board's plan for ending the third round of quantitative easing which began in September 2012. BERNANKE said that if the economic and employment figures of the United States continued to show improvements in the next few months, the Federal Reserve Board might begin to gradually reduce its bond purchase later this year and eventually stop any such purchase in the middle of next year. He also said that the implementation or otherwise of the abovementioned plan of reducing bond purchase must depend on the economic figures to be released in the future. So, the Federal Reserve Board's plan to slow down bond purchase is still surrounded by many uncertainties. Even if the slowing down of bond purchase really begins, the total liabilities in the balance sheet of the Federal Reserve Board will still increase, only that the speed of growth is slower. In spite of this, the Federal Reserve Board's stoppage of bond purchase and the prospects of interest rate increases have still caused market anxieties. Actually, since early May this year, the interest rate for Treasury Note with 10-year tenure has started to rise, and by now, it has risen by about 1%, showing that for some investors has long since expected the end of quantitative easing measures in the United States.

The remarks of BERNANKE that day caused huge fluctuations in financial markets all over the world. In Asia and other emerging markets, the exchange rates of local currencies against the US dollar saw marked drops. In the meantime, bond interest rates all went up, and stock markets softened. In the United States, Europe and Japan, the stock markets all showed a downturn in June after reaching new highs in history or record-highs in years in May. As for the stock market in Hong Kong, the Hang Seng Index dropped by 5.6% within the three days after the Federal Reserve Board had announced its plan to end the quantitative easing measures. In the first half of this year, the Hang Seng Index registered a drop of 8.2% in general. And, the local stock market has since fluctuated. And today, we are able to see the other side of market fluctuations: BERNANKE made some remarks last night, and since these remarks are interpreted as positive by the market, the stock market sees a rise of 533 points today. I believe such fluctuations will continue.

Despite fluctuations in the stock market, the Exchange Rate and the interest rate of the Hong Kong dollar have remained stable. There is no sign of any exodus capitals from Hong Kong. But even so, given the uncertain prospects of the global economy at present, market sentiments and expectations may change very quickly, and the risks associated with capital flows, interest rates, and a cyclical reversal of the property market may increase greatly in the short run.

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Although the employment and retail figures of the United States have shown signs of its economic recovery, whether the American economy can continue to grow at a fast pace in the next few quarters is still an uncertainty. The European economy is weak, with many Euro zone countries in a state of recession. Market anxieties about the European debt crisis have not abated. The unemployment rate in the Euro zone climbed to 12.2% in May. Despite its continued adoption of quantitative easing measures, the European Central Bank has still failed to achieve any substantial improvement to the economic performance of Europe. Regarding Japan, the market adopts a wait-and-see attitude towards the new government's "third arrow" (economic restructuring and reform) for boosting the economy. It may not be possible to maintain investors' confidence in Japan.

As the demand of advanced economies remains weak, it is expected that Hong Kong's export performance will continue to be rather unstable over the short run. Since early this year, the Government has anticipated that the external environment would remain complicated. Therefore, the Budget has proposed to launch some regular and one-off measures. It is expected that this package of measures will have a stimulus effect of 1.3 percentage points on the economy.

The motion of Mr Andrew LEUNG proposes that the Government should keep closely in view the impact of the Federal Reserve Board's impending move to end quantitative easing measures on the global financial and economic environment, and when necessary, introduce appropriate measures. We agree to these suggestions.

To assist SMEs in coping with short-term challenges, raising funds and opening up new markets, the Budget this year proposes many measures, including: a one-year waiver of business registration fee, profits tax remission, application period extension for the special concessionary measures under the SME Financing Guarantee Scheme, and a small business policy scheme run by the Hong Kong Export Credit Insurance Corporation to provide premium concessions to small exporters.

Mr Christopher CHEUNG's amendment talks about preventing the recurrence of negative equity assets. Some in the market think that property prices may face the risk of downward adjustment because the ending of quantitative easing measures by the United States may give rise to a macro environment of capital flow reversal. They therefore request us to abolish the stamp duty measures targeting on the property market. I must point out that the 15360 LEGISLATIVE COUNCIL ─ 11 July 2013 quantitative easing measures adopted by the United States and Hong Kong's demand management measures for the property market are based on different policy objectives and factors of consideration. Our demand management measures aim to stop the overheating of the property market and cater for the home acquisition needs of Hong Kong permanent residents. Besides, these measures can maintain the stability of the macro economy and financial systems of Hong Kong. They are therefore conducive to our long-term economic development. The circumstances in the United States and Hong Kong are different, and we will make timely adjustments to these demand management measures in the light of the actual situation in Hong Kong. Members must note that when the overall economic climate changes, asset prices will automatically re-adjust themselves, and the existence or otherwise of any individual measures is simply not an important issue at all.

I agree with Mr NG Leung-sing who mentions in his amendment that it is important to maintain the normal operation of the financial market. Even though the international financial market is stormy and highly volatile, the operation of the local financial market is still normal. Financial institutions are sound and robust as usual. The capital adequacy ratios of the banks are still far higher than international requirements, and their liquidity ratios are kept at high levels. The Government and the various financial regulatory bodies are on the alert, and we have put in place different measures to enhance risk management and keep the systemic market risks under control.

Ir Dr LO Wai-kwok's amendment points out that pushing forward infrastructure projects can maintain economic growth and the momentum of the labour market. We have all along been striving to make investments in infrastructure construction. In the year 2013-2014, the expenditure on capital works projects is as high as $70.1 billion. This represents an increase of about 13% when compared with the revised estimates of $62.3 billion for the year 2012-2013. As many major works projects enter the construction stage, we estimate that in the next few years, the expenditure on capital works projects would remain at over $70 billion every year. Investing in the infrastructure will not only create employment but will also enhance the long-term competitiveness of Hong Kong. This is beneficial to both the overall economy and the labour market.

We will remain heedful of all the uncertainties in the external environment and make good preparations to cope with the challenges brought about by changes in the global economy.

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I will stop here, and I will give a comprehensive response after listening to Members' views.

MR TOMMY CHEUNG (in Cantonese): President, I think Members still have a vivid memory of the financial tsunami in 2008. In order to save the dying American economy, the Federal Reserve Board introduced various quantitative easing measures with the aim of "printing banknotes" for injection into the banking system to increase currency circulation and boost bank lending.

Since 2008, the Federal Reserve Board has rolled out three rounds of quantitative easing measures. But according to certain analyses, these measures will bring more harm than good to Hong Kong. The reason is that the Federal Reserve Board's massive printing of banknotes has led to the depreciation of the US dollar and in turn the depreciation of the Hong Kong dollar. As a result, inflation in Hong Kong has worsened in recent years, thus adding to the already heavy expenditure of the common masses on food, clothing, housing and transport. Moreover, the huge influx of hot money has added fuel to the already overheated property market, thus denying many people of any chances to buy a home. Those doing business are not having a good time either. The catering industry, for example, is facing a very difficult situation, because rents and prices of food materials have all been soaring, and the implementation of the minimum wage has led to very great difficulties in hiring workers.

But the Federal Reserve Board is bound to end its quantitative easing measures one day. It is just a question of precisely when. Former Chief Executive of the Hong Kong Monetary Authority, Joseph YAM, has already reminded everybody that quantitative easing measures will not last forever and are bound to come to an end one day. His remarks imply that the Federal Reserve Board's market exit is already a foregone conclusion.

The American economy and employment market have improved recently. President, I realized this especially strongly when I was recently caught in great difficulties trying to rent a shop and hire some workers in San Francisco. I also think that the economy of California has really recovered a great deal. The unemployment rate there has dropped from 8.1% to 7.6%. Therefore, the chairman of the Federal Reserve Board Ben BERNANKE indicated earlier his intention of phasing out the various quantitative easing measures which have been in force for nearly five years.

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Ever since the news first broke, the Hang Seng Index has been plummeting almost non-stop. There are signs that capitals are being pulled out of Hong Kong. The statistics of EPFR, which tracks movements of capitals all over the world, show that during the period from April to May this year, totally US$3.43 billion was withdrawn from the stock markets in China and Hong Kong. It can thus be seen that we must not under-estimate the impact of the Federal Reserve Board's market exit on the local financial market.

Stock market fluctuations are nothing unusual, but many retail investors with little investment experience who have not realized the risks posed by America's market exit may still enter the market blindly without doing any basic analyses. In that case, they may easily become the "snacks" of all the predators in the stock market. The authorities should therefore enhance publicity and education to remind investors that they must be mindful of their own capability, and take note of any related risks lest they may suffer losses due to stock market turbulence.

In addition, the authorities should also closely monitor the movements of capitals and implement contingency measures when necessary, so as to prevent any drastic fluctuations in the local financial market and maintain the stability of the local banking system.

President, as we talk about the effects of quantitative easing in the United States, we must also mention property prices in Hong Kong. Housing supply in Hong Kong is basically a bit insufficient, and hot money has served to "turn an ailment into a serious disease", in the sense that it has kept heating up our property prices. But the Government has simply aimed at the wrong target; in order to suppress the rises of property prices, it has introduced the three "harsh measures", including the Buyer's Stamp Duty, an increase in the Special Stamp Duty and the imposition of a double Stamp Duty.

There is basically nothing wrong with the Government's adoption of extreme measures to combat speculators. But then again, the measures have similarly affected those people who want to acquire their own homes or make some long-term investment. This is unreasonable, and I am afraid the measures have already victimized the innocent.

In addition, as this very time when the Federal Reserve Board plans to exit from the market, when the banks may increase their interest rates, we are LEGISLATIVE COUNCIL ─ 11 July 2013 15363 especially worried that the property market may simply reverse its direction of development, thus causing a nose-dive of property prices and turning those people who have purchased properties into owners of negative equity assets. Therefore, the Government should abolish these "harsh measures" as soon as possible as a response to the impending market exit of the United States.

As a highly open city, Hong Kong is vulnerable to economic influences from the outside. The Government must therefore pay extra attention to the effects of the market exit on local small and medium enterprises (SMEs). According to figures of the Standard Chartered Hong Kong SME Leading Business Index for the third quarter released by the Hong Kong Productivity Council earlier, the manufacturing sector and the import and export sector both record a drop. The indices for these two sectors are 43.6 and 49.5 respectively, both below the 50.0 no-change mark. Some economic analysts have pointed out that in the next few months, the manufacturing sector will perform worse than other trades and sectors. All this, together with the signs of economic slowdown in the Mainland, will expose SMEs to attacks from two sides. The situation is worrisome. Incidentally, the turnover volumes of most catering businesses in the first six months of this year showed a single-digit or even double-digit decline against their respective turnovers in the first six months of last year.

Therefore, the authorities should examine its SME support measures to see if they are sufficient. The issue of SME financing should also be studied. This is because we are worried that the market exit of the United States may lead to higher loan interests, thus exerting heavier repayment pressure on SMEs. The SME Financing Guarantee Scheme should be made a regular measure, or the relevant improvement measures should at least be extended for no less than one year. Consideration should even be given to re-launching the Special Loan Guarantee Scheme to help SMEs solve their cash flow problem, which may become more serious.

President, the original motion and the three amendments all urge the Government to watch out for the effects of the market exit of the United States on the financial and property markets. Many suggestions are made. For example, Mr Christopher CHEUNG demands the abolition of the "two harsh measures" in a timely manner. These suggestions are in line with the ideas held by the Liberal Party, so we will support all of them.

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Ir Dr LO Wai-kwok's amendment proposes to push forward infrastructure projects in a timely manner. I think that the Government should squarely address the manpower shortage faced by the construction industry lest the progress of projects may be delayed.

President, I so submit.

MR WONG TING-KWONG (in Cantonese): At the rate-setting meeting yesterday, BERNANKE, Chairman of the Federal Reserve Board of the United States, once again spoke on the issue of market exit, and what he said seems to show an adjustment of his earlier remarks on the issue. When the United States announced its plan of market exit in late June, the stock markets in both the Mainland and Hong Kong immediately suffered great turbulence. Added to this was all the news about a capital shortage faced by Chinese banks and their tightening of lending. The financial market thus came under heavy impact. The market has since been speculating whether a new round of global financial turbulence will be triggered. As the Hong Kong market is closely related to the markets of the United States and the Mainland, the market exit of the United States coupled with any drastic fluctuations in the Mainland market will put Hong Kong to the severest test ever.

It is expected that the People's Bank of China will not inject any huge capitals into the Mainland market, and the market will continue to see some fluctuations in the short run. This is probably because the Mainland may want to try out its risk control as a means of transforming its economic model. The market exit of the United States, on the other hand, is probably based on the observation that the American economy has shown signs of recovery. But ever since the implementation of quantitative easing measures, hot money has already found its way to the markets of different countries and various commodity markets. The market expects that once American hot money retreats to its home market after the ending of quantitative easing measures, prices in the markets of various countries will plunge, and the United States may raise interest rates in a bid to attract capitals.

When hot money flows out of these markets, the currencies of some emerging markets with unstable revenue and spending will be greatly impacted, some examples being the currencies of certain Southeast Asian countries. But China will be less affected due to its foreign exchange control. But we must LEGISLATIVE COUNCIL ─ 11 July 2013 15365 note that many capitals have been entering and leaving China through the black market. So, the Government should also squarely address the problem of capital flows through underground banking. China and Hong Kong have always been places frequented by hot money, so the financial market of Hong Kong will probably fluctuate in the aftermath of the market exit. The Government must therefore squarely address any excessive capital outflows, or any attempts to use the news of market exit as a means of fanning massive speculation and selling short, so as to prevent any undue turbulence of the financial market, consolidate Hong Kong's regulatory measures and prevent problems before they actually occur.

Moreover, once market exit starts, interest rates in the United States will turn around and begin to rise. Interest rates and mortgage interest rates in Hong Kong will likewise increase, thus adding to property owners' mortgage repayment burdens. If mortgage interest rates climb back to their normal levels over long periods of time in the past, the development of the local property market is bound to be affected. People who intend to buy their own homes must take serious note of the risks involved. In this connection, some have called upon the Government to make preparations for the abolition of the "harsh measures" introduced to curb property speculation. Mr Christopher CHEUNG has proposed an amendment to add a request urging the Government to consider the revocation of "the two harsh measures" in a timely manner. The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) does not oppose it. But it also thinks that for the time being, the Government should maintain these measures on stabilizing the property market, and consider the revocation of the "two harsh measures" at an appropriate time in the light of the changing economic circumstances.

President, Hong Kong's trade has also been hindered by external economic circumstances. Statistics can indeed show that Hong Kong's total export of goods recorded a year-on-year real growth rate of 6.7% in the fourth quarter of 2012 and a growth rate of 8.8% in the first quarter of 2013, but such marked growth rates are to a certain extent attributable to the surge of non-monetary gold export in the quarters concerned. Excluding this factor, our performance in goods export is actually very average; our exports to developed markets, such as Europe, the United States and Japan, remain weak. The United States has now announced its plan of market exit. On the one hand, this of course means that the American economy may have improved, and its demand may grow, thus helping to boost the export orders received by Hong Kong enterprises. But on 15366 LEGISLATIVE COUNCIL ─ 11 July 2013 the other hand, it remains to be seen whether the real economy of the United States will really recover. Therefore, it is still difficult to provide any assurance regarding the profit growth of our enterprises. But then, in the meantime, the prospects of rising interest rates have already added to their operating costs. Therefore, the SAR Government must seek to gain a firm grasp of the good and bad effects of the market exit of the United States on the local economy, and take measures to help enterprises cope with market changes when necessary.

Hong Kong's economy is structurally uniform, marked by an over-reliance on financial services and property development. We are thus vulnerable to the impact of external economic conditions, weak in defence capability and unable to prevent impacts on the economy and people's livelihood. I hope that the SAR Government can play an active role in planning and promoting the socio-economic development of Hong Kong, fostering creative and innovative thinking, promoting industrial diversification, supporting small and medium enterprises, and creating room for employment. In this connection, the DAB already proposed to the Government a few years ago that consideration should be given to developing Hong Kong into an all-year-round capital of international exhibitions and sales by using the border area to establish a global exhibition city. In this connection, I hope that this can be achieved as soon as possible and that there will be more constructive proposals and diversified industrial policies. Thank you.

MR JEFFREY LAM (in Cantonese): President, the United States started to implement quantitative easing measures in 2008, and has since been using super low interest rates as a means of economic salvation, pumping cash totalling some US$3 trillion into the economy over just a span of several years. Last month, the Federal Reserve Board foretold that the pumping of cash would gradually come to a halt. Then, a couple of days ago, BERNANKE said that the quantitative easing policy would still last for some time, but regardless of when the pumping of cash would stop, market exit would be an inevitability. When that inevitability comes, the Hong Kong economy will definitely sustain impact.

Over the past few years, Renminbi (RMB) has been on a rising path, and the US dollar has depreciated as a result of the quantitative easing measures. In a way, Hong Kong has been caught exactly between deluge on one side and inferno on the other, thus suffering the greatest impact. The resultant inflation has taken its toll on people's livelihood and has also impacted small and medium LEGISLATIVE COUNCIL ─ 11 July 2013 15367 enterprises (SMEs) very heavily. As the economies of Europe and the United States have been in poor shape over the past few years, the number of orders has decreased, and prices, as we can all understand, can hardly increase. The export prices of Hong Kong goods have remained at the levels a few years ago. But costs have been rising day after day, and so have wages. And, added to all this is the depreciation of the Hong Kong dollar. SMEs operating manufacturing plants or engaged in small-scale business are having very hard times.

Over the past few years, the Government has adopted the various proposals of the Business and Professionals Alliance for Hong Kong (the Alliance) on the provision of assistance to SMEs. For example, the $100 billion Special Loan Guarantee Scheme and the SME Financing Guarantee Scheme have helped SMEs secure loans from banks, thus preventing the closure of many enterprises and protecting the "rice bowls" of many Hong Kong people. The Government has also agreed to our proposal of expanding the coverage of export credit insurance to show support for the export trade.

President, circumstances have changed. BERNANKE is talking about halting the pumping of cash. The Mainland may continue to tighten its credit facility. Hot money may be withdrawn from Hong Kong any time and interest rates will go up. It will then be more difficult for SMEs to secure financing, and increases in interest rates will drive up the costs of borrowing.

However, the ending of the quantitative easing policy is actually a message telling us that the American economy has turned the corner. We hope that our exports can thus improve, and we also encourage Hong Kong enterprises to develop more new products through research and development, taking a more aggressive approach to solicit more business orders. In this age of rapid technological development, product research and development depends heavily on talents. That is why we must focus on training local talents on the one hand and attract first-class talents from all over the world to Hong Kong on the other. To do so, we may provide tax concessions and also relax the requirements of talents admission. It is only when there are talents to provide a sound foundation that enterprises can "venture out".

President, the property market is another area which is greatly affected by quantitative easing measures. There are a number of reasons for high property prices. First, insufficient supply: the problems of land supply and housing production cannot be resolved in a short time. Second, abundant liquidity: the 15368 LEGISLATIVE COUNCIL ─ 11 July 2013

Aggregate Balance of the banking system before 2008 was around $10 billion, but in 2009, it increased to some $300 billion. When hot money flows into the property market and banks have lots of "spare money", they offer low interest rates to solicit mortgage businesses. Third, a super low interest rate environment: since December 2008, the Federal Funds rate has ranged from zero to 0.25% only, and the actual interest rate for mortgage loans in Hong Kong can be as low as 2.15%. When mortgage loan repayment is even less expensive than rental for housing, people will certainly wish to buy residential properties. Fourth, keen demand: married couples wish to have their own homes; young people also wish to live independently in a small apartment of their own; and some people wish to buy residential properties for preserving the value of their capital and for investment. When everybody wishes to buy residential properties, property prices will certainly increase.

However, the ending of quantitative easing measures will see the strengthening of the US dollar, to be followed by the appreciation of the Hong Kong dollar. When hot money leaves Hong Kong and credit facility is tightened, banks will turn more prudent in lending and the interest rates will rise. This will add to people's burden of mortgage repayment, and property prices may hence undergo some adjustments. For example, if the monthly mortgage repayment is $9,400 now, a hike of 2% in the interest rate will bring the amount to roughly $11,000, an increase of 20%. Since the current mortgage-to-income ratio is as high as 56%, the pressure on families making mortgage repayment will increase.

President, we certainly want property prices to return to a reasonable level affordable to the public. But the Government must be careful. Nobody wish to see the recurrence of the plummeting of property prices back in those years. At present, local first-time buyers are the only ones who are spared the "three harsh measures", and all other property buyers will be affected by these harsh measures without any exception. Even companies owned by Hong Kong people which are doing businesses lawfully are not trusted by the Government, because they are likewise required to pay additional stamp duty when purchasing properties to be used as staff quarters. These "harsh measures" are so harsh that they have almost frozen all property transactions, thus changing the course of the market. The measures are of some use in the meantime. But after the United States has stopped "pumping cash" and when the unusual times are over, the market intervention posed by the "harsh measures" may reduce the number of buyers in LEGISLATIVE COUNCIL ─ 11 July 2013 15369 the market and exert pressure on property prices. When the market resumes normal, the need of these extraordinary measures should be reconsidered.

President, the Government must carefully consider each and every policy and plan. It must listen to the views of all in society and those of individual sectors. It must at the same time allow time for society to adapt to its policies and plans. When gauging opinions, government officials must not listen selectively to any particular side. They must speak carefully and refrain from making indiscreet comments like drunkards. The world is changing all the time, so is the financial services sector. Therefore, the Government should not decide to accept the views of any particular group of people simply because they are making louder noises. Rather, it should listen also to the voices of all sectors in Hong Kong. We hope that the Government can upgrade its governing capability. Hong Kong will certainly have a better future.

DR LAM TAI-FAI (in Cantonese): President, I do not know that there are also drunkards among officials. At its rate-setting meeting in June, the Federal Reserve Board described for the first time, in the form of a timetable, the pace of the possible scaling back of the quantitative easing measures. It was said at the meeting that if the economy of the United States could recover at the expected pace, the Federal Reserve Board would reduce its bond purchase within this year the earliest and end the quantitative easing policy altogether in the middle of next year.

President, we have not yet seen any actual scaling back, but the interest rates of American Treasury Notes have already soared as a result of the Federal Reserve Board's capricious remarks. The stock market is up 532 points today, but this is only a rise following the steep fall of more than 1 000 points to 2 000 points over quite some time in the past. The Asian capital markets have seen the biggest capital outflows since the financial tsunami. Hong Kong is no exception, and IPOs of a small scale have to be called off or deferred. Bond issuance for capital raising other than those by the Ministry of Finance of China has even dropped to zero, and even the offshore Renminbi exchange rate has fallen. President, even though the situation has improved over the past week or the last couple of days, the Government must note that since the Hong Kong market allows the free entry and exit of capitals and is highly sensitive to the American credit facility, it must take precautions against the impact of the 15370 LEGISLATIVE COUNCIL ─ 11 July 2013

Federal Reserve Board's scaling down of capital injection this year or next year on our financial and property markets, members of the public and the business sector. Such precautionary measures should cover the existing policies on the property market, the support for small and medium enterprises (SMEs) and the risk guidelines for the banking industry.

President, since the Government's introduction of various "harsh measures", property prices have shown signs of decline. But the property market is still caught in a stalemate, very much like a pool of stagnant water. The original intent of the "harsh measures" is to suppress property prices to help people buy their first homes, so as to alleviate social problems and build harmony. But if the "harsh measures" are enforced without any flexibility, we will certainly see a drastic plunge of property prices and large numbers of negative equity asset owners once interest rates start to climb. All trades and sectors in Hong Kong, including the retail, consumption and services sectors, will certainly be impacted. The employment rate will likewise be subjected to heavy upward pressure. In the end, a new type of more extensive social problems will arise, thus defeating the original intent of the policy.

The Government should inject flexibility into the "harsh measures", or at least provide appropriate exemptions, or even abolish them altogether. Moreover, more guidance should be provided to the public. Frankly speaking, the intent of the Government's "harsh measures" is just to suppress property prices and help people buy their first homes, rather than bringing forth market collapse and any negative equity assets. Actually, the "harsh measures" have already plunged many people in related industries into unemployment. In the absence of any guidance, people waiting to buy their first homes can only grope endlessly for the lowest property prices. But since prices can always be lower than the lowest, the Government simply cannot succeed in using these harsh measures to help people buy their first homes. The Government can consider adopting changes in property prices as a factor of consideration when changing the strength of its property market policies in the future. In the meantime, it should have more communication with the market, so that people can grasp the changes in market direction and government policies. That way, when property prices drop, the demand of first-time buyers can be truly released.

President, suppose the "harsh measures" can really help people buy their first homes, I am sure that their greatest fear must then be a free fall of property LEGISLATIVE COUNCIL ─ 11 July 2013 15371 prices that turns them into owners of negative equity assets. In fact, first-time buyers have never experienced the huge financial and psychological pressure caused by rising mortgage repayment, falling prices of their own properties and worsening employment prospects. Therefore, even if the Government can successfully help people buy their first homes, it must not thus think that its responsibility is over. Whenever there is any possibility of interest rate increases and property price decreases, the Government must adjust its policies on the property market in the light of actual market changes. In this way, it will be able to prevent the many risks (including the risks faced by banks) brought by negative equity assets, and enable the beneficiaries of the "harsh measures" to continue to be benefited, thus making the policy more comprehensive. This can help foster public confidence in the policy administration of the Government.

President, apart from impacting the local property market and people, the scaling back of the quantitative easing measures in the United States will also produce very negative effects on SMEs. Proprietors of SMEs are good at responding to the situation of their own businesses and industries, but they are not equally good at coping with macroeconomic turbulence. Rising interest rates and tight credit facility will not only raise the funding costs of SMEs and cause banks to tighten lending. When capitals flow out of Hong Kong and the quality of mortgage loans deteriorates, SMEs will find it increasingly difficult and costly to borrow money for their operation. Besides, SMEs may also face various risks that make their operating funds even tighter, such as the closure and default payment of their local, Mainland or overseas clients.

A couple of weeks ago, Moody's, an American credit rating agency, revised its outlook on the credit rating of Hong Kong's banking industry, changing it from stable to negative. It considers that banks in Hong Kong will face severer challenges in the future due to the economic slowdown of the Mainland and the banks' growing reliance on their business there. I believe that if interest rates in the United States go up and the Mainland embarks on economic reform, our SMEs will find it more difficult to secure loans from banks than before. President, cash flow is a pre-requisite for the survival of SMEs and every company. If banks suddenly tighten lending and cut off the cash flow of SMEs, the latter will suffer like a person without any oxygen supply. In that case, the person will certainly suffocate no matter how healthy he is. By the same token, a company will have to close down no matter how well-established it is. SMEs have been neglected since the last-term Government. Today, following the Federal Reserve Board's sufficient forewarning, if the Government 15372 LEGISLATIVE COUNCIL ─ 11 July 2013 still remains indifferent to the potential risks posed by interest rates and tightened credit facility, it will certainly produce a very negative impact on the survival and future development of SMEs and even our young people's desire to start a business.

President, I urge the Government to expeditiously strengthen its communication with SMEs and ascertain the difficulties of the industries, so that appropriate, effective and targeted counter-cyclical measures can be formulated as early as possible to reduce the potential risks faced by SMEs and abate the impact on the local financial services sector. For example, more flexibility can be introduced in respect of the guarantee tenure, amounts and other details under the SME Loan Guarantee Scheme to cope with rapid market changes. Apart from the SME Loan Guarantee Scheme, the Government can also implement other effective measures, such as waiving the administrative fee, so as to help SMEs survive the credit crunch cycle in the next three to five years or even for a longer period of time. President, I very much hope that the Government will expeditiously introduce targeted measures to assist SMEs in coping with the high risks in the future. Thank you, President.

DR CHIANG LAI-WAN (in Cantonese): President, just now, Mr Jeffrey LAM requested a headcount because he intended to speak but found that not a single Member from the pan-democratic camp was present. So, he was very disappointed. The subject matter discussed by us today is very important because the whole world is concerned about what the impacts will be if the United States really ends its quantitative easing measures. And, today, we first thought that Members would all speak enthusiastically without any reservation in this debate. But sadly, in no time after they had been summoned here, all of them vanished once again. Now, it is my turn to speak but there is not a single Member from the pan-democratic camp here. Please take some photos of the scene right now and see how seriously they look at economic issues. In the whole Chamber, only Members returned by functional constituencies can be found and only Mr TAM Yiu-chung and I are directly-elected Members ……

(Dr LAM Tai-fai stood up)

PRESIDENT (in Cantonese): Dr LAM Tai-fai, what is your point?

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DR LAM TAI-FAI (in Cantonese): I request a headcount.

DR CHIANG LAI-WAN (in Cantonese): …… in other words, functional constituencies ……

PRESIDENT (in Cantonese): Dr CHIANG, please wait a minute. A Member has requested a headcount. Please sit down.

DR CHIANG LAI-WAN (in Cantonese): I have the right not to let him interrupt.

PRESIDENT (in Cantonese): Dr CHIANG, since Dr LAM Tai-fai has raised a point of order, please sit down first.

DR LAM TAI-FAI (in Cantonese): Thank you, President, for your astute judgment.

PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber.

(After the summoning bell had been rung, a number of Members returned to the Chamber)

PRESIDENT (in Cantonese): Dr CHIANG Lai-wan, please continue.

DR CHIANG LAI-WAN (in Cantonese): President, Members all know the reasons for the introduction of quantitative easing measures by the United States. As many Members said just now, this is because economy is poor and the unemployment rate is high in the United States, so if it does not print banknotes, it cannot possibly survive.

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Mr BERNANKE, the Chairman of the Federal Reserve Board of the United States, said that as the American economy had begun to improve, the purchase of bonds could be scaled back next year if such a situation continued. What he said was the scaling back of bond purchase starting from next year. But I do not know what he means by improving. Nor do I know how well its economy is actually doing and why it should be turning around. However, the Secretary has just said that he has not noticed any immediate flow of capitals back to the United States. But actually, a lot of capitals should be flowing back to the United States, right? If the American economy is really improving and gradually getting out of the trough, people should be sending capitals back to the United States for further capital growth, and this is certainly something delightful.

Therefore, should we believe BERNANKE's words this time around? I really do not know. But I only want to say that the worst victims of his quantitative easing measures in the world must be Hong Kong people. Why? Because I simply cannot understand why Hong Kong people should be dragged into their problem. Their economy is poor and their unemployment rate is high, but it is not like this in Hong Kong. Our economy is in good shape, and our unemployment rate is low, so why should we be dragged into their problem? The reason is the currency peg. Because of this, when the United States prints banknotes, the Hong Kong dollar will depreciate accordingly, and the worst effect of this is that because properties in Hong Kong are among the most valuable in the whole world, the depreciation of our currency has induced practically the whole world to buy properties in Hong Kong, thus leading to speculative activities that boost our property prices incessantly. In fact, measures requiring overseas enterprises or companies, and even foreigners, to pay more tax for property purchase in Hong Kong should have been introduced much earlier. But it is still not too late to do so now. In addition, our people are the most miserable because they are made to suffer inflation through no fault of their own, and the buying power of their money thus diminishes. When we use the Hong Kong dollar to buy goods priced in Renminbi, we will see that since the Renminbi is ever appreciating …… In fact, the Renminbi has not appreciated so much, only that the Hong Kong dollar itself has been depreciating, so the difference is widening. The public have to endure this kind of hardship and they really do not deserve it.

Therefore, what will be the impact of the market exit on Hong Kong? In fact, on how great the impact is, frankly speaking, although I am not an economic LEGISLATIVE COUNCIL ─ 11 July 2013 15375 or financial expert, I can tell from my experience over the years that this may be something good to Hong Kong, at least in respect of people's livelihood. Since interest rates may increase slightly, people may be able to derive some interest from their bank deposits. Besides, if our currency can move closer to the Renminbi in value, and if the difference is not so great, elderly people will be able to buy more things with their money when they are shopping outside Hong Kong.

Of course, I also agree with Members that the property sector will be impacted, and I also think that interest rate increases will certainly produce some impacts. But all must ultimately depend on supply and demand. I think that if there is no timely supply, property prices may not necessarily fall, as some pessimists believe. As for trade, since Hong Kong is not a manufacturer of goods, and it has only been engaged in export and the purchase of goods from China for re-export, the appreciation of the Hong Kong dollar may not possibly produce any significant impact of our export trade.

I still wish to mention one more point. This time around, everybody is so anxious when the world learns that the United States may change its quantitative easing policy and stop printing banknotes. President, I therefore believe that balanced economic development is very important to a city, and a city cannot overly rely on the financial industry or the real estate sector. In the final analysis, I think that Hong Kong must develop its own manufacturing industries, that is, high-tech and high-value-added manufacturing industries. I often say that developing a pharmaceutical industry or a Chinese medicine industry in Hong Kong is absolutely desirable. There are a lot of resources on the Mainland and everything, from raw materials to talents, can be found. There are so many international sales talents in Hong Kong, so why can't the two places join forces? This morning, the Chief Executive, Mr LEUNG, also said that Hong Kong would take part in the preparatory work on the 13th National Five-Year Plan. If so, the Secretary really must talk to the Chief Executive, LEUNG Chun-ying, and ask him if it is possible to place some major high-tech manufacturing industries in Hong Kong and then export the products from here. I think that the development of a pharmaceutical industry or a Chinese medicine industry in Hong Kong is actually desirable. And, I think that we should try to lobby for the establishment of one or two types of these industries.

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Lastly, I also wish to say that recently, the Economic Development Commission has set up a working group that is mainly responsible for two areas, technology and cultural and creative industries. However, originally this team should also cover the manufacturing industry, but there is no mention of it now. I wish to take this opportunity to say to the Convenor, Victor LO, that it is really necessary to pay attention to this area because the future development of our industries, in particular, the Chinese medicine (The buzzer sounded) ……

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

DR CHIANG LAI-WAN (in Cantonese): …… can make significant contribution to Hong Kong's GDP. Thank you, President.

MR TANG KA-PIU (in Cantonese): President, of course, I have to admit that I am no economic expert, and my opinions may even be wrong. Nevertheless, I believe all Members must agree that Hong Kong really suffered a great deal because of the economic downturn and rising unemployment rate arising from deflation and negative equity assets in 2002 to 2004. For this reason, the announcement made at long last by BERNANKE, Chairman of the Federal Reserve Board of the United States, on his market exit timetable should be taken as a warning to us. I believe institutional investors will make adequate preparations for this. However, is the SAR Government going to make any preparations?

By implementing quantitative easing measures in the past four years, the United States has extricated itself from the predicament of the financial tsunami. All are losers except the United States, an apt reflection of American hegemony. At present, the unemployment rate in the United States has fallen from 10.2% at its peak to 7.6%, and the authorities have even made the optimistic projection that the rate will drop further to 6.5%. However, while the United States is so optimistic, the whole world, in particular Hong Kong, is not optimistic at all.

The implementation of quantitative easing measures by the United States has seen the occurrence of obvious and acute imported inflation in Hong Kong. LEGISLATIVE COUNCIL ─ 11 July 2013 15377

The business sector once asked Secretary Matthew CHEUNG if the galloping inflation was attributable to the implementation of the minimum wage. In response, Secretary Matthew CHEUNG stated categorically that 70% of the inflation was caused by the rising prices of imported construction materials and food materials as well as rising land costs. These are the main reasons for the present inflation.

At present, an asset price bubble has formed and we are worried about the impacts sustained by Hong Kong's property market as a result of the United States' market exit. The FTU believes that any rise or fall of the property market must be moderate, and that real estate should not become a speculative tool for Hong Kong people. At present, individual Hong Kong people, organizations in Hong Kong and even people from around the world, such as the Mainland, are all taking part in property speculation. We do not think that this is a reasonable phenomenon. However, the fact is that property speculation is right now extremely rampant.

Property prices in Hong Kong have multiplied over a span of just several years. A report on global property price indices shows that while the property prices of 55 countries or regions in the world rose by 4.3% on average in 2012, property prices in Hong Kong in the same period recorded an increase of 23.6%, 5% and 10% higher than Dubai in the United Arab Emirates in the Middle East and Brazil, which ranks 2nd and 3rd, respectively. This reflects that a property bubble has clearly been formed in Hong Kong.

In the past, when the Federal Reserve Board exited from the market and raised the interest rate in 2005, property prices in Hong Kong cooled down rapidly and the trend of increase halted. However, the bubble resulting from the quantitative easing measures this time around is bigger than before, so the downward adjustment of asset prices may be even steeper. In the future, will the Hong Kong property market see the emergence of negative equity assets or any steep fall of prices? This is something that we are worried about.

A local academic has predicted that property prices will fall by 10% in the second half of this year. In fact, more than a month ago, some people in my local community already called my office to ask the FTU on what it thought a reasonable drop of property prices should be. That people in my local 15378 LEGISLATIVE COUNCIL ─ 11 July 2013 community called a Member's office to ask this question is already a warning. According to some Members, the measures introduced by the new Government to suppress the property market are not effective because property prices are still rising. However, if the authorities had not introduced the "two harsh measures" and the like, would the rate of increase have been merely 15%, the rate mentioned by these Members? We are not sure. Therefore, again, the FTU approves of the "intervention" or "demand management" measures introduced by the SAR Government to the property market. We believe that the Government has already done what its duties call upon it to do. And, whether they are adequate should be a matter of judgment. Now, it seems the authorities must adopt new strategies and a new mindset to cope with the situation that will arise or has arisen from the United States' market exit.

Therefore, we basically support the original motion and all amendments today except Mr Christopher CHEUNG's amendment. Maybe, since Mr Christopher CHEUNG must after all speak for the sector he represents, he is somewhat not quite so agreeable to the "two harsh measures". The FTU will abstain from voting on his amendment. I believe that if the authorities had not introduced the "two harsh measures", the increase in property prices would not have been merely 10% in the second half of this year. Instead, they would have skyrocketed further. Some Members said that since the introduction of the "harsh measures", property transactions have come to a standstill. But we believe that if property transactions have not come to a standstill, the United States' market exit may give rise to serious consequences.

Therefore, we must once again affirm the policy and measures adopted by the SAR Government in relation to the property market. However, we hope the authorities would not thus be satisfied, and that it can prepare adequately for a market reversal, in particular, for our greatest worry, the risks of interest rate increases. Disregarding the impact on property speculators, we would think that interest rate increases will impact home-buyers most greatly.

In fact, the Financial Secretary and the Hong Kong Monetary Authority have pointed out clearly that the present credit ratio has reached a level that calls for concern. Compared with the situation in 2008, the present interest rates are rather low, but cases of over-extension of credit has spiked by 127%, and the mortgage-to-income ratio reflecting the affordability of home purchase of the LEGISLATIVE COUNCIL ─ 11 July 2013 15379 public has deteriorated to 56% in the first quarter, far higher than the 48% recorded between 1993 to 2012. Although the FTU does not have a very good understanding of this matter, I can still say that these figures do indicate that the present situation is serious.

Will the market exit of the United States lead to interest rate increases? If yes, by how much? How will interest rate increases affect those lower middle class property owners who have been repaying mortgage loans or who have just "boarded the train"? These are all our grave concerns. We hope that the Government can introduce measures to enable Hong Kong to tide over this crisis safely.

Just now, Dr CHIANG Lai-wan said that speculation should not be the Way. The FTU could not agree more. At present, the real estate industry, the professional and business services industry, and the financial industry account for the largest proportion of the GDP (about 27% to 28%), so I hope the Government can reconsider whether we should continue to tread this path, or whether we should follow the Way by developing balanced and diversified economic activities, including the manufacturing industries and agriculture, as proposed by some people. We maintain that the authorities should try to develop these industries, rather than refusing progress and attaching importance only to the interests of the financial and real estate industries.

I so submit. Thank you.

MR VINCENT FANG (in Cantonese): President, in a bid to save the market after the financial tsunami in 2008, the United States Government launched the policy of quantitative easing at the end of that year. Over the past few years, three rounds of quantitative easing measures have been launched. The massive printing of banknotes to buy bonds and the ongoing efforts to depress interest rate levels have caused a global overflow of capitals. As a result, huge sums of hot money have to find investment opportunities every where. A lot of such hot money has found its way to Hong Kong, and since the Hong Kong dollar is pegged with US dollar, a low-interest environment has similarly emerged in Hong Kong, thus heating up the already overheated property market; and the high inflation has meanwhile made meals, shopping and transportation more and more 15380 LEGISLATIVE COUNCIL ─ 11 July 2013 costly, eventually making everybody's life very miserable and victimizing all Hong Kong people especially small and medium enterprises (SMEs).

Despite the understanding that quantitative easing would not last forever, many people were still surprised by what BERNANKE, Chairman of the Federal Reserve Board, said on market exit last month. He said that if the economy of the United States developed as expected by the authorities, there would be the possibility of scaling back the purchase of bonds later this year, and it was expected that the whole bond purchase programme would come to an end in the middle of next year. At that time, BERNANKE did not specify any exact timing of market exit. But the capacity in which he spoke convinced the market that he was delivering a clear message of market exit. And, people also thought that market exit would come sooner than expected. Therefore, immediately after he had said so, financial markets all over the world were plunged into great turbulence. This shows that the market exit of the United States will produce far-reaching impacts on the global economy.

This morning, he once again spoke on market exit, saying that in the foreseeable future, a highly accommodative monetary policy would still be needed. These words seem to suggest a change in the timeframe for market exit. Nevertheless, I still think that no matter what BERNANKE says, the market exit of the United States is just a matter of time. The SAR Government must remain fully alert and keep a close watch on when the United States will actually quit the market. It must also make good preparations. And, in particular, it must take precautions in two aspects lest it may be too late to take any actions.

First, we should pay attention to the lebensraum of SMEs. Peripheral economic fluctuations in recent years have already made the business environment more difficult. SMEs must also face the pressure resulting from rises in operating costs such as rents and wages. Moreover, it is not easy for SMEs to secure loans. The Government has launched the SME Financing Guarantee Scheme, but the application procedures are rather complicated and a guarantee fee is also required. What is more, the interest rates are not really that low. In a word, to SMEs, the scheme is just better than nothing. I know that many SMEs have therefore mortgaged their real estate properties in order to raise sufficient operating capitals. Once the United States exits from the market, interest rates will surely soar, and these SMEs will be worst-hit. I think that in order to help SMEs, the Government needs to re-launch the Special Loan Guarantee Scheme for SMEs, because this scheme is marked by fewer LEGISLATIVE COUNCIL ─ 11 July 2013 15381 restrictions, and it also provides a revolving credit line, so capitals could be used in a more flexible way. In addition, there is no guarantee fee. In a word, this scheme is a far better option than the existing SME Financing Guarantee Scheme for assisting SMEs in financing in order to tide over their difficulties.

Another aspect that warrants the Government's attention is the changes in the local property market. The hike of interest rates will increase the burden of mortgage repayment, and the property market will surely be impacted. If we fail to deal with this problem properly, property prices will certainly nosedive, thus causing a "hard landing". What happened during the SARS outbreak will repeat itself. Large numbers of negative equity asset owners will emerge along with an economic downturn in Hong Kong. Basically, there is nothing wrong with taking measures to combat speculators in times of rampant speculative activities and soaring property prices. However, the "two harsh measures", that is, the Buyer's Stamp Duty and the increase in Special Stamp Duty rates, which the Government introduced last year to further curb the rises of property prices are unable to address the real problem; not only this, they are even erroneous measures that have come to victimize the innocent. As we can all see, property prices have never dropped since the introduction of the "harsh measures". Only the transaction volume has dropped. On the other hand, property prices still continue to rise despite the lack of any transaction. Therefore, I think that once the United States announces a definite timeframe for market exit, the Government must react with full attention and immediately abolish the "harsh measures", so as to avoid any negative impact on the local economy.

I so submit. Thank you President.

MR DENNIS KWOK (in Cantonese): President, other Members have pointed out that earlier ― it should be last night ― the Chairman of the Federal Reserve Board of the United States already amended his previous remark. It now looks like there will still be quite some time before the United States actually ends quantitative easing. Moreover, if the Federal Reserve Board decides to end quantitative easing, it will in fact be admitting that the American economy is recovering. The recovery of the American economy is definitely good news to the global economy, so there is no need for too much panicking. Of course, if the United States really starts to increase interest rates next year or at a later time, Hong Kong must follow suit. In that case, huge sums of capitals will flow out of Hong Kong, and the local property market may thus experience quite a 15382 LEGISLATIVE COUNCIL ─ 11 July 2013 substantial downward adjustment. The downward adjustment of property prices is certainly good news to those Hong Kong people who have not "boarded the train". But the impact on small property owners will be far-reaching. I must therefore call upon the SAR Government to make the best preparation in this respect.

The two financial crises that occurred after the reunification in 1997 ― the financial turmoil in 1998 and the financial tsunami in 2008 ― both impacted the Hong Kong economy and caused the plummeting of the property and stock markets. Their impacts are far-reaching. Those worst-hit by such crises are naturally not any large banks or property developers but the common masses under employment and the proprietors of small and medium enterprises (SMEs) who are having such a hard time running their businesses. Unlike large consortia and corporations, SMEs cannot do any hedging to minimize the risks of operation and investment. To SMEs, financing and liquidity difficulties are very serious problems. If such problems are compounded by interest rate increases, the operating costs of SMEs will go further up, and they may easily close down as a result of liquidity problems. Therefore, the Government should closely monitor the financing problems of SMEs and step up the assistance to SMEs in this respect at suitable times. I strongly agree to the series of policies on supporting SMEs proposed by Mr Vincent FANG just now.

Financial crises may plunge ordinary people under employment into the risks of pay cuts, layoffs or negative equity assets. In fact, the two financial crises have gravely impacted the financial conditions and living quality of many people, and even now, they are still living amidst immense hardship and difficulties. Those who once lost their jobs may have found new jobs by now, but the wages are much worse than before; those did not lose their jobs might have been given pay cuts, and their wages have never returned to the past levels.

The recent spates of industrial disputes have led many people to think that wage increases have been too little and too slow, unable to catch up with the very high costs of living. In fact, wage earners and SME owners both hope that the Government can introduce some measures which can maintain Hong Kong's overall economic growth on the one hand, and help them tide over their difficulties and achieve self-reliance on the other.

One further point is that the economic philosophy of LEUNG Chun-ying's Government is, we think, based on "trickle-down economics". He thinks that as LEGISLATIVE COUNCIL ─ 11 July 2013 15383 long as he can maintain economic growth, other problems, such as people's livelihood, the environment or even political reform, can all be automatically solved. Of course, it is definitely not as simple and naïve as that. The gist of "trickle-down economics" is about making a bigger pie, but such an economic theory which holds that a bigger pie will necessarily benefit all people has in fact long since been negated by many economists. President of the United States George BUSH, for example, adhered to "trickle-down economics" throughout his eight-year term of office and slashed the capital gains tax and dividend tax. But in the end, rather than seeing any economic growth comparable to the growth recorded during the times of Bill CLINTON, his administration saw the onslaught of the financial tsunami in 2008, and his policies instead greatly reduced the American Government's taxation revenue, resulting in a national debt of US$16 trillion nowadays.

We agree to the views of Mr Andrew LEUNG, and we hope the Government can make special efforts to roll out measures on supporting the masses and SMEs. The Government is not a corporation. It should not just look at the GNP and economic growth. It should also care about the livelihood of the masses and the prospect of SMEs. Thank you, President.

MR KENNETH LEUNG (in Cantonese): President, I frankly did not plan to discuss this motion here because it is actually very academic. Mr Dennis KWOK has just said a few words about BERNANKE's remark on ending the quantitative easing measures, and I agree with him because to begin with, we do not know when he is going to do so; second, we do not know what steps he will take to this end; third, we do not know how great the impacts will be. There is still one more thing: is the United States worthy of our trust? We are having so many arguments with the United States at the moment.

There is an economist named Prof LUCAS who advocates the economic theory of rational expectation. Will the Chairman of the Federal Reserve Board (FRB) make a certain point with the intention of benefiting American enterprises or banks? Economies all over the world will react to his remark, so will American enterprises and banks do any hedging in order to reap benefits? This is a question that merits our deep thoughts. Should we believe such messages? This is why I did not intend to discuss this motion.

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Another point is that the motion urges the SAR Government to closely keep in view the incident, ensure the stability and robustness of Hong Kong's financial system, and so on. This is actually what the Government should do every day. Maintaining economic growth is what the Government should be concerned about every day; so is introducing appropriate measures to assist members of the public and small and medium enterprises in facing new developments in the international market. Looking back, we see that there was the Asian financial turmoil in 1999, followed by an economic downturn in 2003, and around 2006 and 2007, there came another global financial crisis. What exactly were the main causes? Can Hong Kong withstand such great impacts? Earlier on, some Members talked about the need for us to put in place certain fiscal policies and monetary policies. Honestly, Hong Kong is just a tiny and open economy. No matter what monetary policies or fiscal policies we adopt, and although they may be very effective, their impacts are bound to be minimal.

A moment ago, Dr CHIANG Lai-wan wondered why Members on our side were so silent on economic issues. Actually, the debate topic is all about our basic economic structure. In the last part of her speech, Dr CHIANG Lai-wan remarked that we must have a real economy and manufacturing industries. This precisely involves the problem of economic restructuring that Hong Kong must face. If the market exit of the United States really comes, if you are told that the market exit will happen next month with the ending of the quantitative easing measures, and if our economic structure is not wholly based on the financial services and real estate industries but is also made up of a real economy comprising components like manufacturing industries, then as the American economy starts to recover and develop a greater demand for our goods, our real economy can actually expand itself to take up a larger proportion in the Gross Domestic Product (GDP). The problem is that 95% of the GDP of Hong Kong is generated by the services industries and we do not have a real economy to manufacture any goods for export. These services industries, in the main, must depend on consumption demands from overseas because our domestic consumption market is very small. Therefore, in case any large economies ― the European Union, the United States or the Mainland ― want to end their quantitative easing measures and stop printing banknotes, Hong Kong's monetary source will be reduced and we will be severely impacted.

Let us also look at the causes of global economic collapse. I am not going to talk about BERNANKE, and I will talk about the former FRB Chairman, GREENSPAN. Many people, including American economists, have criticized LEGISLATIVE COUNCIL ─ 11 July 2013 15385

GREENSPAN for abusing various policy loopholes in the 1980s for the benefit of banks and financial institutions. Our economic system is actually divided into two parts. One is the financial system, and the other is the real economy. Let me give a very simple example. We can see that the economic systems of many European countries have come under severe impact because their financial systems have been damaged. But let us look at Germany. Why has Germany's economic system managed to remain stable and robust over the past few years? All is because Germany has manufacturing industries and a real economy.

The financial services industry in any economic system cannot possibly survive independently. Why did banks emerge several centuries ago? Because banks are like lubricants which can make this machine of the real economy operate in a better way. But in the midst of the speculative atmosphere in the 1980s, GREENSPAN in the United States introduced many loose laws allowing banks to engage in financial business. Thus, many banks were already able to reap huge profits simply by undertaking speculative activities such as hedging or offsetting. A bubble economy thus emerged. Simply put, banks need not engage in any actual production and can focus solely on contracts about opposite bets. For example, they can place a bet on a 50% increase in grain prices or place an opposite bet on having dry weather conditions the next day or next year. There are also some futures contracts. So, the placing of such opposite bets has led to financial bubbles, and this explains the many problems plaguing our financial systems over the last two decades.

As long as we do not have a real economy, we are bound to face cyclical crises sooner or later, at intervals of five or 10 years, no matter how well the financial services are developing. Therefore, I hope that the Chief Executive ― though I do not think he knows economics very well ― can put in more time and resources to facilitate the development of a real economy in Hong Kong. He may do so by developing the shipping industry that he has mentioned or a pharmaceutical industry as suggested by Dr CHIANG Lai-wan. We hope that our economy can develop healthily, or else Hong Kong will have to face such impacts at intervals of two years, three years or five years, as part of the cyclical development in the global economy.

President, I so submit.

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MR RONNY TONG (in Cantonese): President, when I first read the wording of this motion, I was a bit puzzled. The reason is that the business sector of Hong Kong has always emphasized the importance of the Government's non-intervention in the market and the economy. But then in this particular case where the Government's intervention should be impossible, the business sector has put forth a motion urging the Government to do so.

President, I do not see any problems if the Government is only asked to assist small and medium enterprises (SMEs) and the general public in preparing for or handling the financial difficulties they encounter in times of economic slump, and in that case, I do not think it is necessary to bring up such issues for discussion in the legislature. However, I believe if the discussion is about the quantitative easing measures, many people will have strong and divergent views.

First, the very question of whether this policy should be implemented at all is already very controversial in itself. The reason is very simple. President, two weeks ago, when BERNANKE indicated that market exit would be considered, the stock market plunged immediately. President, last week, when I checked my investment record, I was stunned, and I thought I was over and must go bankrupt. Then, this morning, when BERNANKE said that market exit would not be considered within this year, the stock market went up immediately. Just now, my bank manager called me and during the conversation, he sort of assured me, saying that I did not need to resign from my post in the Legislative Council and go out to work for money. Should BERNANKE try to trick the Hong Kong economy like this? More importantly, he is trying to trick not only the American economy but also the whole the world. Hong Kong is the place worst-hit by his trick, because our currency is pegged with the US dollar and we have no escape.

The case of the SAR is odd. We do not have any of the usual fiscal tools possessed by sovereign states for adjusting currency supply or the economic environment. We are not free to adjust our interest rates, and we cannot adjust our economy through any foreign exchange policy or monetary policy. To put it not quite so politely, we can only wonder how we will be beaten up, trying to ascertain how the problems in Europe and the United States will affect us.

President, back to the point. Is the influx of hot money into Hong Kong as a result of quantitative easing something desirable to Hong Kong? President, I do not think so. Some people may think that this is desirable. Maybe, Mr LEGISLATIVE COUNCIL ─ 11 July 2013 15387

Andrew LEUNG and the commercial sector will think so. However, I do not, because any advantages are bound to be illusory. It is true that the influx of hot money can enable us to enjoy a low-interest rate environment for a certain period of time, and we can thus borrow loans at low interest rates. However, this is only just an illusion, something that will "lull you into a false sense of security". What I mean is that all is nothing but deception, a kind of deception that makes us think that we are very safe, when our actual situation is in fact most vulnerable and volatile. BERNANKE's brief remark last week about considering market exit is a case in point. In fact, as we read from the newspaper today, half of the participants at the meeting actually indicated that the issue must be considered carefully. But just a single remark from BERNANKE on considering market exit already made Hong Kong very chaotic.

Therefore, the influx of hot money into Hong Kong may not necessarily be conducive to the overall development of Hong Kong in the long run. What low interest rates have brought about is a surge in property prices, right? The surge in property prices is definitely undesirable to us. The Government has to introduce one, two and even three "harsh measures" in response to the surge, and this has induced thousands of people to take to the streets. Is this desirable? I think the Secretary knows only too well that this is undesirable.

Will the withdrawal of hot money mean the collapse of our economy? President, the answer is certainly negative. Quite the contrary, we hope that rather than aiming to make short-term profits, foreign investors can make long-term investment in Hong Kong. In fact, the retreat of investors aiming at short-term profits will be more conducive to our overall and healthy development in the future. Therefore, the slight monetary pain will be conducive to the future development of our economy as a whole.

President, I also do not buy the saying that in case of any market changes, such as the withdrawal or otherwise of the quantitative easing measures, there will certainly be knee-jerk reaction or instant response. There should not be any such response. Our financial regulatory regime can be described as sound and well-established by Hong Kong's own standards and also by South East Asian standards. It should therefore command the respect of investors. If we suddenly alter the long-established principles, standards and criteria of our regulatory regime in response to any sudden market changes, the outcome of any such sudden alterations may not be helpful to our economy at all. Rather, we 15388 LEGISLATIVE COUNCIL ─ 11 July 2013 may end up making the credibility and authority of Hong Kong as an international financial centre come under doubt.

Hence, I do not think that our financial regulatory system should make any immediate knee-jerk adjustments in response to the outflow of hot money and the market exit of the United States. Quite the contrary, we should maintain the existing standards, in the hope of encouraging more people to make long-term investment in Hong Kong. The influx of hot money may bring us a moment of enjoyment, but the outflow of hot money may not necessarily be a bad thing to us. Other Members have examined the issue from their perspectives, but on my part, I wish to adopt a boarder or more far-sighted perspective, and advise everybody against any panic.

President, if Mr Andrew LEUNG's proposal is meant to assist SMEs, I must then reiterate that we should assist SMEs at all times rather than giving them any special attention only because of the market exit. Therefore, I hope that the motion today can be passed without any disagreement.

DR PRISCILLA LEUNG (in Cantonese): President, I suppose many Members will have their insightful analyses of the possible market exit of the United States. Today, I wish to adopt the perspective of the middle class and professionals, and analyse how the common people react to this news. I also wish to express my views on the overall sentiments in Hong Kong in the wake of the news.

In general, Hong Kong is just like a big casino. Everyone is extremely free, and like it or not, there are both large investors and small investors. More often than not, small investors may not be as well-versed in making investment as professionals. They do not have many choices. Many middle-class people or professionals in Hong Kong have amassed some savings, but they will receive no interest if they deposit the money into banks. This explains why so many middle-class people purchased the Lehman Brothers minibonds back then. The reason is that they all thought that such minibonds were safe products. I have many friends who are medical practitioners, and they have never made any investment. They work all their life but they only make cash savings. Unlike small and medium enterprises (SMEs), such conservative people may not have any need for liquidity. But still, they will surely think about how they should wisely handle the matter of investment and post-retirement life in the future. LEGISLATIVE COUNCIL ─ 11 July 2013 15389

Hence, some people have learnt how to make investment, but others have not, and they simply continue to take the advice of investment professionals.

As a result, such "sandwich class" people sustained the heaviest casualties when the gigantic wave of the Lehman Brothers hit. Grassroots and poor people could gain greater sympathy, because it was very easy for people who purchased such minibonds with their only savings of $70,000 to prove a case of having been misled. However, many cases have not yet been settled and the victims are still seeking assistance. I feel helpless on some such cases. Many people invested $4 million or $8 million; having lost all their pensions or lifelong cash savings, they are no longer able to recover and return to normal. They cannot claim compensation, because their investments are so large in amount and it is difficult to prove that they know nothing about investment. The problems faced by this group of people have not yet been settled, and I still hope that I can help them. I think some of them are incapable of facing the difficulty and have developed mental disorders. At the Tsim Sha Tsui MTR Station I often pass by, there is a professional who used to be normal, but who has now developed mental disorder. He shouts with a loudspeaker every day at the MTR station.

Hence, my great concern is that once another storm hits …… Certainly, enterprises will encounter difficulties. SMEs will face tremendous problems, and in the end, serious unemployment will result, and even middle- and high-level employees may likewise lose their jobs. When all these people become unemployed, society as a whole will lose a large group of consumers and the whole economy will be plunged into difficulties.

Therefore, even at the risk of verbosity ― I have been saying so for many years already ― I must ask the Secretary whether it is possible for us to take care of those people who become unemployed, and who even fail to support the normal living of their families in times of such storms. Will the Government set up a loan fund for occupation switching? Even at the risk of verbosity, I must repeat that a storm may be coming. You should know this better than us, because you are all experts. The common people, however, really may not realize that once a storm hits, their employment may be affected. When their employment is affected, their families will not be spared, their children will likewise be impacted, and their families may be shattered. In this connection, I hope the Government will consider what it should do in the long run.

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Second, some Members said earlier that we should develop our own industries. Industries are not our strength. But I instead want to point out that young people are often eager to start their own businesses. Perhaps because Hong Kong is not endowed with any resources, many young people can only develop their career by starting their own businesses. In recent years, our organization, the Kowloon West New Dynamic, has conducted a number of opinion polls. According to the findings of all these polls, many young people actually hope that circumstances permitting, the Government can give them some policy support for starting their own businesses several years after the start of their careers. They may not necessarily become great entrepreneurs or even owners of any SMEs after the setting up of their own businesses. However, they may have an advantage when it comes to creative industries.

In the past, many self-made entrepreneurs did not go to university. The Mayor of New York City, BLOOMBERG, has once remarked that a college degree is not the pre-requisite for career success. There are many classic examples nowadays. Some people say that even a person who sells peanuts well may also establish a chain store and turn his business into an enterprise. Career development and success in many trades and occupations does not always depend on academic qualifications and university degrees. The incomes of famous hairstylists, for example, may be comparable to successful professionals. If Hong Kong can develop further in this direction, then even carpenters, paint workers and concrete finishers in the "three occupations" …… In fact, no one is willing to join this trade …… With a more professional packaging, they may also be able to set up their own business.

I thus want to put forth two requests in this connection. First, in times of economic adversities, will the authorities provide any occupation switching assistance for the unemployed or any assistance of a bridging nature to the middle class people or people who are themselves still capable? Second, for people who have not established their career, will the Government take the lead to set up a start-up fund or creativity fund, and provide them with policy support and assistance in forming connections and seeking help from the commercial sector, so that people intending to start a business, young people in particular, may find a way out? This is a longer-term proposal, but I think the Government should consider this actively in the course of economic development.

President, I so submit.

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

MR WONG YUK-MAN (in Cantonese): President, over the past several months, the Chairman of the Federal Reserve Board of the United States, BERNANKE, has repeatedly talked about the issue of market exit. Many in the business sector of Hong Kong have sounded their fear. And, just now, certain Members not from the business sector likewise sounded their fear. Our Senior Counsel Mr Ronny TONG was one of them. He probably thinks that the Americans are in control of the world and also Hong Kong, so he does not know what we should do. When we talk about the impacts caused by the possible ending of the quantitative easing measures by the United States, we will only speak from the perspective of the grassroots. Can you see my point? Hong Kong is a typical rightist society. Frankly, to the grassroots, the prosperity of the rich should be none of their business …… But if the rich all "conk out", poor people will also be victimized …… But then when certain people get rich, we beggars will still be victimized. I have said more than 90 times that the "trickle-down effect" simply cannot work.

After the financial tsunami in 2008, various countries hastened to implement quantitative easing measures. Huge sums of hot money have thus found their way to our asset markets, but instead of boosting the real economy, such hot money has triggered overall inflation, plunging the grassroots into great misery. Under the linked exchange rate system, the value of the Hong Kong dollar has dropped continuously. As a result of imported inflation, low-income families must spend a good part of their incomes on the purchase of daily necessities, and their livelihood has been gravely impacted. Inflation aside, as limited quantities of assets are sought after by huge sums of capitals, stock prices and property prices have all soared, along with shop rentals and residential rents, thus resulting in the emergence of many "subdivided units". The grassroots can only live in "subdivided units" with poor security but rents per square foot comparable to those of luxury flats. The number of multimillionaires and the Gini Coefficient in Hong Kong have both recorded one new high after another, evidencing the huge disparity between the rich and the poor in Hong Kong.

If its economy can recover and return to the right track as expected, the United States will put an end to the quantitative easing measures, and this will surely plunge our stock market into turbulence. The wealth effect thus triggered, coupled with subsequent interest rate increases, will make the property 15392 LEGISLATIVE COUNCIL ─ 11 July 2013 market plummet. When all this happens, I am afraid the financial sector and the wealthy classes in Hong Kong will have to live a "difficult" life. The real economy will likewise come under heavy impact, and spates of layoffs and pay cuts may follow, thus endangering the livelihood of the grassroots. There seems to be a direct causal relationship here. However, if you ask me, I will say that this is only an excuse used by the rich to reduce the salaries of employees. If the American economy really recovers, its demand for imported goods will naturally increase and thus give a boost to the trading and cargo industries in Hong Kong. When the exchange rate of the US dollar goes strong, the value of the Hong Kong dollar will increase accordingly. In that case, the pressure of inflation on the livelihood of the grassroots may abate. Also, as property prices drop, rents will hopefully go down. But well, all this is only our wishful thinking. This may not be the case in reality. Am I right? Why? It all depends on whether the financial and monetary policies of the Government will show any signs of change. Many people once had some expectation on LEUNG Chun-ying, thinking that he might tilt towards the "left" due to his grassroots upbringing. But it has turned out that he is even more "rightist" than K C CHAN. Right?

The happiness or misery of the grassroots is largely determined by how the SAR Government chooses the case to be. Regrettably, the SAR Government has often sacrificed the well-being of the people in times of recession, robbing the poor of their properties to help the rich. And, recession has even become an excuse for the SAR Government to deprive the rights and welfare of the grassroots. During any economic downturn, the Financial Secretary will invariably put forth the principle of "keeping the expenditure within the limits of revenues in drawing up its budget" as stated in the Basic Law to justify the need for reducing welfare expenditure ― or at least the need for not increasing the expenditure. Some time ago, Carrie LAM, who has now ascended to rank of Chief Secretary for Administration, was in charge of reducing the rates of Comprehensive Social Security Assistance (CSSA) and the "fruit grant" as the Director of Social Welfare. The then Secretary for Housing, Planning and Lands, Michael SUEN, also rolled out his "Nine Measures" on halting the production of Home Ownership Scheme (HOS) flats, cancelling all land auctions and allowing owners to evict their tenants. In the end, all these measures fattened property developers but caused great misery to the people of Hong Kong. "Developer hegemony" and "collusion between Government and business" have since become the catch phrases of the public.

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At this very time when the SAR Government possesses such huge fiscal reserves, I hope that officials of the SAR Government can all think about the issue with all the conscience they have. The authorities should not reduce the social protection for the grassroots during economic recession, including the social security allowance (CSSA payment), medical protection, as well as the Disability Allowance and transport allowance, and so on.

Members are all talking about the need for a crisis awareness regarding the market exit of the United States. But I instead hope that at this very time when we are still talking about the possible outbreak of a crisis, the SAR Government can hasten to roll out some policies to protect people's livelihood. First, the Government should inject funds to establish a seed fund, so that we can immediately kick-start a universal retirement protection scheme to provide all retired persons over the age of 65 with basic livelihood protection, and also prevent the SAR Government itself from reducing CSSA, the Old Age Living Allowance and the "fruit grant". Second, at present, unemployment protection is provided under the CSSA system only; applicants must undergo prolonged and harsh means tests, and successful applicants are stigmatized as CSSA recipients. I request the SAR Government to expeditiously establish an unemployment relief fund to offer timely assistance to the unemployed. Third, labour rights awareness is weak in Hong Kong; the law does not provide adequate protection to workers; there is an extreme imbalance of powers between employers and employees, and this imbalance is at its worst when economic conditions worsen. I request the Government to expeditiously launch the legislative processes for the right to collective bargaining, standard working hours and paid paternity leave, so as to protect workers from exploitation. Fourth, the construction of additional public housing estates is always the most effective solution to the housing problem of the grassroots. But since LEUNG Chun-ying assumed office, he has only been paying lip-service. I request the Government to make good use of the sites intended for auction for the construction of public housing and HOS flats, so as to cope with the housing demand of the grassroots.

The proposals I have mentioned are no new ideas, but since we are talking about market exit, I think I may as well mention them once again. Speaking of market exit or how we should cope with it once it comes, I would say that no other considerations can be more important than the livelihood of the grassroots. If the Government only wants to prevent plutocrats' loss of money in the hope that something can thus trickle down to benefit us, I must say, "No, thank you." The Government is capable of implementing the proposals put forth by me 15394 LEGISLATIVE COUNCIL ─ 11 July 2013 earlier. These are only very modest requests, and Mr TAM Yiu-chung will also support them.

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

MR SIN CHUNG-KAI (in Cantonese): President, this motion debate is frankly very meaningless …… Thanks to Mr Ronny TONG for telling me that. He has also expressed the same view. Well, even though it is meaningless, I should perhaps still say a few words because this debate has already wasted taxpayers' money and our time whether I speak or not.

The original motion gives the impression that quantitative easing is an ogre. Indeed, it is. The death of this ogre should be a cause to rejoice. However, some Members seem to think that the ogre's death is very bad news, and they hence ask the Government to do something. We must objectively admit that BERNANKE's words last night are about a different stance. He said that the stimulus measures would not be withdrawn in the near future ― this is exactly opposite to what is said in the motion because the motion was put forward several weeks ago. Maybe, two weeks after the passage of this motion today, the Vice Chair of the Federal Reserve Board may once again come out and say …… I have learnt that he may not go to the economic symposium in Jackson Hole this year, but his Vice Chair may say something again, and following his remarks, changes will occur to the market. You know, things just keep changing every day depending on what these people say.

Basically, there should still be certain specific issues that are worth discussing. The only thing is that the original motion is just far too vague in wording, thus making this debate a bit hollow. But, in contrast, the proposal in Mr Christopher CHEUNG's amendment is more specific. And, his proposal also happens to be a subject that this Council is dealing with these days. What I am talking about is his reference to the "two harsh measures". The "two harsh measures" really warrant discussion and debate. I know that two bills committees are discussing the measures these days. When the Government introduced a "harsh measure" for the first time, the market response was not as strong. The first "harsh measure" was about stamp duty, and the time of introduction should be 2012. Later, in 2013, another measure on stamp duty was introduced.

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Mr Christopher CHEUNG says that we should abolish the "two harsh measures" in a timely manner, but he has not explained what he means by "in a timely manner". "In a timely manner" can be interpreted as in the next month or one year, two years or three years later. We really need to discuss this because the relevant bills are still under the scrutiny of the Legislative Council. Therefore, the Government should actually give a more detailed view on this issue. Over the last couple of days, the Government has spoken in greater detail, saying that it is not the right time now. After the protest march on Sunday, the Government also made a response. However, I think we should closely monitor the situation because these measures will produce very concrete impacts. As for the second "harsh measure", the relevant bills committee will follow it up next Monday. I hope the Government can listen to the views of the market, rather than being so totally rigid and merely replying that it is not the time for consideration. Quite the contrary, we should all consider what the right timing should be.

Other Members have also raised some other issues. Ir Dr LO Wai-kwok has suggested that we should push forward infrastructure projects in a timely manner. This suggestion sounds perfectly good, but there is actually one problem. When the 10 major infrastructure projects were rolled out during the time of Donald TSANG, one problem surfaced in Hong Kong ― Members who engage in property development and works projects should be aware of it. It is very difficult to hire construction workers these days, and construction costs are also surging. On this problem, I would think that if it is possible to adjust the timing of our infrastructure projects, the Government should in fact adopt an "anti-cyclical" approach, meaning that it should step up its efforts a bit in times of market sluggishness. Suppose there is already a shortage of workers for our existing infrastructure projects, should we still launch more infrastructure projects? Or, should we instead wait until a good part of the projects are completed and labour supply is not so tight before we launch any more infrastructure projects? If we do not consider these questions, we will fail to hire enough workers during certain times, and during other times workers may fail to find any jobs.

Lastly, while this motion is rather meaningless, I cannot find any reason for opposing the amendments because they simply contain no concrete measures but are just filled with words like "in a timely manner", "appropriate" and "market order". The only thing I want to say is that the Government should take concrete measures to help the people. Mr WONG Yuk-man has proposed a number of 15396 LEGISLATIVE COUNCIL ─ 11 July 2013 measures ― although his speech was a bit fiery and emotional ― to benefit the people. The Government should give thoughts to them. With a huge surplus in hand, the Government should introduce long-term measures to tackle the long-term problems of Hong Kong.

Next week, we will continue to hold a debate on the Hospital Authority and other related issues. We can see that there are many problems such as retirement protection and healthcare services for the elderly. The Government should consider how best to deal with them in the long run. I am glad to see that the Government has set up a working group to study the long-term fiscal planning of Hong Kong, and I consider this move commendable. It is something which should be done. I hope that after completing the study, the Government can disclose the relevant data to the public and promote the formulation of medium- and long-term measures, rather than simply focusing on its responses to the ending of quantitative easing. Quantitative easing aside, the economic situation of the Mainland in fact impacts us much more greatly. Some studies have shown that the economic growth of the Mainland may drop to 2% to 3%. The impact of this on Hong Kong will probably far exceed the impact of quantitative easing. Therefore, we should have vision; we should not just focus on the risks in front of us. I hope the Government can make preparations for stepping its efforts to introduce retirement protection and healthcare services for the elderly.

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

MR LEUNG KWOK-HUNG (in Cantonese): President, BERNANKE must be joking! This morning, when I was on my way back to hurl things at LEUNG Chun-ying, I heard from the radio news that BERNANKE was no longer contemplating any market exit because he thought that the unemployment rate of over 7% actually reflected an exaggeration of the extent of economic recovery. He must be joking. He himself also engages in stocks speculation. This is precisely the most rotten feature of American capitalism. Once a person is elected President, he may appoint anyone he likes as Secretary of the Treasury.

As we all know, a big crisis arose in 2008 because Goldman Sachs had "seckilled" the Lehman Brothers. The story began when all those Goldman Sachs people who took control of the Department of the Treasury decided to "slaughter" the Lehman Brothers. They of course tried to save their own LEGISLATIVE COUNCIL ─ 11 July 2013 15397 products. This is the "financial management techniques" in capitalism. The SNOWDEN incident is another example. They often hack into our accounts to conduct surveillance. Once they notice any violations of their regulations, they will bring them to light and make arrest. Such is the world hegemony of American capitalism and the financial empire called the United States. The worst thing is that China must dance to the tune of the United States. When the United States adopts quantitative easing measures, we must follow suit. If we still adopt any quantitative easing measures after it has turned to an austerity policy, we will die for sure.

President, I do not know which Member has cracked such a big joke, talking about advance preparations like a seer who knows everything in the future. In fact, we should always seek to save Hong Kong people, shouldn't we? As you may know, when we first asked for the implementation of universal retirement protection, Hong Kong only had a reserve of $130 billion. By now, the reserve has grown to $3 trillion. During the first Asian financial turmoil, some said that our finances were in great danger. But our fiscal reserve has since been ever-rising. It has already increased several times by now.

Tax rates in Hong Kong are so low, but our reserve is still so huge. This can show how rich our tycoons are. President, you should remember that when you were a Member of the Provisional Legislative Council, or the Legislative Council, I once hurled things at TUNG Chee-hwa from the public gallery, chiding him aloud, "It is shameful to save only the market but not the people." Unfortunately, my words have come true. Is that right? Under his rule, people really suffered.

Speaking of the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA), I must say that "Old TUNG" was somewhat unlucky. During his time, Communist China had not joined the World Trade Organization (WTO), and had yet to become rich. So, how could it bring any money to Hong Kong? If not because of its ascendancy to the WTO, China could not have become the factory of the world and earned any greenback for delivery to Hong Kong. If not because of all this, could Hong Kong still have any hope? Then, TUNG Chee-hwa stepped down in sorrow. A new age thus began, "Greedy TSANG" came to power. "Greedy TSANG" was obviously commended by all "royalist" Members at the time, and they started to trample on him only after the revelation of the "sea-land-air corrupt practices".

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We often told him that the idea of developing the six major industries simply would not work. We told him that the Commission on Strategic Development and the Task Force on Economic Challenges were just "devices of deception". We told him that if he really wished to achieve anything, he must take concrete actions. We asked him to promote green industries, but he simply ignored us. The Hong Kong Polytechnic University invented a value-adding and high-tech electric vehicle. You see, despite our poor performance in research and development, we still managed to produce such an electric vehicle. In contrast, an electric vehicle invented by the Mainland burst into fire once it was plugged in after arriving at Hong Kong. The truth is in fact very simple. But what has Hong Kong been doing? A casino for gamblers. The development of Hong Kong as an offshore Renminbi market is actually the same as allowing hot money from the Mainland to be laundered in Hong Kong. A market is created to lend money back to the Mainland in times of its money shortage. How can they do anything like this?

What are they talking about now? To privatize, to assetize and to securitize all assets in Hong Kong, private or public alike, just for the sake of speculation. President, those people are all crazy. They have never asked how we should deal with the withdrawal of stimulus until now. If they are really so concerned about this issue, why did they agree to the development of Kowloon East to create another Admiralty? Why did they vote for the development of Qianhai to create another loop? Why did they support allocating more than $10 billion to develop the site above the Express Rail Link (XRL) station for future speculation? Worse still, they even supported building the XRL in Hong Kong with more than $60 billion to connect with the XRL system in the Mainland. Those who advocated the construction of XRL are all condemned.

What else can we say? Very honestly, people all want to make money in a crashing stock market, and make even more money in a buoyant market. These people include every ordinary man in this Council. They all gamble in the stock market when it rises. If they are lucky enough to make gains, they will be very happy. Yet, if they lose any money, they will insist on carrying out investigation, as once insisted by the Democratic Alliance for the Betterment and Progress of Hong Kong in the past. The Lehman Brothers incident was one example. Hey, guys, are you saying that you did not know of the risk at that time? The International Monetary Fund already warned us of the risk as early as 2003. Secretary Prof K C CHAN should know this. The HSBC therefore LEGISLATIVE COUNCIL ─ 11 July 2013 15399 retreated from the market as warned, leaving the Bank of China and the DBS Bank behind to grab the windfall. What did you do at that time? Nothing but speculation.

We call on the Government to do more real work. It should build more public rental housing (PRH) units when it has money in hand. Before inflation gets too serious, it should do more to promote green industries, develop high-value-added industries and produce "integrity products" to tap the Mainland market. What are "integrity products"? All products sold in the Mainland are fakes, but Hong Kong sells genuine products only. Therefore, we should do more in product development to increase our range of products, so that Mainlanders will not just come to buy milk powder. Has the Government taken our suggestions? All it knows is to earn commission.

President, commission will not bring any big money. For a sale of $10 billion, Hong Kong can at most earn a commission of $100 million only. But speculation is different. That is why everyone scrambles for speculative opportunities. Secretary Prof K C CHAN, these guys are trying to fool you. They once supported your efforts to boost the market in preparation for quantitative easing. However, now, when they sense that something is wrong, they yell for help, saying that they will soon lose money. This is all nonsense! It is definitely a shame to save only the market but not the people.

Implement universal retirement protection! Build more PRH units!(The buzzer sounded)

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

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): Mr Andrew LEUNG, you may now speak on the amendments. The speaking time limit is five minutes.

MR ANDREW LEUNG (in Cantonese): President, I am most grateful to Mr Christopher CHEUNG, Mr NG Leung-sing and Ir Dr LO Wai-kwok for proposing their amendments to my motion. Mr Christopher CHEUNG, my 15400 LEGISLATIVE COUNCIL ─ 11 July 2013 fellow party member who comes from the financial services sector, is an expert on this issue. In his amendment, he specifically requests the authorities to consider the revocation of the "two harsh measures" in a timely manner. This suggestion is agreed by our members in the Business and Professionals Alliance for Hong Kong (BPA).

When the Buyer's Stamp Duty and the Special Stamp Duty were first introduced by the Government, we already said that these two government measures would deal severe blows to Hong Kong's free economy and put a heavier burden on local flat owners. From the number of property transactions and property prices recorded, we can see that since the introduction of these "harsh measures", there has been no significant drop in property prices and prices per square foot have remained high; but property transactions have come to a halt. The statistics for property transactions even show that money has flowed to the market of cheaper flats and Home Ownership Scheme flats. As a result, prices of these flats are pushed up drastically. Seeing that property prices keep rising, first-time home buyers with slightly highly affordability are forced to buy their homes at a high price. If, unfortunately, an economic downturn comes later, these buyers who scrimped to save their down payment may become negative equity asset owners. The negative equity asset misery triggered by the Asian financial turmoil is still fresh in many people's memory even after the passage of more than 10 years. I hope that the Government can take this as a good lesson and keep a close watch on the property market. It should be proactive in coping with the latest situation instead of trying to look for solutions only when something has happened.

The amendment of Mr NG Leung-sing objectively describes the latest economic situation and mentions enterprises in particular. I support this point most strongly. President, the BPA have all along been very concerned about enterprises, especially small and medium enterprises (SMEs). My original motion likewise requests the Government to assist members of the public and SMEs in facing a new market order. As 98% of the enterprises in Hong Kong are SMEs, which usually have limited capitals and are most vulnerable to economic impacts, I have specifically highlighted SMEs in my motion, hoping that the Government will pay more attention to them when providing supports to enterprises.

Lastly, I would like to talk about the amendment of Ir Dr LO Wai-kwok, who is also a member of the BPA. In this amendment, Ir Dr LO puts his focus LEGISLATIVE COUNCIL ─ 11 July 2013 15401 on infrastructure; and I share his view. As stated in my speech for moving this motion, in times of recession, the Government must not watch with folded arms; rather, it must grasp the opportunity and increase its investment. By doing so, the Government will not just be able to support the local economy and create job opportunities; it can also enhance the capabilities of local enterprises. Investment in infrastructure is always the primary impetus for economic development. The business and professional sectors have long been asking the Government to propose infrastructure projects, such as the fourth Industrial Estate, the third runway, convention and exhibition facilities, with a view to facilitating the long-term economic development of Hong Kong. However, over the years, these projects have remained mere empty talks.

It takes a long time, often many years, to develop major infrastructure projects. If the timing of infrastructure projects is wrong, Hong Kong will lose its superiority over other economies in the region when the economy recovers, thus hindering our future economic development. Therefore, I hope that the Government can make good preparations now, so that in case of a market reversal, measures can be rolled out expeditiously to sustain the growth of the local economy, provide people from different social strata with job opportunities, and maintain people's confidence.

President, in my view, these three amendments and my original motion all share the same direction and goal. With these remarks, I express support for all these amendments.

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I am grateful to Members for their many valuable opinions on how to cope with the impact of the ending of the quantitative easing measures by the Federal Reserve Board.

As a small, open economy and a major international financial centre, the economic cycle in Hong Kong is closely linked with the global economic and financial conditions. Hence, the Government has been closely monitoring the external economic and monetary background and their implications on the development of the Hong Kong economy.

Many Members have expressed in their speeches the view that Hong Kong's vulnerability to the impact of external economic conditions is attributable 15402 LEGISLATIVE COUNCIL ─ 11 July 2013 to its own economic structure. This is not the first time they put forward this view, and they have actually been saying so very often. The point of their argument is that since Hong Kong mainly depends on the services industries, it can only go along passively when facing the impact of external economic developments. I think this viewpoint is open to discussion. Certainly, we do support the development of more high value-added industries in Hong Kong. Diversification of industries is a very good economic policy objective, but we must not lose sight of the fact that the services industries in Hong Kong is a part of the real economy, and the financial services industry also serves the real economy. Of course, when it comes to the development of the financial services industry, we must prevent the formation of financial asset bubbles and maintain effective regulation on the financial services industry, but the services industries are in themselves a real economic entity. If we look around other economies in the region, even though they have industries, they still face the impact of global market fluctuations, and we do not see that their economies are in any way more stable than ours in Hong Kong. We are a small and open economy, and our buyers naturally come from overseas economies. For this reason, how we can achieve economic growth on the basis of external developments has always been a matter of concern for both the Hong Kong Government and enterprises.

With regard to the quantitative easing policy, as I said in my speech earlier, the major effects that it has brought to us are a surge in asset prices and financial market instability due to a low interest environment; moreover, we do not see any stronger confidence among enterprises in the economic outlook. Therefore, market fluctuations have always been our concern. The Government has also cautioned repeatedly on various occasions that it is impossible for the extremely accommodative monetary environment which now prevails in Hong Kong to last forever. Once the United States and other advanced economies reduce their bond purchases, the risks of a reversal of global capital flow and considerable fluctuations in the financial market are bound to surge. The fluctuations in global stock markets have clearly shown that the financial risks brought by the flows of international capitals must not be neglected. Certainly, we hope that the Federal Reserve Board can provide more explicit policy directions and a timetable to the market in the future, so that the market can make orderly adjustments when the United States ends the quantitative easing measures, thereby minimizing the impact on global financial markets and economies. However, as we can see today, the statements made by the Federal Reserve Board may not always provide a clear direction to the market; quite the contrary, their statements can sometimes give rise to fluctuations.

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Let me now turn back to the measures taken by Hong Kong to maintain financial stability. The Hong Kong Government and financial regulators will continue to closely keep in view market changes in different aspects, including the local currency and foreign exchange markets, the liquidity position and financial risks in the banking system, the performance and trading activities in the local stock market and the derivatives market, and so on. The Government and the regulators have established a number of platforms for discussing the latest development of the financial market and regulation. The regulators also maintain liaison with their overseas counterparts to keep track of the operating and financial situations of foreign financial institutions, in order to identify any risks to Hong Kong's financial markets.

To upgrade the capability of the banks and the financial system of Hong Kong to withstand possible impacts in the future, the Hong Kong Monetary Authority (HKMA) has since 2009 put in place totally six rounds of countercyclical prudential supervisory measures for mortgage lending. Besides, the HKMA will take appropriate regulatory measures when necessary to ensure that individual banks and the entire banking system have sufficient ability to meet the challenges posed by, say, interest rate increases resulting from the market exit of the United States, and the drastic deterioration of the Mainland and Hong Kong economies.

Although the exchange rate of the Hong Kong dollar and interest rates have remained stable and there is no sign showing any massive outflow of capital from Hong Kong, the HKMA will still closely monitor the development of market conditions as the flow of capital may still change rapidly, and there are the risks of a reversal of the property market and interest rate cycles. In the event of sudden massive capital outflows, the HKMA, under the linked exchange rate system, also has in place a mechanism to deal with the possible impact. For instance, the foreign currency reserves accumulated from previous capital inflows will serve as a buffer against capital outflows, thereby maintaining the stability of the Hong Kong dollar exchange rate and avoiding excessive interest rate fluctuations.

The Securities and Futures Commission (SFC) will continue to closely monitor the performance and trading in the market and find out from the exchanges and market players the latest situation of the market while gauging the resilience of various market participants against systemic risks. The SFC has, 15404 LEGISLATIVE COUNCIL ─ 11 July 2013 among other things, implemented since the middle of 2012 a short position reporting regime to enhance the transparency of short-selling activities in the stock market. This is helpful to our monitoring of these activities and enables us to understand the latest development of the market. If there are signs showing the accumulation of risks to a certain level or other irregularities in the market, the SFC will follow up and take appropriate actions. The SFC has also formulated a series of contingency plans for dealing with emergency situations in order to cope with market fluctuations.

The Government and the financial regulators will continuously keep a close watch on the development of the global markets and assess the impact of the latest situation on the local financial services industry. If necessary, we will take effective and timely measures in the light of the situation to ensure the normal operation of the financial market.

The motion today and Members' speeches have mentioned the need to assist enterprises, especially small and medium enterprises (SMEs). I very much agree that SMEs are a major pillar of the economy of Hong Kong. We will make continuous efforts to assist SMEs on various fronts. With a loan guarantee commitment of $100 billion provided by the Government, the Hong Kong Mortgage Corporation Limited (HKMCL) has extended the application period of special concessionary measures under the SME Financing Guarantee Scheme for one year up to the end of February 2014. This will enable the HKMCL to continue to offer loan guarantees with a guarantee ratio of 80% at a concessionary fee rate, so as to help enterprises obtain loans in the commercial credit market. As at the end of May 2013, over 6 800 applications have been approved, involving a loan guarantee amount of more than $23 billion.

We will continue to closely monitor the external economic developments and local economic situation, and review the operation of various measures. We will, in line with the usual practice, take into consideration various factors, including market conditions and the aspirations of the industries, and make adjustments and provide support according to needs.

The Budget has proposed a number of measures to alleviate the burden of the public in their living. They include increasing the tax allowance for children and implementing other one-off measures, such as providing tax concessions, LEGISLATIVE COUNCIL ─ 11 July 2013 15405 waiving rates, providing subsidies for electricity tariffs, providing one additional month of payment under various subsidy schemes, and paying two months' rent for public housing tenants. Moreover, to improve the quality of various public services and the standard of living of the people, total government spending in the current year will increase by 17% over the last. This will include an 11% increase in recurrent expenditure and the expenditure on welfare will even increase by over 30%. Meanwhile, we must ensure that we have sufficient fiscal reserves to cope with unexpected incidents and to serve as a buffer in times of an economic downturn.

In recent years, Hong Kong is faced with super low interest rates, an overflow of capital and a tight supply of residential flats, which have resulted in a persistently exuberant property market. To cope with an overheated property market, the Government introduced demand-side management measures in October 2012, including the enhanced Special Stamp Duty (SSD) and the new Buyer's Stamp Duty (BSD), with a view to suppressing speculative activities while according priority to the housing needs of Hong Kong permanent residents amidst the tight supply situation. In response to signs of the property market becoming exuberant again in early 2013, the Government introduced another round of demand-side management measures in February 2013, including the doubled ad valorem stamp duty for all property transactions, with a view to strengthening the management of demand and cooling down the property market.

We have noticed that the residential property market has shown signs of cooling down since the introduction of the demand-side management measures, but market sentiments remain unsettled. At the same time, the risk of a property bubble cannot be neglected, given the persistence of low interest rates and abundant liquidity, as well as the tight supply of residential properties in the short run.

The Government will continue to monitor closely the development of the residential property market, with reference to a basket of indicators, including the external conditions, property prices, housing affordability of the general public, volume of property transactions, supply of residential properties, growth in mortgage lending, speculative activities, and so on. I wish to emphasize once again that there is not any automatic and direct correlation between the quantitative easing measures in the United States and the demand-side 15406 LEGISLATIVE COUNCIL ─ 11 July 2013 management measures on the property market in Hong Kong. The situation of the United States and that of Hong Kong are different. We will make adjustments to the demand-side management measures in a timely manner in the light of the actual situation in Hong Kong. In the current circumstances, it is necessary to maintain these demand-side management measures. If we rashly suggest that adjustments be made to the property market because of one single reason, this may possibly cause unnecessary over-reaction in the property market, which will not be beneficial to the economy as a whole.

The current measures are extraordinary measures introduced under exceptional circumstances. To ensure that we can make timely adjustments to the measures on the property market by flexibly making reference to the market conditions, the Government has proposed in the relevant stamp duty bill that adjustments to the duty rates be made by means of subsidiary legislation subject to negative vetting by the Legislative Council. Besides, the Government has also undertaken to conduct a review and report to the Legislative Council one year after the enactment of the legislation by the Legislative Council concerning the extraordinary measures of the enhanced SSD and the BSD.

President, there is no room for optimism in the economic outlook of Hong Kong amidst uncertainties in the global economy. In view of possible substantial fluctuations in the asset market, here, I once again appeal to investors, especially ordinary members of the public, to exercise extra caution in making decisions on investment and take adequate risk management measures.

In the face of the prevailing uncertainties, the Government will focus its energy on meeting the challenges on various fronts while seizing the opportunity to enhance the international competitiveness of Hong Kong. When necessary, the Government will not hesitate to introduce appropriate measures to maintain the stability and robustness of the financial market and the economy.

Thank you, President.

PRESIDENT (in Cantonese): Mr Christopher CHEUNG, you may move your amendment to the motion.

LEGISLATIVE COUNCIL ─ 11 July 2013 15407

MR CHRISTOPHER CHEUNG (in Cantonese): President, I move that Mr Andrew LEUNG's motion be amended.

Mr Christopher CHEUNG moved the following amendment: (Translation)

"To delete "as" after "That," and substitute with "following the announcement by Bernanke, Chairman of"; to delete "will gradually end" after "the United States" and substitute with ", that"; to delete "," after "easing measures" and substitute with "will be ended gradually, which has immediately triggered a wave of global financial fluctuations,"; and to delete "to" after "appropriate measures" and substitute with ",including considering the revocation of 'the two harsh measures' in a timely manner, i.e. the Buyer's Stamp Duty and the Special Stamp Duty which are targeted at the property market, to prevent the recurrence of negative equity, and"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment, moved by Mr Christopher CHEUNG to Mr Andrew LEUNG's motion, 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 Kenneth LEUNG rose to claim a division.

PRESIDENT (in Cantonese): Mr Kenneth LEUNG has claimed a division. The division bell will ring for five minutes.

15408 LEGISLATIVE COUNCIL ─ 11 July 2013

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 Albert HO, Mr James TO, Mr Tommy CHEUNG, Dr Joseph LEE, Mr Jeffrey LAM, Mr Andrew LEUNG, Mr WONG Ting-kwong, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr IP Kwok-him, Mr NG Leung-sing, Mr Steven HO, Mr YIU Si-wing, Mr MA Fung-kwok, Mr Charles Peter MOK, Mr Dennis KWOK, Mr Christopher CHEUNG, Mr Martin LIAO, Mr POON Siu-ping, Ir Dr LO Wai-kwok and Mr Tony TSE voted for the amendment.

Mr CHEUNG Kwok-che voted against the amendment.

Miss CHAN Yuen-han, Mr Kenneth LEUNG, Mr KWOK Wai-keung and Mr TANG Ka-piu abstained.

Geographical Constituencies:

Mr CHAN Kam-lam, Ms Emily LAU, Mr TAM Yiu-chung, Mr Ronny TONG, Mr CHAN Hak-kan, Dr Priscilla LEUNG, Mrs Regina IP, Ms Claudia MO, Mr James TIEN, Mr WU Chi-wai, Mr Gary FAN, Dr Kenneth CHAN, Mr SIN Chung-kai, Dr Helena WONG and Dr CHIANG Lai-wan voted for the amendment.

Mr LEE Cheuk-yan and Ms Cyd HO voted against the amendment.

Mr WONG Kwok-hing, Mr WONG Kwok-kin and Mr Michael TIEN abstained.

LEGISLATIVE COUNCIL ─ 11 July 2013 15409

THE PRESIDENT, Mr Jasper TSANG, did not cast any vote.

THE PRESIDENT announced that among the Members returned by functional constituencies, 26 were present, 21 were in favour of the amendment, one against it and four abstained; while among the Members returned by geographical constituencies through direct elections, 21 were present, 15 were in favour of the amendment, two against it and three 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.

MR ANDREW LEUNG (in Cantonese): President, I move that in the event of further divisions being claimed in respect of the motion on "Impact of the United States' ending the quantitative easing measures" 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 Mr Andrew LEUNG be passed.

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

(No Member indicated a wish to speak)

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)

15410 LEGISLATIVE COUNCIL ─ 11 July 2013

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 on "Impact of the United States' ending the quantitative easing measures" 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): Members have already been informed, as Mr Christopher CHEUNG's amendment has been passed, Mr NG Leung-sing has withdrawn his amendment.

PRESIDENT (in Cantonese): Ir Dr LO Wai-kwok, as the amendment of Mr Christopher CHEUNG has been passed, you may now move your revised amendment.

IR DR LO WAI-KWOK (in Cantonese): President, I move that Mr Andrew LEUNG's motion as amended by Mr Christopher CHEUNG be further amended by my revised amendment. My revised amendment is mainly on retaining one part in my original amendment, that is, "take precautions by fully evaluating the impacts of a market reversal, once occurred, on Hong Kong's overall economy and labour market, push forward infrastructure projects in a timely manner". Also, there are also some revisions of wording, and the parts that do not need to be retained have been deleted.

Ir Dr LO Wai-kwok moved the following further amendment to the motion as amended by Mr Christopher CHEUNG: (Translation)

"To add "; this Council also urges the Government to take precautions by fully evaluating the impacts of a market reversal, once occurred, on Hong Kong's overall economy and labour market, and push forward infrastructure projects in a timely manner" immediately before the full stop."

LEGISLATIVE COUNCIL ─ 11 July 2013 15411

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Ir Dr LO Wai-kwok's amendment to Mr Andrew LEUNG's motion as amended by Mr Christopher CHEUNG 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 amendment passed.

PRESIDENT (in Cantonese): Mr Andrew LEUNG, you may now speak in reply. You have one minute and 33 seconds.

MR ANDREW LEUNG (in Cantonese): President, I am very grateful to the 17 Members who have spoken on the motion. I also wish to thank Mr Jeffrey LAM and Dr LAM Tai-fai for attaching so much importance to this motion. They helped me ask other Members to come back and discuss this issue. Members are worried about the impact of the market exit of the United States. They are particularly concerned that SMEs may face borrowing difficulties, and that interest rate increases may increase people's burden of mortgage loan repayments.

Actually, as also mentioned in my speech, I hope the Government can lend its support to Hong Kong people, including the grassroots. We are not talking about large enterprises only, because SMEs and the grassroots will also be affected. I am also very grateful to the Secretary for his positive response. Many Members have asked for the revocation of the "two harsh measures". This is because they are afraid of the recurrence of negative equity assets and the 15412 LEGISLATIVE COUNCIL ─ 11 July 2013 impact on borrowing and cash flow of SMEs. Mr Kenneth LEUNG talks about relying on activities in the real economy to boost the Hong Kong economy. This I would agree. My good friend Mr Ronny TONG mentioned that some bankers were almost bankrupt, but they are now all right because the index has gone up by 500 points in a week. I would advise him not to invest in structured products. He is an outstanding barrister, but when it comes to making investments, maybe he should heed our advice.

Thank you, President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr Andrew LEUNG, as amended by Mr Christopher CHEUNG and Ir Dr LO Wai-kwok, be passed.

PRESIDENT (in Cantonese): 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 as amended passed.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the meeting until 11 am on Wednesday 17 July 2013.

Adjourned accordingly at twenty-six minutes past Seven o'clock.