OFFICIAL RECORD OF PROCEEDINGS Wednesday, 20 January … · LEGISLATIVE COUNCIL 20 January 2016 3699 OFFICIAL RECORD OF PROCEEDINGS Wednesday, 20 January 2016 The Council met at Eleven

LEGISLATIVE COUNCIL ─ 20 January 2016

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OFFICIAL RECORD OF PROCEEDINGS

Wednesday, 20 January 2016

The Council met at Eleven o'clock

MEMBERS PRESENT: THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.M., 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 ABRAHAM SHEK LAI-HIM, G.B.S., J.P. THE HONOURABLE TOMMY CHEUNG YU-YAN, G.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.

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PROF THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P., Ph.D., R.N. 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 CYD HO SAU-LAN, J.P. THE HONOURABLE STARRY LEE WAI-KING, 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 WONG KWOK-KIN, S.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


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THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P. THE HONOURABLE NG LEUNG-SING, S.B.S., J.P. THE HONOURABLE STEVEN HO CHUN-YIN, B.B.S. THE HONOURABLE FRANKIE YICK CHI-MING, J.P. THE HONOURABLE WU CHI-WAI, M.H. THE HONOURABLE YIU SI-WING, B.B.S. THE HONOURABLE GARY FAN KWOK-WAI THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P. THE HONOURABLE CHARLES PETER MOK, J.P. THE HONOURABLE CHAN CHI-CHUEN THE HONOURABLE CHAN HAN-PAN, J.P. 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, B.B.S., J.P. DR THE HONOURABLE KWOK KA-KI THE HONOURABLE KWOK WAI-KEUNG THE HONOURABLE DENNIS KWOK


THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, S.B.S., 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, S.B.S., J.P. THE HONOURABLE POON SIU-PING, B.B.S., M.H. THE HONOURABLE TANG KA-PIU, J.P. DR THE HONOURABLE CHIANG LAI-WAN, J.P. IR DR THE HONOURABLE LO WAI-KWOK, S.B.S., M.H., J.P. THE HONOURABLE CHUNG KWOK-PAN THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P. THE HONOURABLE TONY TSE WAI-CHUEN, B.B.S. MEMBERS ABSENT: DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P. DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P. THE HONOURABLE CHEUNG KWOK-CHE THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P.


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PUBLIC OFFICERS ATTENDING: THE HONOURABLE JOHN TSANG CHUN-WAH, G.B.M., J.P. THE FINANCIAL SECRETARY PROF THE HONOURABLE ANTHONY CHEUNG BING-LEUNG, G.B.S., J.P. SECRETARY FOR TRANSPORT AND HOUSING THE HONOURABLE MATTHEW CHEUNG KIN-CHUNG, G.B.S., J.P. SECRETARY FOR LABOUR AND WELFARE PROF THE HONOURABLE K C CHAN, G.B.S., J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY THE HONOURABLE GREGORY SO KAM-LEUNG, G.B.S., J.P. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT THE HONOURABLE LAI TUNG-KWOK, S.B.S., I.D.S.M., J.P. SECRETARY FOR SECURITY MR GODFREY LEUNG KING-KWOK, J.P. UNDER SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT

CLERKS IN ATTENDANCE: MR KENNETH CHEN WEI-ON, S.B.S., SECRETARY GENERAL MISS ODELIA LEUNG HING-YEE, DEPUTY SECRETARY GENERAL MS ANITA SIT, ASSISTANT SECRETARY GENERAL MS DORA WAI, ASSISTANT SECRETARY GENERAL


PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members to the Chamber. (After the summoning bell had been rung, a number of Members entered the Chamber) TABLING OF PAPERS The following papers were laid on the table under Rule 21(2) of the Rules of Procedure: Subsidiary Legislation/Instruments L.N. No.

Land Survey (Fees) (Amendment) Regulation 2016 ......... 2/2016 Rules of the High Court (Amendment) (No. 4) Rules 2015 ... 3/2016 Rules of the District Court (Amendment) (No. 2) Rules

2015 ....................................................................

4/2016 Child Abduction Legislation (Miscellaneous Amendments)

Ordinance 2014 (Commencement) Notice ............

5/2016 Inland Revenue (Amendment) (No. 3) Ordinance 2015

(Commencement) Notice .......................................

6/2016 Toys and Children's Products Safety Ordinance (Amendment

of Schedules 1 and 2) Notice 2016 ........................

7/2016 Other Paper

No. 60 ─ Legal Aid Services Council Annual Report 2014-2015


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ORAL ANSWERS TO QUESTIONS PRESIDENT (in Cantonese): Questions. First question. Protection of Wages on Insolvency Fund 1. MR KWOK WAI-KEUNG (in Cantonese): President, at present, when a winding-up or bankruptcy petition has been filed with the Court against an employer, the employee(s) concerned may apply for ex-gratia payments from the Protection of Wages on Insolvency Fund (PWIF) to cover the outstanding wages, the pay for untaken annual leave, the pay for untaken statutory holidays, wages in lieu of notice, severance payments, etc. PWIF is administered by the Protection of Wages on Insolvency Fund Board (the Board) and the Labour Department is responsible for handling and vetting the relevant applications. In August last year, a furniture and electrical appliance chain store suddenly closed down, rendering around 400 employees being owed wages, wages in lieu of notice and severance payments. Although such employees were granted ex-gratia payments by PWIF in the end, some of them have pointed out that they have encountered numerous obstacles in applying for ex-gratia payments, there are problems about the application procedures and calculation methods of ex-gratia payments, and the coverage of PWIF is inadequate. These problems have undermined the level of protection available to employees under PWIF. In this connection, will the Government inform this Council:

(1) given that when there are disputes between the employees and the companies in liquidation over the amounts owed to the employees, the amounts have to be determined by the Labour Tribunal (LT), but PWIF does not always calculate the amounts of ex-gratia payments payable to the employees concerned according to LT's determination, whether the authorities will review if the procedure requiring LT to determine the amounts owed to employees is necessary;

(2) given that the payment ceilings of a number of ex-gratia payment

items under PWIF have not been adjusted for years (for example, it has been over 20 years since the ceiling of wages in lieu of notice was increased to $22,500 in 1996 but no further adjustment has been made), whether it knows why the Board has not reviewed the levels


of the payment ceilings for years, and whether the Board will conduct a review and put forward relevant adjustment proposals expeditiously; if the Board will not, of the reasons for that; and

(3) given that when this Council scrutinized the Protection of Wages on

Insolvency (Amendment) Bill 2011, the authorities indicated that the Board had undertaken to review the coverage of PWIF, of the details and progress of the review, and when the authorities will submit the relevant review report to the Labour Advisory Board and the Panel on Manpower of this Council?

SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, the Protection of Wages on Insolvency Fund (PWIF) was set up to provide timely relief in the form of ex-gratia payment to employees in the event of the closure of business of their insolvent employers. The ex-gratia payment covered by the PWIF includes wages, wages in lieu of notice, severance payment, pay for untaken annual leave and pay for untaken statutory holidays. My reply to the question raised by Mr KWOK Wai-keung is as follows:

(1) Under the Protection of Wages on Insolvency Ordinance (PWIO) (Cap. 380), the filing of a bankruptcy or a winding-up petition against an employer is a pre-condition for the grant of ex-gratia payment from the PWIF. If the amount owed to the employee is undisputed between the employer and the employee, and the employer has confirmed his inability to pay the said amount, the Labour Department (LD) can process the employee's application for payment from the PWIF after having received all the relevant information so long as a bankruptcy or a winding-up petition has been presented to the Court against the employer, irrespective of whether the petition is filed by the employee or other creditors of his/their own accord. In such circumstances, there is no need for the employee to seek the Labour Tribunal (LT)'s determination of his claim(s).

If the employee has to apply for legal aid for filing a bankruptcy or a

winding-up petition to the Court against the employer, the LD will refer the employee to the Legal Aid Department (LAD). If,


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however, the employee fails to establish the amount of debts owed as claimed before the Court in its hearing of the said petition, the process of his claim for recovering the outstanding payments may be delayed and the cost incurred by the relevant parties on filing the petition may be wasted. Therefore, according to the LAD, generally speaking, unless the amount owed by the employer is undisputed between the employer and the employee, and the employer has admitted his inability to pay the debts, the employee is required to confirm his employment relationship with the employer, the payment item(s) and amount owed by the employer to him and the inability of the employer to pay the amount. For this reason, the LD will be required to refer the employee's case to LT for determination so as to ascertain the claim item(s) and amount due to the employee before the LAD can process the employee's application for legal aid. If the employer fails to pay the said amount in accordance with the award made by LT, the employee may then file a bankruptcy or a winding-up petition to the Court against the employer on the basis of the said award and concurrently apply for ex-gratia payment from the PWIF.

In processing applications for ex-gratia payment from the PWIF, the

LD carefully verifies the information and documents provided by the applicant or other relevant parties in respect of each application. If the employee has obtained an award made by LT in respect of his claim(s), the LD will make reference to the award in the course of verifying his application for ex-gratia payment. As verification of applications is conducted on the basis of all the available information, and there is a statutory ceiling on every item of ex-gratia payment under the PWIO, the amount of ex-gratia payment approved by the LD may be less than that awarded by LT.

(2) The Protection of Wages on Insolvency Fund Board (Board) reviews

from time to time the scope of protection of the PWIF having regard to the changes in the socio-economic circumstances and needs as well as the financial position of the PWIF in order to progressively improve the protection accorded to employees. With the improvements made over the years, the majority of applicants for the PWIF can now receive all or a large part of the amount that they


applied for. Notwithstanding, the Board will take into account the item on wages in lieu of notice in the review that it is currently conducting.

(3) The Protection of Wages on Insolvency (Amendment) Ordinance

2012 (Amendment Ordinance) was passed by the Legislative Council in April 2012 to expand the scope of the PWIF to cover pay for untaken annual leave and pay for untaken statutory holidays so as to improve the protection of employees who are affected by their insolvent employers. The relevant amendments have taken effect in June 2012. In endorsing the amendment proposals, the Board agreed to review the scope of protection of the pay for untaken annual leave and pay for untaken statutory holidays, including the payment ceiling of $10,500, one year after implementation of the Amendment Ordinance based on actual operational experience and the relevant data.

The Board kick-started a review in this regard in the second half of

2013 and, having regard to the views of the Panel on Manpower of Legislative Council, has undertaken to cover all the payment items under the PWIF in its review. In the process, the Board has to examine with prudence all the relevant information, including the forthcoming ruling of the Court of Final Appeal in April this year on a judicial review case concerning the calculation of ex-gratia payment on severance payment, and the effect that the said ruling may have on the financial position of the PWIF for the purpose of thoroughly considering the matter. When the result of the review is known, the Government will definitely consult the Labour Advisory Board and the Panel on Manpower of Legislative Council as soon as possible.

MR KWOK WAI-KEUNG (in Cantonese): President, the labour sector has all along opposed the offsetting arrangement and considered that it would weaken the function and role of the Mandatory Provident Fund (MPF) in providing retirement protection. However, after reading the recent Policy Address, it seems to me that the Government remains indifferent to the call for the MPF offsetting mechanism to be abolished. I received complaints from many workers


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when handling the case of the DSC. They initially expected to receive from the PWIF advance payments for the outstanding balance of severance payments after offsetting, but because of the PWIF's calculation methods, these workers have not been able to receive the balance. Since the offsetting mechanism has rendered the PWIF unable to perform its due role and function, may I ask the Secretary whether he would proactively advise the Government to abolish the offsetting mechanism in the review being conducted by the Board? What I mean is the Board tasked to review the PWIF. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I thank Mr KWOK for his supplementary question and concern. The operation of the PWIF is completely unrelated to the MPF offsetting arrangement. The PWIF solely operates and is subject to regulation under the law. Of course, if Members have concerns about this issue, we would be ready to listen to their views and pass them on. As Members would be aware, we have six months to conduct the consultation. We are ready to listen to views from the society before 21 June, no matter whether such views are expressed by groups or by any boards. PRESIDENT (in Cantonese): Mr KWOK, what is your point? MR KWOK WAI-KEUNG (in Cantonese): President, I was asking whether the Board for reviewing the PWIF would give advice to the Government on the abolition of the MPF offsetting mechanism; I was not referring to any other groups or boards. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, the Protection of Wages on Insolvency Fund Board is an independent statutory body which is obliged to advise the Government on issues within its remit. The issue of whether or not the offsetting mechanism should be retained falls outside the remit of the Board. However, as I said earlier, if the Board puts forward any view on this issue to the Government, we would be ready to listen.


MR POON SIU-PING (in Cantonese): President, I am a member of the Board. Mr KWOK Wai-keung asked earlier when the Board would review the issue of expanding the scope of protection offered by the PWIF. The Secretary replied that the Board had already kick-started a review in the second half of 2013, but since the Court of Final Appeal was dealing with a judicial review case concerning the calculation of ex-gratia payment on severance payment which had dragged on for a long time and it would hopefully give its final verdict in April this year, the review had not been completed. If the Court ruled that the Government had erred in its calculations, the Government would surely follow the matter up. Regarding the review report on the PWIF, the Secretary has certainly said that it would be completed as soon as possible, but will he submit the entire report, including the contents on wages in lieu of notice, outstanding wages and pay for untaken leave and so on, to the Labour Advisory Board and the Legislative Council for discussion immediately after the Court has given its ruling in April this year? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I thank Mr POON for the question. First of all, the Court of Final Appeal will only hear the case in April this year and I believe the Court of Final Appeal needs time to consider the case and will not give its ruling immediately. Once the Board receives the final ruling, it will decide on the appropriate steps to take. If the Government wins the case and the calculation methods remain unchanged, we will immediately submit the results of the review to the Labour Advisory Board, give a comprehensive report to the Panel on Manpower and consult Members' views. MR LEUNG YIU-CHUNG (in Cantonese): President, as said by the Secretary in his reply, at present, the full amount of payments which are protected under the law cannot be made out of the PWIF to employees. The Secretary said that a review on the PWIF was being conducted and pending the final ruling of the Court in April, the results of the review would be submitted to the Labour Advisory Board and an account of the matter would be given. On the issue of universal retirement protection, since the Government has adopted a clear stance of opposing the introduction of a universal retirement protection scheme, may I ask the Secretary, as far as the scope of protection of the PWIF is concerned,


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whether he would agree to provide employees with the full amount of payments which are protected under the law, and put forth this proposal as the Government's stance to the Labour Advisory Board for consideration? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): The authorities' general policies concerning the operation of the PWIF are as follows: first, we seek to promote the employees' interests progressively and make advances with the times, having regard to the actual socio-economic development of Hong Kong. As Members may be aware, the ceiling of ex-gratia payment under the PWIF has increased from only $8,000 to $289,000 in 31 years, indicating a continuous improvement over the years. Nevertheless, the Board has to adhere to certain basic principles. The PWIF has been set up, after all, to make ex-gratia payments to employees in the form of a financial relief when the employer closes down his business and is unable to pay his debts, particularly when the employer has difficulties in paying wages to his employees. The payments made out are not supposed to cover all the losses of the employees, which, in common terms, means that there is no "guarantee" against all losses. We should bear in mind that the purpose of the PWIF is only to make ex-gratia payments to employees in order to relieve their financial pressure. Under the circumstances, the Board also has to adhere to certain principles. Just now, Mr LEUNG suggested that the full amount of payments which are protected under the law be paid out to employees. I think there are difficulties with adopting this approach. In fact, the ceiling of ex-gratia payment has increased from $8,000 in the past to nearly $300,000 at present, which is not a small amount. It is important that the PWIF has to be financially sustainable and it has to grant payments prudently. If it adopts too lax an approach, it may actually encourage employers to default on wage payments altogether and let the PWIF pay. In other words, employers may look upon the PWIF as their automatic teller machines. We must handle the actual situations like this carefully, balance all factors and make progress where feasible. As I mentioned earlier, we are conducting a review. If the Court of Final Appeal rules in favour of the Government and the methods for calculating ex-gratia payments remain unchanged, we can immediately put forward a series of improvement measures to the Legislative Council in the hope that the relevant legislative proposals will be passed as soon as possible.


MR LEUNG YIU-CHUNG (in Cantonese): President, the Secretary has not answered my supplementary question which I have asked clearly. Does the Government agree or disagree with the proposal and will it put forward the proposal to the Labour Advisory Board? I was not asking the authorities to handle the matter prudently; I just want to know what the Government's stance is, that is, whether it agrees or disagrees with the proposal. PRESIDENT (in Cantonese): Mr LEUNG, I heard the Secretary's clear answer to your supplementary question. Secretary, will you give a clear and brief reply again please? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): Let me respond briefly then. The Board has its own basic principles. While the Government is concerned about the welfare of the employees, it cannot "guarantee" against all losses. Generally speaking, the majority of the employees can recover the full amount of the wages in arrears, that is, they are already protected under the existing safety net. However, we will not take it lightly. Where circumstances allow and when there is room for improvement, we will continue to achieve our objective of making improvements. MISS ALICE MAK (in Cantonese): President, the Secretary said in the main reply that, "The Protection of Wages on Insolvency Fund Board reviews from time to time the scope of protection of the PWIF having regard to the changes in the socio-economic circumstances and needs as well as the financial position of the PWIF". In fact, the current levels of various ex-gratia payments were set as early as in 1995, what did the Secretary mean by reviewing "from time to time"? When were the reviews conducted? Since we know that the socio-economic circumstances have changed significantly over the years, why have the authorities not conducted any review on the levels of ex-gratia payments? As the Secretary also said that the financial position of the PWIF was one of the factors for consideration, may I ask the Secretary what the current financial position of the PWIF is?


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SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I thank Miss Alice MAK for the supplementary question. First of all, as I said earlier, the level of protection offered by the PWIF has advanced with the times. Initially, the ceiling of ex-gratia payment under the PWIF for wages in arrears was only $8,000, but the employee can now recover up to a total of $289,000 (with different combinations of payments). That is one obvious example. Second, as Members would be aware, the authorities have recently set the payment ceilings of pay for untaken statutory holidays and untaken annual leave at $10,500. The legislative proposal for this enhanced protection was endorsed by the Legislative Council two years ago. That is another obvious example. Besides, the ceiling of ex-gratia payment for severance payment has also continuously increased in the hope that it can keep up with the times. Regarding the financial situation of the PWIF mentioned by Miss MAK, the PWIF has accumulated a healthy surplus of about $4.3 billion at present. Although that sounds a huge sum, we should not forget that circumstances can change drastically. The PWIF faces different challenges under different economic situations and the figures involved can differ significantly. For example, in 2002 when the economic situation was very poor, the PWIF received 23 000 claims for a total amount of more than $500 million. By comparison, in 2015 when the situation has improved significantly, there were only some 3 400 claims for a total amount of $60-odd million. Hence, the difference can be seven- or eight-fold. Furthermore, when there is an economic downturn, the number of applications for business registration certificates will drop significantly. A simple example is that in 2002 when the economy was in the doldrums, there were only 730 000 applications for business registration certificates, but in the financial year of 2014-2015, there were 1.38 million, which was almost twice as many. Since the economic situation can change for the worse suddenly, the PWIF must maintain an adequate reserve. Nevertheless, I am not saying that we should not make any change at all. The Board has already done its work and we are only waiting for the ruling of the Court of Final Appeal. In fact, earlier on, I had tried to convince a trade union official not to lodge an appeal, but he insisted to appeal his case to the Court of Final Appeal and so the matter has dragged on for some time. Nevertheless, I respect his view. If he decides not to appeal when the case is dealt with at the stage of the Court of Appeal, we can come back to the Legislative Council immediately to make improvement by legislative means.


MR TANG KA-PIU (in Cantonese): The Secretary said clearly in reply to Mr KWOK Wai-keung that the offsetting arrangement was not related to the PWIF. I totally disagree with this point. Because of the offsetting arrangement, the PWIF has not been able to provide protection to employees in respect of outstanding severance payment. The Secretary said that we should avoid the situation in which employers would look upon the PWIF as their automatic teller machines. However, under the current mechanism, the offsetting arrangement has become the PWIF's coffer. As a result, the employer does not have to pay, the Government does not have to provide compensation and the employees has to pay their severance payments with their own money. Does the Secretary agree with this statement? SECRETARY FOR LABOUR AND WELFARE (in Cantonese): I have to state the differences involved and clarify some concepts. Mr TANG, funding of the PWIF and the MPF comes from different sources. Funding of the PWIF comes from the business registration certificate levy. Every employer has to pay $250 at present and no employer can be exempted. On the other hand, the employers' MPF accrued benefits are derived from the employers' contributions. The two cannot be confused. We understand Members' concerns about the MPF offsetting arrangement. In fact, we had a very thorough discussion on the subject in the Panel on Manpower yesterday afternoon and the Subcommittee formed under the Panel on Manpower will commence work soon. Members can discuss the subject in more detail in that forum. (Mr LEUNG Kwok-hung stood up but did not raise any supplementary question) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, are you going to ask a supplementary question? MR LEUNG KWOK-HUNG (in Cantonese): President, Mr LEUNG Yiu-chung asked the Secretary a supplementary question earlier which you said the Secretary had answered, but his answer was not an answer at all. I would not mind taking the trouble to ask it once again. The Labour Advisory Board


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comprises the three parties, namely, the employees, the employers and the Government. Employees and employers are in conflict with each other. When Mr LEUNG asked the Secretary what the Government's view was, he replied that the Government had not taken any stance and it would respect the Board. Let me ask the Secretary once again. It is simple. What the Government's stance is if the employees make such a demand? What I mean is, will the PWIF pay the employees' entitlement in full? It is so simple. Please answer it. SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I have answered this question very clearly just now. The Board has to act in accordance with the established basic principles and comply with the statutory provisions. For example, the legislation stipulates that the Board cannot pay ex-gratia payment more than the payment ceiling and after paying the first $50,000, it can only pay half of the outstanding amount. This is the statutory requirement. Another principle is that the PWIF has to be financially sustainable. It should be noted that if the Board pays employees every item of payment owed to them in full, this may encourage or condone the defaults on wage payments by employers. Why? The reason is that if any problem occurs, the Government will "guarantee" to pay in full. That is an undesirable approach. Nonetheless, the authorities will surely continue to improve employees' welfare having regard to the actual circumstances. MR LEUNG KWOK-HUNG (in Cantonese): He has not answered the question. I asked him what the Government's stance was. He may introduce a bill to amend the legislation. The legislature can do anything other than turning a man into a woman … the Government can revise the payment ceilings simply by introducing a bill. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, debate is not allowed during Question Time. MR LEUNG KWOK-HUNG (in Cantonese): I was asking him what his stance was …


PRESIDENT (in Cantonese): As I have reminded Members time and again, debate is not allowed during Question Time. The Secretary has answered your supplementary question, if you are not satisfied with his answer, please pursue the matter through other channels. MR LEUNG KWOK-HUNG (in Cantonese): President, please listen to me carefully. I asked him what his stance was, but he told me the difficulties involved. Stance and difficulties are two different things. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please sit down. The time for this question is up. (Mr LEUNG Kwok-hung indicated his request for a headcount) 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): Second question. Imposing Stamp Duty on Transactions of Specified Derivatives 2. MR SIN CHUNG-KAI (in Cantonese): The Stamp Duty Ordinance provides that for each transfer of stocks, both the buyer and the seller must pay a stamp duty at a rate of 0.1% on the value of the transaction. However, transactions of specified derivatives, including derivative warrants (commonly known as "warrants") and callable bull/bear contracts, are exempted from the payment of stamp duty. In this connection, will the Government inform this Council:

(1) of the detailed justifications for the authorities' granting stamp duty exemption for the transactions of specified derivatives;


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(2) of the respective percentages of the turnovers of derivative warrants, callable bull/bear contracts and other various specified derivatives in the total turnover of the securities market in each of the past three years; and

(3) whether it will, for the sake of complying with the principle of

fairness, consider revoking the stamp duty exemption for the transactions of specified derivatives, so that investors are required to pay stamp duty for all types of securities transactions; if it will, of the details; if not, the reasons for that?

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

(1) Under the Stamp Duty Ordinance (SDO) (Cap. 117), the buyer and the seller each has to pay stamp duty in respect of instruments for transfer of Hong Kong stock.

"Hong Kong stock" is defined in the SDO to mean stock the transfer

of which is required to be registered in Hong Kong, including any right, option or interest in respect of such stock.

If derivative products are settled by physical delivery, share transfers

will be involved, and will therefore be chargeable to stamp duties. Generally speaking, if the holder of a derivative has no right to the underlying stock, the derivative will not be a "Hong Kong stock" as defined under the SDO, and its transfer will not be subject to stamp duty. At present, the trading of derivatives under the markets of the Hong Kong Exchanges and Clearing Limited (HKEx) is cash-settled and thus, it is not subject to stamp duty.

The Financial Secretary proposed in the 1997-1998 Budget to

encourage derivative trading by way of tax remission. Stamp duty payable on transactions in regional derivative warrants and convertible bonds had been remitted since April 1997. In 1998, the Stamp Duty (Amendment) (No. 2) Ordinance 1998 (which, among other things, added section 19(1D) and the Fourth Schedule to the SDO) was enacted to replace the stamp duty remission arrangement


at that time for transactions in regional derivative options and convertible bonds or notes with a specific exemption, so as to simplify the process for granting the concession, and extend such exemption to cover transactions in regional derivative warrants which had no more than 40% weighting by value in Hong Kong stocks.

(2) According to the information of the HKEx, the turnovers of

derivative warrants and callable bull/bear contracts in 2013 were $1,783.3 billion and $1,269.2 billion respectively, accounting for 12% and 8% of the securities market's total turnover. In 2014, their respective turnovers were $2,044.5 billion and $1,230 billion, accounting for 12% and 7% of the securities market's total turnover. The turnover figures of 2015 were $4,504.7 billion and $1,836.9 billion, accounting for 17% and 7% of the securities market's total turnover.

(3) It is a common practice in international financial markets that

derivative products are not subject to stamp duty. Major international derivative markets including the United States, the United Kingdom, Germany, Australia, Singapore and China all do not levy stamp duty on trading of derivative products.

As an international financial centre, Hong Kong must provide a

competitive trading environment, including competitive transaction costs. As the product nature and trading purpose are different, unlike stock investors, derivative product investors do not have rights such as dividend payment and voting rights.

If derivative products are settled by physical delivery, share transfers

will be involved, which is equivalent to trading on stocks. Thus, both cases will be subject to stamp duties, and this will not cause any unfairness to investors.

MR SIN CHUNG-KAI (in Cantonese): President, according to the information provided in part (2) of the main reply, the turnovers of these two types of derivative products now account for 24%, or almost one fourth, of the securities market's total turnover. It is thus clear that the introduction of tax remission


3719

some 19 years ago to pursue the policy objective of encouraging derivative trading has been highly successful. As the intended objective has been achieved, can the tax remission be reduced progressively? In part (3) of the main reply, the Secretary also mentioned that as derivative product investors do not enjoy certain rights, the granting of stamp duty exemption will not cause any unfairness. It is of course a question whether stamp duty should be levied or not, but is it possible to have different levels of stamp duty? For instance, trading of stocks should be subject to a higher stamp duty rate and trading of derivative products should be subject to a lower rate? The crux is whether the policy of granting total stamp duty exemption for derivative products is worth reviewing now. Since the objective set in 1997 has already been achieved, is it no longer necessary to encourage derivative trading in Hong Kong by way of tax remission? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, allow me to explain the matter more concisely. In the 90s, stamp duty remission was implemented for derivative products settled by physical delivery because under the provisions of the SDO, these transactions were subject to stamp duty. Hence such an exemption was granted at that time. However, the trading of derivatives that we are now referring to is all settled in cash and does not involve share transfers. Under the provisions of the SDO, cash-settled transactions of derivative products are not subject to stamp duty. All in all, the current success of the HKEx derivatives market has nothing to do with the then tax remission because cash-settled derivatives transactions are not subject to stamp duty under the SDO in the first place. I would like to add that although the ratio of derivatives trading is by no means small in relation to the securities market's total turnover, but this ratio can hardly be considered high when compared with other overseas markets. We are satisfied that while the derivatives in the market have achieved a balanced development, there is still scope for continuous development in the right track. MR SIN CHUNG-KAI (in Cantonese): My question is specifically that as the derivatives market has been so successful, accounting for 24% of the market's total turnover, is it still necessary to provide such a remission? The points mentioned by the Secretary about delivery physical and rights entitlement are


simply statutory requirements, but considering from the perspective of simple logic, some HKEx transactions are subject to stamp duty while others are not, and those not subject to stamp duty account for a substantial portion. As the relevant market has been so successful, is it still necessary to provide such a remission? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): Hence the question is not about the provision of remission or otherwise, but whether a new tax on derivatives trading should be introduced or not. That is the point that I have been trying to explain: the question is not whether the stamp duty should be exempted, but whether a new tax should be introduced. I wish to point out that should a new tax be imposed on derivatives trading, it would be inconsistent with the general practice of the international community. Derivatives transaction tax is not imposed in any financial markets in the world. Should we go down this path, it would mean a significant departure from the requirements of the current SDO on one hand, and a significant departure from the practice of the international market on the other. The authorities do not see any need to do so for the time being. MR CHRISTOPHER CHEUNG (in Cantonese): President, I take great exception to the reply just made by the Secretary. Firstly, in issuing derivative products in the past, we were required to hold the physical underlying shares. Hence, no stamp duty was payable because we were holding the underlying shares physically, and the derivative products were only an arbitrage tool that served to reduce risks. If derivative products were subject to stamp duty, it might give rise to double taxation. Nonetheless, after years of market development, issuers of derivative products are no longer required to hold the physical underlying shares, and derivatives trading is now purely some sort of gambling. Secondly, as far as derivative warrants are concerned, a large number of derivative warrants can be issued on any single stock. In other words, there may be over 100 derivative warrants in the market which are issued over a specific stock at any given time. As a result, the market has effectively become a


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casino, hindering the development of the financial sector. If the stamp duty remission for derivatives trading should continue, the normal operation of the stock market would be genuinely affected. PRESIDENT (in Cantonese): Mr CHEUNG, please ask your supplementary question. MR CHRISTOPHER CHEUNG (in Cantonese): This practice might even encourage gambling. Hence I do not think that Hong Kong's derivatives market should strictly follow the models of overseas markets. Instead, we should take into account the actual conditions locally and regard derivative products as stocks so that stamp duty revenue can be generated from such trading. PRESIDENT (in Cantonese): What is your supplementary question? MR CHRISTOPHER CHEUNG (in Cantonese): I hope the Government will review the existing system of granting stamp duty remission for derivative warrant transactions. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, as I said earlier, this proposal is not in line with the global market practice … (Mr LEUNG Kwok-hung stood up) PRESIDENT (in Cantonese): Secretary, please hold on. Mr LEUNG Kwok-hung, what is your point? MR LEUNG KWOK-HUNG (in Cantonese): According to the provisions of the Basic Law, half of the Members should be present. I think a quorum is not present in the Chamber now.


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): Secretary, please continue. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I would like to point out that should a stamp duty or transaction tax be imposed on the trading of derivative products, it would be inconsistent with the global market practice. The current arrangement is only intended to reflect the features of this product. If Hong Kong unilaterally imposes a stamp duty or transaction tax on derivative products, I am worried that we will be pushing such trading activities to other securities markets. As Members are aware, there is no requirement that derivative products must be issued in Hong Kong. Other markets can also launch the same derivative products. If such trading activities are pushed to other markets, this will not only affect the development of Hong Kong's financial sector, but also our market liquidity. As a result, the local stock market will be impacted adversely. Separately, I would like to raise another point. There is a wide variety of derivative products in the market. Apart from equity derivatives, there are many types of cash-settled contracts, including the more commonly-known commodity trading contracts, currency trading contracts, forward trading contracts, and so on. All these transactions are settled in cash. Should a transaction tax or stamp duty be imposed, these cash-settled financial products would also be covered. In other words, all these products, regardless of whether they are exchange-traded or traded over-the-counter, would be subject to stamp duty. This would be a major change. PRESIDENT (in Cantonese): Mr CHEUNG, has your supplementary question not been answered?


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MR CHRISTOPHER CHEUNG (in Cantonese): President, regarding cash-settled transactions, I think it is even more unfair … PRESIDENT (in Cantonese): Mr CHEUNG, no debate is allowed during the Question Time. The Secretary has already answered your supplementary question. If you are not satisfied with it, please follow it up with the Secretary through other channels. MR NG LEUNG-SING (in Cantonese): President, regarding the last two paragraphs of the main reply, I would like to ask the Secretary through the President: given that the product nature and trading purpose are different between stocks and derivatives, and unlike stock investors, derivative product investors do not have rights such as dividend payment and voting rights, should the degree of regulatory oversight warranted for derivatives be different from that for other general products? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I thank Member for the supplementary question. We will pay special attention to the regulation of derivative products because these products can be sold in the market simply through the issuance mechanism of issuers. We note that there are many regulatory issues involved, such as risk management, the financial strength of issuers, and so on. Over the years, the regulators have been closely monitoring the development of derivatives market in Hong Kong, and various new regulatory policies have been formulated. The objective is to improve the mechanism continuously so as to enable the derivatives market to maintain the momentum of growth while ensuring the stability of the financial markets. MR KENNETH LEUNG (in Cantonese): President, as the Secretary would also know, stock borrowing is also a kind of derivatives. Under the SDO, stock borrowing transactions are also exempted from the payment of stamp duty so long as the stock borrowing agreements are registered in Hong Kong. However, a problem arises when both the lending and borrowing parties are


overseas companies or non-Hong Kong companies. As a result, the agreements cannot be registered within the time limit. May I ask the Secretary if there is any plan to abolish or comprehensively review the registration requirement? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, as far as the stock borrowing and lending process is concerned, we have been particularly concerned about the level of transparency of the process, and whether we know which stocks have been used for borrowing or lending. In this connection, we have been taking follow-up measures in order to gain a better understanding of the stock borrowing and lending activities. The authorities will constantly review the situation and ensure that we are informed of the stock borrowing and lending activities. MR SIN CHUNG-KAI (in Cantonese): President, given that the tax relief or remission on derivative products has exempted the relevant transactions from the payment of stamp duty, some investors who would originally invest in stocks may switch to invest in derivative products, making derivatives a substitute of stocks. May I ask the Secretary whether any study has been conducted by the Government in this regard? If considered from this perspective, the public coffers have indeed suffered a loss. Has any study been conducted by the Secretary concerning the so-called substitution effect of derivatives vis-à-vis stocks investment? If such a study has been conducted, what are the findings? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, derivatives have been developing in the world for several decades. It is clear from the development history of various financial markets around the world that a derivative itself will not become a substitute. In other words, derivatives trading will not reduce the turnover of stock trading as they are different products by nature. Derivatives are generally used for short-term hedging or other risk management purposes. But of course some investors might regard derivatives as more aggressive investments. As shown by historical data from the global markets, I see no signs that derivatives would replace securities with physical settlement. On the contrary, it is more likely that the two will complement each other.


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MR CHRISTOPHER CHEUNG (in Cantonese): President, the recent fluctuations in the stock market have aroused the concern of many members of the public as to whether the securities held by the Tracker Fund of Hong Kong or in the MPF funds have been borrowed for short selling? That is my first point. Secondly, if any securities have been borrowed for short selling, ownership has actually been transferred. In that case, would the transactions be subject to stamp duty? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): I do not quite understand his supplementary question. PRESIDENT (in Cantonese): Mr CHEUNG, can you please ask your supplementary question in a concise manner? MR CHRISTOPHER CHEUNG (in Cantonese): Firstly, whether the securities held by the Government have been lent out for short selling? Secondly, if any securities have been lent out for short selling, it means that the securities held by the Government have been transferred to the short-selling investors. Would this process be regarded as a transaction for the purpose of stamp duty levy? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): Our priority is to closely monitor the short-selling position. In the past, the authorities have been working on acquiring additional tools to collect information in respect of stock borrowing and lending activities. Moreover, we have been collecting information about short selling, and market players are required to furnish information to the regulators. In this regard, we have been monitoring the situation. Regarding the levy of stamp duty, stamp duty is only payable for the trading of physical shares. PRESIDENT (in Cantonese): Third question.


MR LEUNG KWOK-HUNG (in Cantonese): President, I think a quorum is not present in the Chamber. 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) Impact of Rising Interest Rates 3. MR CHRISTOPHER CHEUNG (in Cantonese): President, The United States (US) Federal Open Market Committee established in December 2008 the target range of zero to 1/4 percent for the federal funds rate, and it was only last month that the target range was raised to 1/4 to 1/2 percent, which ended a seven-year era of near-zero interest rates and set off a cycle of rising US dollar interest rates. As Hong Kong maintains a Linked Exchange Rate System with the Hong Kong dollar pegged to the US dollar, the Hong Kong dollar interest rates will definitely climb along with the US dollar interest rates in the long run. In this connection, will the Government inform this Council:

(1) given the slowdown of the economic growth on the Mainland in recent months and the contraction in local industries such as retailing and tourism, etc., whether the Government has assessed if the Hong Kong economy can withstand the impact of persisted interest rate hikes, and the maximum magnitude of interest rate hikes Hong Kong can withstand in light of the prevailing market conditions; if it has assessed, of the details; if not, the reasons for that;

(2) given that while the Government launched a number of measures to

stabilize the property market one after another in recent years so as to combat speculative activities in the property market and curb external demands, a cycle of rising Hong Kong dollar interest rates has been set off and property transactions have shown clear signs of decline both in volume and prices in recent months, whether the Government has drawn up plans for abolishing some of the property market-stabilization measures; if it has, of the objective criteria for


3727

deciding whether or not to abolish some of the measures, the implementation timetable, and other details; if not, the reasons for that; and

(3) whether it has assessed the impact of rising interest rates on Hong

Kong's non-property asset markets and capital flow; if it has assessed, of the details; if not, the reasons for that?

MR LEUNG KWOK-HUNG (in Cantonese): President, I think a quorum is not present in the Chamber. PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (While the summoning bell was ringing, some Members shouted loudly) PRESIDENT (in Cantonese): Would Members stop shouting in the Chamber? (Mr LEUNG Kwok-hung left his seat and spoke loudly) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, please keep quiet. (After the summoning bell had been rung, a number of Members returned to the Chamber) PRESIDENT (in Cantonese): Secretary for Financial Services and the Treasury, please answer. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President,

(1) The impact of the United States (US) interest rate hikes on the global and Hong Kong economies hinges not only on the magnitude and the pace of the increase, but also on the global economic performances,


monetary policies of other major central banks, geopolitics, the ability of emerging market economies in managing capital outflows, and so on.

In this respect, the uncertainty over the US interest rate

normalization is one of the major challenges facing the global economy this year. The uncertainty is underscored by the sluggish and uneven global economic growth and diverging policies of central banks, which may trigger volatility in the global financial markets and swings in exchange rates and capital flows, impacting on the already fragile economic environment.

Under a complicated international monetary environment, the

influence of possible fund reversals will have a bearing on local asset prices, in turn affecting local consumption and investment appetite. Moreover, any further strengthening of the US dollar may exert downward pressures on Hong Kong's exports and inbound tourism. We will monitor closely these developments and their impact on the overall economy and employment. The Financial Secretary will announce in his 2016-17 Budget next month the economic growth forecast for this year.

(2) Regarding the property market, despite signs suggesting downward

movements of private property prices and rentals, and the Federal Reserve's decision to raise the interest rate in December 2015, imbalance persists between the supply and demand in the local property market. Property prices remain at levels beyond the affordability of the general public. The home purchase affordability ratio(1) has risen to about 64% in the third quarter of 2015, remarkably higher than the long-term average of 46% over 1995-2014. Therefore, the Government has no intention to withdraw the demand-side management measures.

Interest rate is not the only factor affecting the property market.

With the Government's sustained efforts in providing land for residential development, the medium-term supply of residential flats has increased significantly. The Government will remain vigilant

(1) The home purchase affordability ratio refers to the ratio of mortgage payment of a 45-square metre flat to

median income of households (excluding those living in public housing).


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and prudent, and continue to closely monitor property market movements and ever-changing external conditions, with reference to a series of indicators (including property prices, home purchase affordability ratio, transaction volume, flat supply, and local and global economic developments).

(3) As for the asset markets, amid uncertainties over the magnitude and

pace of interest rate hikes, coupled with a misty global economic outlook, the global financial markets are expected to remain fragile. Fund flows could reverse thereby affecting local asset prices. That said, interest rate is not the sole factor affecting asset prices. In the stock market for example, prices are also affected by investors' risk appetite and corporate profitability outlook. It is therefore difficult to predict the impact of US interest rate normalization on the Hong Kong stock and other asset markets.

In terms of fund flows, the Federal Reserve's interest rate hikes will

widen the Hong Kong dollar-US dollar interest rate spreads. As capital gradually flows from the Hong Kong dollar to the US dollar, the Hong Kong dollar exchange rate will weaken against the US dollar. Upon the triggering of the weak-side Convertibility Undertaking at 7.85 under the established mechanism, the Hong Kong Monetary Authority (HKMA) will sell US dollar for Hong Kong dollar. Hong Kong dollar outflows following the triggering of the weak-side Convertibility Undertaking, and the subsequent contraction of the Hong Kong dollar monetary base, will set the inevitable course for Hong Kong dollar's interest rate to normalize alongside US dollar interest rates.

That said, with strong economic fundamentals, and a mature and

robust financial system, Hong Kong is capable of withstanding capital flows. We will keep a close watch of the external financial conditions and ensure the normal functioning of Hong Kong's financial system, against any systemic risk in the financial markets. In light of an array of external and other uncertainties, investors and the financial sectors should conduct proper risk management and act with prudence and vigilance.


MR CHRISTOPHER CHEUNG (in Cantonese): President, the Secretary has not answered part (2) of my question clearly. I asked whether the Government has any objective criteria and under what circumstances it would consider abolishing some of the "harsh measures" to prevent a property market meltdown, which may in turn jeopardize the Hong Kong economy. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): I have already said very clearly that the Government will consider a number of factors. In the face of the demand-supply imbalance in the property market, property prices remain at levels beyond the affordability of the general public. Based on various statistics and reasons, the Government has no intention to withdraw the demand-side management measures. MR ANDREW LEUNG (in Cantonese): In the past few days, many financial and monetary officials and experts from various countries have come to attend the Asian Financial Forum here. Some opine that Hong Kong dollar is the weakest in four years and some others say that the Hong Kong interest rates will enter an upward cycle. I would like to ask the Secretary in the face of the impending interest rate hikes and the declining local asset prices, including that of the stocks and properties, what measures the Government will put in place to protect the small and medium enterprises (SMEs) against such harsh conditions and ensure that they will have sufficient fund to continue with their operation. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): I thank Mr LEUNG for the supplementary question. We are all aware that in various economic downturns in the past, the Government was deeply concerned about the operation of the SMEs and it also discussed with the financial sectors how to support the SMEs. We attach great importance to the development of the SMEs as always and we also review various support measures from time to time. We will continue to be pragmatic and review these support measures in concert with the industry. MR JEFFREY LAM (in Cantonese): President, the Secretary said in his reply that it is difficult to predict the impact of US interest rate normalization on the Hong Kong stock and other asset markets. I am very worried that if the


3731

financial and monetary officials are unable to predict, the business operators and investors in the stock market are even more helpless. The property prices have fallen a few percentage points already. Should the fall continue, will the Government consider taking any contingency measures? In view of the turmoil caused by the last property market crash, if the Government is not prepared ahead of time, the situation will be dire. Will the Secretary tell us what options are open to the Government now, such as toning down the "harsh measures" as proposed by Mr Christopher CHEUNG just now, or even abolishing the "harsh measures" altogether, or slightly adjusting the mortgage loan-to-value ratio? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): I wish to clarify. I said in my reply just now that the interest rate hike was not the sole factor affecting asset prices. I would like to point out that one cannot totally grasp the risks facing the asset markets by looking at the interest rate hikes alone. But that does not mean the Government lacks a mechanism to comprehensively monitor the risks facing the asset markets. Apart from interest rates, the risks facing the asset markets also include the economic environment, global fund flows, and so on. We will watch all these factors closely in our review. As regards the Member's supplementary question concerning the measures to be taken by the Government when there is a major market downturn, we will, as always, take sound and prudent risk management measures to deal with the volatile market. MR JEFFREY LAM (in Cantonese): President … PRESIDENT (in Cantonese): Mr LAM, has your supplementary question not been answered? MR JEFFREY LAM (in Cantonese): The Secretary has not answered my supplementary question.


PRESIDENT (in Cantonese): Please repeat your supplementary question. MR JEFFREY LAM (in Cantonese): I asked him what measures would be taken to deal with the downturns in the property and stock markets. He said sound and prudent measures would be adopted. I can also make such comments but are there any specific measures? He did not answer me. PRESIDENT (in Cantonese): Secretary, can you tell Members what specific measures would be taken? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I believe that from the measures taken by the Government in the past financial turmoils, Members may have an idea of what measures we are going to take to deal with those problems. I believe it may not be a good time for us to discuss these measures in detail here in the Legislative Council today. MR ABRAHAM SHEK (in Cantonese): President, a good government does not encourage speculation on properties and that is why "harsh measures" were introduced but their historical mission has been accomplished. Now the interest rate hike reflects the changes in the market. A good government also does not hope to see people falling into the net of the negative equity. The Secretary said just now that the time for the abolition of the "harsh measures" would depend on objective conditions. What are these objective conditions? Does it mean "one single man's" objective conditions or "a basket of" objective conditions? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I have already said in the main reply that we are deeply concerned about this subject. As regards whether there will be any changes to the demand-side management measures, the Government has repeatedly stated that it will review all relevant factors, including the affordability of the general public, property prices, transaction volume or supply of properties … (Mr LEUNG Kwok-hung stood up)


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MR LEUNG KWOK-HUNG (in Cantonese): President, the quorum required under the Basic Law is not present in the Chamber. 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): I now ask the Secretary for Financial Services and the Treasury to continue with his reply to Mr Abraham SHEK's supplementary question. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, concerning the demand-side management measures imposed on the property market, I stated the Government's position just now. Let me reiterate that the demand-side management measures are related to the health and long-term development of the property market and the Government will monitor the health of the property market in various aspects, such as property prices, people's ability to purchase a home, transaction volume, speculation activities, and the housing supply and demand. MRS REGINA IP (in Cantonese): President, while the community generally believes that US interest rates will enter the upward cycle after seven years of low-interest environment in the US, many people think that many industries in the US have a bleak prospect. For example, the plummeting oil price has dealt a heavy blow to many oil and gas-related industries, including the coal mining industry. The retail industry has also been in the doldrums. For instance, Walmart has closed a few hundred branches around the globe. Besides, Europe is in political turmoil. Some think that because of the slowdown in the economic growth of China, the global economy may experience a recession, instead of an interest rate hike. May I ask the Secretary, with the retail industry in Hong Kong already suffering great hardships in the face of a possible global economic recession, what preparations has the Government made? Does it have any measures in place to address that?


SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, in respect of the performance of the global economy, the Government has put forth various proposals in the period that has just elapsed in the hope that the industries and the people will be well prepared. Of course we will keep a close eye on the economic performance in the coming year. During the past economic downturns, the Government has explored various measures to assist the industries and the people to tide over the difficulties. We will keep monitoring the performance of the local economy this year and will implement feasible measures at the right time. PRESIDENT (in Cantonese): Mrs Regina IP, has your supplementary question not been answered? MRS REGINA IP (in Cantonese): President, the Secretary has not answered my question. He has not mentioned any measures. Will the Secretary tell us what the specific measures are? PRESIDENT (in Cantonese): Secretary, can you tell us about any specific measures you have? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): I think I am not in a position to name too many measures today because that may involve … The Government has launched various measures to help the industries and people. We will consider from this perspective what former measures can be implemented again and what new measures can be launched in the coming economic environment. MR CHAN KAM-LAM (in Cantonese): President, although the Secretary said in the main reply that there were "strong economic fundamentals", the report about China's economic growth falling below 7% for the first time has hit the headlines of many newspapers today, right? As a matter of fact, the local financial sector and other areas in our economy rely heavily on our nation's development. This, coupled with the prevailing social environment in Hong


3735

Kong in which the political ambience is particularly poor with Members constantly filibustering in the Legislative Council meetings to stall the passing of Bills … (Mr LEUNG Kwok-hung stood up) MR LEUNG KWOK-HUNG (in Cantonese): President, the quorum required under the Basic Law is not present in the Chamber. 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): Mr CHAN Kam-lam, please continue with your supplementary question. MR CHAN KAM-LAM (in Cantonese): President, I will speak clearer. Perhaps the Secretary has not heard me clearly. President, the Secretary said in the main reply that there were "strong economic fundamentals" but the report about Mainland's economic growth falling below 7% for the first time has hit the headlines of many newspapers today. It is an indication that the economic prospects are not too optimistic. Hong Kong's economy and finance are closely tied with the Mainland. In the light of the prevailing economic and political environments in Hong Kong, and especially when filibustering has become prevalent in Legislative Council meetings and people's drastic acts have damaged the real business environment of Hong Kong, I would like to ask the Secretary: apart from emphasizing Hong Kong's "strong economic fundamentals" or perhaps stepping up the publicity to alert people of the risks involved in investments and property purchase, what other measures can the Government take?


SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, the Government will certainly ensure Hong Kong's financial stability, which is of paramount importance. Without financial stability, no matter how strong our economic fundamentals are, problems will arise everywhere. The Government understands perfectly the challenges brought by the external economy to the local economy. In the period that has just elapsed, we have all along expressed our concern in this regard and advised the public and various industries to guard against possible risks. When the economy slows down, we will, as always, adopt measures that are proven effective to help ease the pressure on the industries and the public. I wish to reiterate that in the face of the present hardships, first of all, maintaining strong fundamentals is very important; otherwise, our resilience will be even weaker. Although Hong Kong has strong economic fundamentals, we should brace ourselves for the volatile external economy in view of the impending US interest rate hikes and the weakening of the international economy. The pace of the interest rate hikes may be slow but everyone must be wary of the risks posed by the possible downturn of the external economy as well as the uncertainties brought by the interest rate hikes. Hence, in addition to the efforts of the Government, I hope that the industries and the public will guard against various possible risks and keep a close eye on the fluctuations in asset prices under the influence of the external economic environment. For individuals, they should also enhance their risk management and avoid getting into debt. As such, we hope to adopt sound and prudent management measures and join hands with the public to face the challenges ahead. MR CHUNG KWOK-PAN (in Cantonese): President, although the Secretary stresses that we have strong economic fundamentals and a robust financial system, the fact is, I think, the present situation is even grimmer than that in 1997 and 1998. Amid the present volatility in the global currency market, capital outflow, property market downturn, stock market slump, recurrence of incidents similar to the Lehman Brothers minibond incident, I wonder if the Secretary is aware that some banks have recently introduced a product called "Renminbi forward contracts" and many export companies trading such contracts have suffered losses of more than $10 million. Regarding the Lehman Brothers minibond incident back then, the Secretary said that there were many products of which he was not aware. I wish to draw the attention of the Secretary to whether banks have, apart from the forward accumulators which have caused


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heavy losses to many companies, launched another kind of accumulators. I would like to ask the Secretary to look into the matter seriously to see if banks are engaging in this kind of shady business? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, after the last financial tsunami, the banking sector has stepped up its supervision on the sale of structured products and the HKMA also keeps a close watch of the situation in this respect. If members of the public have any complaints about any financial issues, they may refer the matter to the relevant regulators for follow-up and these regulators will certainly adopt more stringent regulatory strategies to ensure that financial institutions comply with the regulatory requirements when selling structured derivative products. MR NG LEUNG-SING (in Cantonese): While I basically agree that Hong Kong has "strong economic fundamentals" as stated in the main reply, I concur with the remarks of Mr CHAN Kam-lam that the recent situation in Hong Kong is worrisome. Even if the Government does not stress it, I believe ordinary people can also feel it. Instead of relying on a single factor, the overall stability of the financial system can only be achieved by a sound regulatory regime, industry self-discipline and compliance with the rules. In part (3) of the main reply, the Secretary mentioned that the fragile global financial market at present will bring about significant fluctuations in the asset markets. The Secretary then talked about the difficulty in predicting the impact of US interest rate normalization on the Hong Kong stock market and other asset markets. As such, when there are greater fluctuations in the market, will the Administration remind stock holders or other investors the matters to which they should pay attention in the light of the changes in the international financial markets, and launch similar publicity campaigns where appropriate? SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, we will monitor the changes in the markets and request the regulators to keep close contact with the stakeholders and enhance the regulatory requirements. At the same time, we will also tell the industries and investors our views about the market changes to raise the investors' risk awareness.


Mr NG and some other Members have raised one point, that is, what measures the Government will take to address the downward pressure on our economy. I do not wish to elaborate on the relief measures at the moment but one approach which is worth taking is to implement public works projects. However, it is very hard to obtain the Legislative Council's approval to carry out such projects these days. When the economy begins to slip, public works projects are usually a very good countercyclical economic activity to pursue. When the economy turns down, the Government's investments in works projects can boost the economy. Hence, my colleagues and I are deeply concerned that with the slow progress in funding approval of public works projects at present, we will not have sufficient tools to respond to the oncoming countercyclical economy. All other things aside, today I wish to bring up this vital issue and hope that Members will give funding approval for some public works project as soon as possible so that we can have more ammunition to cope with the challenges ahead. PRESIDENT (in Cantonese): Fourth question. Uploading Copyright Works onto Chief Executive's Facebook Page 4. MR CHAN CHI-CHUEN (in Cantonese): President, before I ask this question, I would like to request a headcount. 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): Mr CHAN Chi-chuen, please ask your main question.


3739

MR CHAN CHI-CHUEN (in Cantonese): President, earlier on, the Chief Executive's Office (CE's Office) uploaded onto CE's Facebook page a video clip featuring CE himself and some other people singing together a karaoke song when attending a banquet, as well as photos of two types of buns and cakes of a cartoon character design, recently bought by CE when he visited the Hong Kong Brands and Products Expo. Some netizens have queried that the acts of uploading the video clip and photos may have constituted an infringement of copyright. It has been reported that CE's Office subsequently admitted that the prompt uploading of the video clip was undesirable, and indicated that it had made retrospective payment of royalties to and obtained the relevant licence from the Composers and Authors Society of Hong Kong (CASH). In this connection, will the Government inform this Council:

(1) given that some creators have pointed out that the uploading of

video clips featuring acoustic covers of karaoke songs onto the Internet may involve six different copyrights, whether CE's Office has made payments of royalties in relation to the aforesaid video clip to copyright owners other than CASH; if it has, of the respective amounts of such payments; of the amount of royalties paid retrospectively by CE's Office to CASH;

(2) given that CE's Office paid royalties to and obtained the relevant

licence from CASH only after it had uploaded the video clip, whether the authorities have assessed if that uploading act has incurred any criminal or civil liabilities for infringement of copyright; given that the Director of Intellectual Property has remarked that since CE is a public figure, the fair dealing exception for "commenting on current events" provided under the Copyright (Amendment) Bill 2014 (Amendment Bill) may be applicable to the uploading act in question, but CE's Facebook page is not a news web site and the video clip lasting one minute and nine seconds contains no contents commenting on any subject of current events, of the specific justifications for the Director's making the remark; given that some netizens have queried that even the Director has a problematic understanding of the Amendment Bill, of the measures adopted by the authorities to publicize the contents of the Amendment Bill so as to prevent members of the public from breaching the law inadvertently; and


(3) whether CE's Office had obtained authorization from the copyright owner(s) of the relevant cartoon character before it uploaded the aforesaid photos of buns and cakes; if it had, of the details; if not, whether the authorities have assessed if that uploading act has incurred any criminal or civil liabilities for infringement of copyright?

SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): President, I would first like to explain a few basic concepts in copyright. Copyright is a private property right protected by law. Such a right is provided for in Articles 6 and 140 of the Basic Law at the constitutional level. Article 140 provides that the Government shall protect the achievements and the lawful rights and interests of authors in their literary and artistic creation. The Copyright Ordinance (Cap. 528, Laws of Hong Kong) contains detailed provisions on how to define the existence of copyright and the vesting of rights and interests. Thus as a matter of law, copyright owners have the right to determine whether to agree to the use of their copyright works by others and the conditions of use. It is common in real-life situations that users use others' copyright works in accordance with licensing terms and conditions. This is a common mode of economic activity which helps to achieve an important goal of the copyright system, namely, providing economic incentives to creators through the legal protection of copyright, which in turn encourages creativity and dissemination of knowledge. In another common real-life scenario, a copyright owner may not have given any expressed consent or reached any licensing arrangement with a user before the latter's use of the former's copyright works. However, if a consensus between the copyright owner and the user could be objectively derived from the copyright owner's overall conduct, or from trade practice or custom, an implied licence or acquiescence to allow such use could be legally established. Whether the user has any legal liability would depend on whether the owner takes action against the user and the ruling of the Court in any subsequent litigation.


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Another important concept in copyright laws is copyright exceptions. Copyright protection is not absolute. Users can use others' copyright works in the absence of the owners' consent under reasonable circumstances. This is important for freedoms of speech and of creation, which are also protected constitutionally. The existing Copyright Ordinance contains more than 60 provisions on copyright exceptions; the Copyright (Amendment) Bill 2014 (the Bill) proposes additional copyright exceptions to the Ordinance. My reply to the Honourable Member's question is as follows:

(1) In this case, the cover version of the song involves two layers of copyright works:

(i) The melody and lyrics of the song; and (ii) The musical recording of the background music.

The making of a video clip of the singing of the cover version and

the uploading of the video clip involve the following rights of the two layers of copyright works:

(i) Right of reproduction (The music industry may further divide

it into right of reproduction and right of synchronization, the latter of which refers to the right to merge the melody/lyrics and musical recording with the visuals of the video clip); and

(ii) Right of making available copies of copyright works on the

Internet.

The respective rights in the melody and lyrics are managed by the Composers and Authors Society of Hong Kong (CASH) and covered by a licence. The Office of the Chief Executive has obtained the licence, at a cost of $600 for three months from the date of the event.

The respective rights of the musical recording belong to the

producer. If the musical recording came from a released record, the respective rights would be managed by the record label and covered by a licence. After the event the Chief Executive's Office has made earnest efforts to identify the owner, including liaising with the


organizer and the production company of the event that evening, as well as a company that releases the relevant sound/video recording products. The Chief Executive's Office has eventually been informed that the musical recording of the background music did not belong to the latter company. As such, it has not been possible so far to identify the copyright owner to obtain a licence.

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

(2) The licence that the Chief Executive's Office has obtained from CASH is effective for three months from the date of the event. There is thus no question of legal liability for copyright infringement. As for the rights in the musical recording, the Chief Executive's Office would be pleased to pay the fee to obtain the necessary licence if the copyright owner could be identified.

On the day following the day on which the news was reported,

without knowledge of the details of the case, the Director of Intellectual Property (the Director) made it clear at the beginning of her reply to media questions that what should first be considered was whether the consent of the copyright owners had been obtained. If that was the case, there would be no question of copyright infringement. When asked if there had been no licences, the Director said one might consider if the exceptions in the Copyright Ordinance were applicable. And legally speaking, the fair dealing exception for reporting current events under section 39(2) might be applicable. When subsequently asked by other reporters about this exception, the Director also explained its legal rationale. The Director did not refer to the fair dealing exception for commenting on current events proposed by the Bill. We note that some media reports on this issue, and the main question above in this regard, are not accurate. There is thus no factual basis in the allegation that the Director did not have a proper understanding of the Bill.

Regarding the possible application of section 39(2) of the Copyright

Ordinance, the legal considerations are whether the relevant act is reporting current events and whether the dealing of the relevant work


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is fair. The provision does not specify that this exception covers only reporters and news agencies and websites.

On publicity and education, the Government has been promoting the

awareness of and respect for intellectual property in society. In respect of the copyright law, we agree that more publicity with particular emphasis in relation to common usage of copyright works on the Internet may be carried out so that the public could have a better understanding of the relationship between the copyright law and our daily life.

(3) We note that many merchants in the market are authorized by

copyright owners to use copyright works (especially pictures/illustrations of cartoon characters) in their decorations to attract customers or produce food products containing such pictures/illustrations for sale. It is also common for customers to take photos of these decorations and food products and upload them to online social platforms. From the perspective of copyright law, this may constitute use of others' copyright works. However, as mentioned above, so long as there is consent from the owners (including through licensing, implied licensing or acquiescence) or it falls under any of the exceptions in the Copyright Ordinance, such acts would not attract legal liability.

In reality, we are not aware of any legal action taken by copyright

owners in respect of such acts. We believe that copyright owners are generally liberal with customers' online sharing of photos of food products containing pictures/illustrations of cartoon characters. Prohibition of such photo-taking by customers is uncommon. This may lend support to the existence of implied licensing or acquiescence from a legal perspective.

The Chief Executive's Office has not obtained authorization for

uploading such photos, in line with legal considerations and common practices.


MR CHAN CHI-CHUEN (in Cantonese): Deputy President, actually, Secretary Gregory SO of the Commerce and Economic Development Bureau should not be the only one answering my question here today. The Information Co-ordinator of the Chief Executive's Office should also be present. This is because I believe that it was Mr Andrew FUNG who told Secretary Gregory SO the answer to part (1) of the main question. Yet, as to the information about which I am going to ask further, if Andrew FUNG did not tell the Secretary, the Secretary would not be able to give me an answer. For instance, it is mentioned in part (1) of the main reply that the Chief Executive's Office has paid CASH a fee of $600 in total for a three-month licence, and has, after the event, made earnest efforts to identify other relevant entities with a view to paying the relevant fees, but it has not been possible so far to identify them. However, it has been reported that Ricky FUNG, the Chief Executive Officer of International Federation of the Phonographic Industry (Hong Kong Group) Limited (IFPI), said on a radio programme that apart from applying for a licence from CASH, the Chief Executive's Office should also pay royalties to IFPI. This is really a case of one person's word against another's. Has Andrew FUNG done his best to identify the copyright owners concerned? According to IFPI, the Chief Executive's Office has not paid royalties to it. Secretary Gregory SO is unable to answer this question, because Andrew FUNG did not tell him about the actual situation. I would like to ask a further question that Secretary Gregory SO is able to answer. It is mentioned in part (2) of the main reply that "the Chief Executive's Office would be pleased to pay the fee to obtain the necessary licence"; in other words, it has yet to identify all the copyright owners. Nonetheless, Secretary, any unauthorized use of copyright works involves civil and even criminal liability. Since the Chief Executive can do that, can the general public cite this as a reason for using copyright works without prior authorization, and pay royalties retrospectively only when such acts are exposed? Does it mean that if such acts are not exposed, they can take it that there is acquiescence in such acts and so they do not have to pay any royalties? Now that the Government is asking the Legislative Council to pass the amendments to the Copyright Ordinance, if even the highest person in charge of the Government and his office have made such mistakes, leading to suspicions of copyright infringement, how can the general public feel at ease? (Mr Gary FAN stood up)


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MR GARY FAN (in Cantonese): Deputy President, please do a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber) DEPUTY PRESIDENT (in Cantonese): Secretary, please reply. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): Deputy President, let me respond to the first part of Mr CHAN Chi-chuen's supplementary question, in which he queried whether the Chief Executive, unlike the general public, enjoyed a privilege whereby he was allowed to obtain the necessary licence retrospectively after the event. In fact, like other members of the public, the Chief Executive has no privilege in this regard. I am not aware of any people being classified as superior members or inferior members of the public. In short, neither the Chief Executive nor any member of the public has any privilege in this regard. Licence agreements are private contracts entered into between copyright owners and users for the use of copyright works, covering various circumstances and durations. The validity period of a licence is generally determined by the contracting parties on their own; it may have retrospective effect from a date in the past, and may also cover acts to be done in the future, without being subject to any particular statutory restriction. So, there is no question of obtaining the necessary licence retrospectively being a privilege. Besides, Mr CHAN queried whether it was against the law to do so. In part (2) of the main reply, I have already stated clearly that as the Chief Executive's Office has obtained the licence for the relevant melody and lyrics, there is no question of legal liability for copyright infringement. It is also explained clearly in the main reply that the Chief Executive's Office, after repeatedly liaising with a company that releases the relevant sound/video recording products, has eventually been informed that the musical recording of the background music did not belong to that company, and therefore it has not


been possible for the Chief Executive's Office to identify the relevant copyright owner to obtain a licence. Moreover, it is pointed out clearly in the main reply that the Chief Executive's Office would be pleased to pay the licence fee required if the copyright owner could be identified. MR CHAN CHI-CHUEN (in Cantonese): Deputy President, the Secretary merely repeated his reply without answering my supplementary question. My supplementary question is: Given that it was only after the problem was exposed that the Chief Executive paid royalties retrospectively … DEPUTY PRESIDENT (in Cantonese): Which part of your supplementary question has not been answered? MR CHAN CHI-CHUEN (in Cantonese): If the general public do the same thing, are they also exempt from civil and criminal liability? DEPUTY PRESIDENT (in Cantonese): The Secretary has already answered. Secretary, do you have anything to add? SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): Deputy President, I have nothing to add, but I would like to reiterate a point that I made just now. Perhaps Mr CHAN did not hear it clearly, so let me repeat it once again. The validity period of a licence is generally determined by the contracting parties on their own; it may have retrospective effect from a date in the past, and may also cover acts to be done in the future, without being subject to any particular statutory restriction. MR WONG YUK-MAN (in Cantonese): Deputy President, the Secretary said in his reply that the Chief Executive had no privilege. He also mentioned just now that the contractual period could be very long. However, at the outset, when the Chief Executive's Office uploaded onto the Facebook page this video clip which it considered very interesting, did it ever think that there would be a problem? What the Secretary has said is that since the contractual period can be very long,


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it is alright to let things ride until they fade into insignificance, and nothing needs to be done unless the problem is exposed; had the problem not been exposed, the Chief Executive's Office would not have paid the fee. This approach is not morally proper, let alone legally proper. What is most absurd is part (3) of the main reply concerning the uploading of the photos of buns and cakes of a cartoon character design to the Internet by the Chief Executive's Office, which even stated complacently that the Chief Executive was treating children to these buns and cakes. The reply given by the Secretary just now … In respect of these buns and cakes of a cartoon character design, has the Chief Executive's Office obtained authorization from the copyright owner? No. But then, the Secretary has mentioned a practice known as "acquiescence". Buddy, is that possible? The Secretary has referred to "acquiescence" in a legal sense, saying that "this may lend support to the existence of implied licensing or acquiescence from a legal perspective". This point is really disputable. People in this legislature may not understand … DEPUTY PRESIDENT (in Cantonese): Mr WONG Yuk-man, what is your supplementary question? MR WONG YUK-MAN (in Cantonese): My supplementary question is very clear. Regarding the uploading of the photos of buns and cakes of a cartoon character design, the Secretary has remarked in his reply that this is in line with legal considerations and common practices. This is wrong; even if this is not wrong, this is highly controversial. How could the Secretary give such a reply? I have yet another question. Did the Chief Executive's Office tell the Secretary that it had sought authorization from Hello Kitty's … DEPUTY PRESIDENT (in Cantonese): Mr WONG Yuk-man, please sit down. You have asked a supplementary question. Please let the Secretary reply. MR WONG YUK-MAN (in Cantonese): I am afraid he did not hear it clearly. You should not bawl at me in the first place.


DEPUTY PRESIDENT (in Cantonese): You are repeating your supplementary question. MR WONG YUK-MAN (in Cantonese): Has it sought authorization from the copyright owner of Hello Kitty? DEPUTY PRESIDENT (in Cantonese): Mr WONG Yuk-man, please sit down. MR WONG YUK-MAN (in Cantonese): Has it tried to seek authorization from the copyright owner of Hello Kitty? DEPUTY PRESIDENT (in Cantonese): Mr WONG Yuk-man, please stop speaking. (Mr WONG Yuk-man remained standing and made comments loudly) DEPUTY PRESIDENT (in Cantonese): Please sit down. (Mr WONG Yuk-man kept making comments loudly while standing) DEPUTY PRESIDENT (in Cantonese): Mr WONG Yuk-man, if you still do not sit down, I will rule that your conduct is grossly disorderly. Secretary, please reply. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): When I answered Mr CHAN Chi-chuen's supplementary question just now, I already pointed out that such licences may have retrospective effect. This is very clear. The Chief Executive's Office has earlier responded that on the evening in question, the Chief Executive was invited to sing a song extempore on stage with a number of guests, and the prompt uploading of the video clip featuring that song onto the Facebook page after the event was … (Mr WONG Yuk-man stood up and made comments loudly)


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DEPUTY PRESIDENT (in Cantonese): Mr WONG Yuk-man, please keep quiet. Secretary, please continue with your reply. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): Deputy President, what I want to say is that the Chief Executive's Office has earlier responded that on the evening in question, the Chief Executive was invited to sing a song extempore on stage with a number of guests, and the prompt uploading of the video clip featuring that song onto the Facebook page after the event was undesirable. Subsequently, the Chief Executive's Office has made earnest efforts to obtain the necessary licence. MR MARTIN LIAO (in Cantonese): Deputy President, the Copyright Ordinance is a controversial and rather complex piece of legislation, so actually the Government should have made good preparations for this beforehand. Yet, as the scope of copyright works can be very wide, the question of how to make relevant payments may involve different institutions and different mechanisms. May I ask if the Government can initiate discussions with copyright owners' organizations on establishing a simple and convenient mechanism under which members of the community may use copyright works in compliance with rules and regulations in an easy and simple way? For example, is it possible to implement an unofficial registration system for copyright owners with the register available for inspection online, so that people would know who they should approach for negotiation? For certain relatively straightforward uses of copyright works, is it possible to introduce more fixed charges as far as practicable, and to foster arrangements for online payments? SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): I thank Mr LIAO for the supplementary question. His proposal is actually very good. We understand that the existing authorization system may not be perfect, and there is room for improvement to a certain extent in order to provide users with greater convenience. In fact, as we can see, in the light of the changes in user behaviours and through agreements signed with some platforms, licensing bodies have been commercially facilitating the use of copyright works by users without a licence. We have relayed the views of netizens to copyright owners' representatives and some licensing bodies, and recommended them to study mechanisms that can better facilitate licence applications by the public. I


also note that some representatives of the record industry have pointed out that they never brought civil proceedings against harmless acts of individual netizens in the past, and will not rashly take legal action against individual users in the future. Nonetheless, I am aware of Members' concern over this issue, and we have relayed Mr LIAO's opinion to the industry. If there is an authorization mechanism which can make it easier for users to obtain authorization, it is likely to provide the public with greater convenience and facilitate the development of creative industries. MR MARTIN LIAO (in Cantonese): Regarding the introduction of more fixed charges as far as practicable, may I ask whether more fixed charges should be introduced for general uses of copyright works? SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): In this respect, we must also consider whether it would be against any other laws to introduce fixed charges. This requires further consideration and an in-depth study. That said, we believe that a more convenient and clearer authorization mechanism will not only offer convenience to the public but also facilitate the development of the industry. MR TONY TSE (in Cantonese): Deputy President, to set the scene for today's discussion on copyright infringement, the Member who raised this question has specifically mentioned the Chief Executive's Office's uploading of a video clip featuring the Chief Executive singing with some other people, as well as photos of buns and cakes of a cartoon character design, onto the Chief Executive's Facebook page. In fact, many people may do similar acts in Hong Kong every day, so in my view, in order to prevent a handful of people from taking the opportunity to stir up conflicts and create social misconceptions, the Government should strive to enhance public awareness of and publicity for intellectual property as mentioned by the Secretary in the main reply just now. Apart from this, actually I also share Mr Martin LIAO's opinion. Can the Government discuss with the copyright owners concerned to see what should be done? Deputy President, if promotion work is to be carried out in this regard, may I ask whether the Government will formulate guidelines to make things clearer? Given the misconceptions among many people and the incorrect comments made by some people, an unnecessary misunderstanding has arisen in society. In this


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connection, will the Government do the relevant work? The Government should, at least, consider the fact that officials do need to know how to handle such situations, because very often they will also take part in such activities in public. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): I agree. The international developments in copyright legislation over the years, such as the exceptions mentioned by me just now, are actually complex. The Copyright Ordinance is complex. In places outside Hong Kong, any copyright legislation that conforms to international standards is likewise very complex. Therefore, we need to do a lot of work in publicizing and educating the public about intellectual property protection and how to comply with the requirements of the Copyright Ordinance. The Honourable Member just now mentioned guidelines. I think that apart from guidelines, we also need to conduct a wide range of publicity and education activities. I concur with Mr TSE's view. In fact, the Intellectual Property Department allocates about $8 million to $9 million a year for organizing various publicity and public education activities. We also review the strategy and content of public education from time to time in a bid to enrich it, thereby enabling the public to better understand this ordinance. DEPUTY PRESIDENT (in Cantonese): Fifth question. Handling of Cases of Hong Kong People Reported Missing 5. MS EMILY LAU (in Cantonese): Deputy President, it has been reported that five Hong Kong people who are shareholders or employees of the Causeway Bay Books went missing one after another during the period from mid-October last year to the thirtieth of last month. The first person, the subsequent three and the last one were last seen in Thailand, the Mainland and Hong Kong respectively before they went missing. Moreover, it has been reported that the wife of Mr LEE Po, the last missing person, received two calls from Mr LEE to assure her of his safety and the displayed caller number was a Shenzhen phone number. Subsequently, an associate of the bookstore also received a handwritten fax purportedly issued by Mr LEE, saying that "I have returned to the Mainland using my own way to work with the authorities concerned in an


investigation". On the sixth of this month, the editorial of the Global Times, a state-run newspaper of the Mainland, stated that "powerful agencies across the world generally have their own ways to circumvent the law and make a person under investigation to work with them, so that they can proceed with their work without crossing the bottom line of the system". The string of incidents of people reported missing have aroused grave concern among people from various sectors of society. In this connection, will the Executive Authorities inform this Council:

(1) of the actions (to be set out in detail) taken by the authorities since the first reported missing incident happened three-odd months ago to locate the whereabouts of those five missing persons and ensure their personal safety;

(2) given that the mainland public security authorities and the Hong

Kong Police (HKP) have established a reciprocal notification mechanism regarding the detainment, arrest or unnatural deaths of their residents in the territory of the other party, whether HKP have taken action under that mechanism in respect of the aforesaid missing cases; if HKP have, of the details, and whether, apart from the information announced by the public security authorities and official media on the Mainland, HKP have received any other information on the five missing persons as notified by the mainland public security authorities; if HKP have received such information, of the details; and

(3) whether they have verified if the five missing persons were taken to

the Mainland by a powerful agency using means circumventing the law to make these persons work with it in an investigation, as mentioned by the aforesaid editorial of the Global Times; if they have verified and the result is in the affirmative, whether they have assessed if the action taken by the agency has contravened the principle of "one country, two systems" and Article 28 of the Basic Law, which stipulates that "[n]o Hong Kong resident shall be subjected to arbitrary or unlawful arrest, detention or imprisonment. Arbitrary or unlawful … deprivation or restriction of the freedom of the person shall be prohibited"?

(Mr Gary FAN stood up)


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MR GARY FAN (in Cantonese): Deputy President, I request a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber) DEPUTY PRESIDENT (in Cantonese): Secretary for Security, please reply. SECRETARY FOR SECURITY (in Cantonese): Deputy President, my reply to Ms Emily LAU's question is as follows:

(1) The HKSAR Government attaches great importance to the cases of missing persons associated with a bookstore in Causeway Bay and fully understands the concerns of the community.

Amongst the five persons who are suspected to be missing, four are

Hong Kong residents. The Police have received reports at different times that these four persons are missing. The family of one of the missing persons has also sought assistance from the Immigration Department, and the Immigration Department has already provided practicable assistance according to the wishes of his family. As regards the other missing person, he is not a Hong Kong resident and not a holder of a Hong Kong Identity Card. The Police have also not received any report that this person is missing.

With regard to the above-mentioned missing person cases, the Police

have already commenced proactive and comprehensive investigation in an attempt to understand the circumstances, background and the course of the event of the missing persons. The Police are also proactively gathering evidence and looking for clues from various sources, including closed-circuit television footage, and so on. The Police's investigation also covers the locations where the missing persons might have been to according to the informants. Currently,


the relevant cases have been consolidated and are being handled by the Regional Missing Person Unit of Hong Kong Island of the Police, with the support of the Regional Crime Unit of Hong Kong Island. During the course of investigation, the Police have been maintaining contact with the families of the four missing persons who are Hong Kong residents. The Police have also informed the families of the investigation progress and answered their queries. At the same time, the Police have set up a 24-hour hotline 6764 4385 to facilitate provision of information related to the cases by members of the public. I would like to appeal to anyone who has any information which might assist the Police in following up the cases to contact the Police as soon as possible.

During the course of investigation, the Police have been seeking

assistance from relevant Mainland police co-operation units. In the evening of 18 January, the Police received a reply letter concerning one of the missing persons, Mr LEE Po, from the Interpol Guangdong Liaison Office of the Guangdong Provincial Public Security Department, stating that "having understood that LEE Po is in the Mainland". Also enclosed in the reply is a letter from him addressing to the relevant government department of the HKSAR Government. The content of this letter is similar to the one which the media reported that he has written to his wife on 17 January. The Police have contacted Mrs LEE, who confirmed that it was LEE Po's handwriting in the letter. The Police have already written to the Interpol Guangdong Liaison Office of the Guangdong Provincial Public Security Department on 18 January, requesting to meet with LEE Po and further understand the situation of the incident.

The HKSAR Government is concerned about the rights and personal

safety of Hong Kong residents in or outside of Hong Kong. The Police will continue to spare no effort in the investigation. However, the Police could not disclose all the case details so as not to affect the investigation.

(2) Since 1 January 2001, the HKSAR Government has, by way of an

administrative arrangement and on the basis of mutual respect for the relevant laws of both sides, put in place a reciprocal notification


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mechanism with the Mainland in respect of cases involving unnatural deaths and imposition of criminal compulsory measures on residents from the other side, so that notification could be made as soon as practicable. Upon receipt of notification from the Mainland authorities, the HKSAR Government will inform the family members of the persons concerned as soon as possible so that the latter can consider whether to engage a lawyer or to seek other assistance through the HKSAR Government. In this respect, the Mainland public security authorities and other relevant authorities have been offering assistance and co-operation, and the reciprocal notification mechanism has also been serving its purpose. Since the operation of the mechanism in 2001 to the end of December 2015, over 12 000 notifications involving more than 9 400 Hong Kong residents were made by the Mainland authorities to the HKSAR side.

In addition, the Hong Kong Police have been maintaining a police

co-operation mechanism with relevant Mainland counterparts. Under the mechanism, if one party requires the assistance of the other party to conduct investigation, the requested party may gather information relevant to the case through legal means and provide such information to the requesting party. When the requesting party makes request for assistance, it must give prior notification to the requested party and explain clearly the nature of the case and the scope of the assistance sought for the investigation. It will then be for the law-enforcement officers of the requested party to undertake the investigation work in accordance with the law. When conducting such co-operation, any law-enforcement actions must only be taken by the local law-enforcement agencies in accordance with the law. Under no circumstances can police officers of either side take enforcement actions in the territory of the other jurisdiction.

Under the above mechanisms, the two sides could communicate with

regard to various cases or matters, and both sides have received assistance from the other side as well as useful information. In the past, a number of cases have registered progress or have even been solved through these mechanisms.


As I mentioned earlier, in respect of the missing person cases, the Hong Kong Police have received a reply from the Interpol Guangdong Liaison Office of the Guangdong Provincial Public Security Department. The Police will continue to follow up the cases with the Mainland authorities and request for information on other relevant missing persons.

(3) Since Hong Kong's return to China, the HKSAR Government has all

along been dealing with matters relating to the HKSAR strictly in accordance with the principle of "one country, two systems" and the Basic Law.

The Basic Law only authorizes Hong Kong law-enforcement

agencies to enforce laws. Law-enforcement agencies outside of Hong Kong, including law-enforcement agencies of the Mainland and overseas, do not have the authority to enforce laws in Hong Kong. If law-enforcement officers of non-Hong Kong jurisdictions take law-enforcement actions in Hong Kong, this will contravene Hong Kong laws and is unacceptable. Except properly permitted under the laws, we shall not tolerate any unauthorized law-enforcement action by anyone or any organization. For any suspected case of infringement, we will conduct full and thorough investigation.

I will not comment on reports or comments by individual media,

irrespective of whether they are local or non-local media. Since the Police's investigation of the cases is still ongoing, in the absence of a full grasp of the facts, it is not appropriate for me to make any speculation.

Article 28 of the Basic Law states that the freedom of the person of

Hong Kong residents shall be inviolable. No Hong Kong resident shall be subjected to arbitrary or unlawful arrest, detention or imprisonment. Arbitrary or unlawful search of the body of any resident or deprivation or restriction of the freedom of the person shall be prohibited. The HKSAR Government will, as always, continue to resolutely safeguard the rights and freedoms of Hong Kong residents in accordance with law.


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MS EMILY LAU (in Cantonese): Deputy President, five people from the Causeway Bay Books went missing and it has been three months since the incident occurred. The authorities said that they were very concern about it and would try their best to deal with the incident. Four of the missing persons are Hong Kong residents and reports have been made to the Police; but we only have information on one of them, that is, LEE Po, though we do not know where he is, and we do not have any information on the rest of them including LAM Wing-kei, LUI Bo and CHEUNG Ji-ping. Although the authorities said that the Police are trying hard to investigate the matter, how can Hong Kong people have confidence that the authorities would really make the best efforts to defend our personal safety? If, as the Secretary said, some people from law-enforcement agencies outside Hong Kong enforce the law, kidnap or arrest certain people in Hong Kong, this would violate the Basic Law and undermine "one country, two systems". Yet, the authorities only keep saying that they would deal with the matter and that is why Hong Kong people are angry. Deputy President, according to press reports, MENG Jianzhu, the Secretary of the Central Political and Legal Affairs Commission of the Chinese Communist Party, visited Shenzhen and Guangdong last week and carried out co-ordination work on the LEE Po incident. Have the authorities sent someone to meet with MENG Jianzhu? Have anybody gone to Shenzhen, Guangzhou or Beijing and told Hong Kong people that the authorities really defend our interests, and they will not let the "one country, two systems" collapse? SECRETARY FOR SECURITY (in Cantonese): The SAR Government has all along strictly adhered to the principle of "one country, two systems" and it has also strictly complied with the Basic Law and the laws of Hong Kong. I believe we all know that after the Hong Kong Police have received the several reports, the Regional Missing Person Unit of Hong Kong Island has taken action. They have met with the families of the missing persons and collected information and sought assistance from the related Mainland units through the mechanism just mentioned in my reply. Regarding the incident of four Hong Kong residents reported missing, we received information on one of the residents the night before last and we are still seeking information on the other three. We will continue to make efforts and we are awaiting replies from the related Mainland units. Today and in the past few


days or weeks, the local media and the media outside Hong Kong are very concerned about this incident and they have made different forms of reports. We have certainly seen these reports but we will not comment publicly on the contents and background of media reports. We will only try our best to collect evidence and we also call upon Hong Kong people to inform the Police as soon as possible if they have information on these four Hong Kong residents. The Police welcome any information and consider it useful. MS EMILY LAU (in Cantonese): Deputy President, I am not asking the Secretary to make comments; I asked whether he met with MENG Jianzhu or whether the authorities would send some people to the Mainland to tell the Central Government that Hong Kong people are very tense and really frightened as "one country, two systems" is going to exist in name only. SECRETARY FOR SECURITY (in Cantonese): After having communications with the Mainland, the Police have received information on one Hong Kong resident, and we have also written to the Interpol Guangdong Liaison Office of Guangdong Provincial Public Security Department, asking them to arrange for a meeting between us and Mr LEE Po for collecting further information and follow-up investigations. PROF JOSEPH LEE (in Cantonese): Deputy President, I have not expected that it is my turn to raise a question so soon and I was going to ask Mr Frederick FUNG a question just now. Deputy President, I have been listening to the Secretary for Security's reply in the Dining Hall. Ms Emily LAU mentioned "one country, two systems". I have a very interesting question to which the Secretary has not responded in his reply. Evidently, the Mainland authorities have confirmed that Mr LEE Po is now in the Mainland but there is no record of his departure. I asked a question when I was chatting with other people: if someone in Hong Kong leaves the territory illegally ― this is not my supplementary question and it is just my idea ― will he violate the law? The focus of my supplementary question is: since we know that someone has illegal left Hong Kong and entered the Mainland, I would like to ask


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the Secretary if there is any "powerful police" or "powerful agency" in Hong Kong which can deport him back to Hong Kong ― I do not know if the authorities have the budget to rent a "shampoo boat" ― so as to investigate if he has violated the law? (Some Members spoke loudly) DEPUTY PRESIDENT (in Cantonese): Will Members please keep quiet. SECRETARY FOR SECURITY (in Cantonese): Prof LEE, to my knowledge, none of the departments of the SAR Government is called a "powerful agency". All government departments in Hong Kong perform their duties in accordance with the laws of Hong Kong and we do not have law-enforcement authority in places outside Hong Kong. Similarly, law-enforcement agencies outside Hong Kong do not have law-enforcement authority in Hong Kong. As to exactly how Mr LEE Po returned to the Mainland, this is something to be understood and investigated by the Police. If we can meet with Mr LEE, we would probably be able to obtain further information in this regard. PROF JOSEPH LEE (in Cantonese): Deputy President, when the Secretary heard me mention the term "powerful agency", he might think that this was the focus of my supplementary question, but the focus of my supplementary question is: since a Hong Kong person has illegally left the territory and I do not know whether he has violated the law, can the Secretary request the Mainland authority to deport him back to Hong Kong for conducting investigations on whether he has violated the law? The Secretary has not answered this part of my question. DEPUTY PRESIDENT (in Cantonese): This is not your question raised just now. The Secretary has already answered the question about the "powerful agency".


MS CLAUDIA MO: Hong Kong is supposedly one of the safest cities in the world. It is very ironic that a Hong Kong person can be "disappeared" from Hong Kong as such. C Y LEUNG has been trying very hard to play down the issue as some sort of ordinary crime. But even the Chinese Foreign Minister would bother to open his mouth on this issue, meaning that Beijing is officially and politically involved. As a political Minister, the Secretary should be held politically accountable over this whole saga, right? I wish he would agree.

My question is: has the Secretary actually provided extra protection to

those involved in this whole business, especially Mrs LEE or any other person who might be considered to be related to in this incident, so as to ensure that the person or persons would not become the next victim or the sixth or seventh victim?

SECRETARY FOR SECURITY (in Cantonese): Deputy President, if, having understood the situation, the Police believe that the personal safety of a person may be at risk, they will of course responsibly tell the person so and ask him if he needs protection from the Police. On the contrary, if anyone reports to the Police or requests for police protection and states the reasons why he fears that his personal safety is at risk, the Police would follow the established procedures and consider his situation in order to determine whether protection will be provided. I can tell Members that the Police adopt the same principles and attitudes in handling all cases. As to whether the specified person mentioned by Ms MO has requested for police protection, as the matter involves privacy of an individual, I am sorry that I cannot disclose this publicly. However, the Police have clear standards and attitudes in handling cases involving personal safety. We will deal with all cases equally and unambiguously, and the Hong Kong Police protect the personal safety of all persons in Hong Kong according to the law. MS CLAUDIA MO: Another shameless reply. "Yes" or "No" to my question. DEPUTY PRESIDENT (in Cantonese): Secretary, do you have anything to add?


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SECRETARY FOR SECURITY (in Cantonese): I believe I already made it very clear, and the answer is actually very obvious. If in the course of investigation, the Police think that some people may need police protection, they will offer them such protection; if anybody requests for police protection, the Police will definitely consider … (Ms Claudia MO stood up and made comments) DEPUTY PRESIDENT (in Cantonese): Ms Claudia MO, please sit down. (Ms Claudia MO kept making comments) DEPUTY PRESIDENT (in Cantonese): Ms Claudia MO, debate is not allowed during Question Time. (Ms Claudia MO continued to make comments) DEPUTY PRESIDENT (in Cantonese): A Member shall not make a speech without my permission. Secretary, please continue with your reply. SECRETARY FOR SECURITY (in Cantonese): Deputy President, I have answered the question very clearly. I certainly cannot disclose publicly the specific situation but our criteria is that if people find that their personal safety is at risk, we will definitely provide them with protection. MR YIU SI-WING (in Cantonese): Deputy President, the Secretary mentioned in part (2) of the main reply that Government has "by way of an administrative arrangement and on the basis of mutual respect for the relevant laws of both sides, put in place a reciprocal notification mechanism with the Mainland", and that the Police have been "maintaining a police co-operation mechanism with relevant Mainland counterparts". I would like to ask the Secretary how different these two mechanisms are. Under what circumstances and with which Mainland departments or units will the SAR Government activate these mechanisms?


SECRETARY FOR SECURITY (in Cantonese): I thank the Member for the supplementary question. Concerning these two mechanisms, the first one is a reciprocal notification mechanism, which is an administrative arrangement implemented since 1 January 2001. The two sides act in accordance with their respective laws and notify the other party as early as practicable about people who are subject to criminal coercive measures. The targets of this mechanism are mainly: first, Hong Kong residents; and second, people who are subject to criminal coercive measures. Another mechanism is a police co-operation mechanism; it can be said that this mechanism covers a notification mechanism and has a wider scope. Other issues can also be dealt with through the co-operation mechanism and this form of collaboration is done in a similar way as that of the Interpol. The counterparts are the same. DEPUTY PRESIDENT (in Cantonese): Last oral question. Measures for Improving Taxi Service 6. MR FRANKIE YICK (in Cantonese): The Government is studying the introduction of quality taxi service to be operated under a franchise model, with a view to improving the current situation that taxi service varies in quality, which is caused by the highly scattered ownerships of taxi licences and management responsibilities of taxis. Some members of the taxi trade have conducted surveys on taxi service, with findings showing that respondents generally hope for improvements in the ways of hailing taxis and the service attitude of drivers, and they are in general willing to pay up to 30% more in fares for better taxi service. Those members of the trade are worried that the direction of the Government's study deviates from public expectations. In this connection, will the Government inform this Council:

(1) of the considerations based on which the authorities will decide whether or not to introduce quality taxi service, and the criteria to be adopted for determining the relevant details (including the number of franchises, vehicle types, compartment facilities and restriction on vehicle age); whether they have studied if the introduction of quality taxi service is the only solution to the current


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problem that taxi service varies in quality; if they have studied and the outcome is in the affirmative, of the relevant justifications;

(2) as the authorities suggest that any company holding a quality taxi

service franchise be required to maintain an employer-employee relationship with its drivers, and the drivers concerned will hence be covered by the protection of the current legislation related to labour rights, such as the Employment Ordinance, the Minimum Wage Ordinance, etc., of the reasons why the authorities have proposed to add a franchise term to additionally require the franchised company to properly handle matters on drivers' remuneration, so as to ensure reasonable protection of drivers' benefits and interests; whether they have assessed if such a proposal constitutes over-regulation and violates the principle of free market operation; and

(3) as some taxi groups have now formed their own fleets to operate taxi

service, and have set the standards of service level, drivers' work attitude, reward and punishment system as well as vehicle quality for fleet members to follow, whether the authorities will consider first keeping the situation in view for a period of time to ascertain if such an operation model can address the public calls for improvement in the quality of taxi service before deciding whether or not to implement quality taxi service; if they will, of the details; if not, the reasons for that?

MR GARY FAN (in Cantonese): Deputy President, I request a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber) DEPUTY PRESIDENT (in Cantonese): Secretary for Transport and Housing, please reply.


SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, my consolidated reply to the various parts of Mr Frankie YICK's question is as follows: In recent years, the number of complaints relating to taxi service has increased rapidly from around 6 200 complaints in 2005 to around 10 000 complaints in 2014. The majority of the complaints were about refusal to hire, "cherry-picking" of passengers and poor service of taxi drivers. Improvement of quality of existing taxi service is a common request from the public. In response, some members of the trade are actively proposing some improvement measures. The Government welcomes the trade's effort. Meanwhile, there is community's demand for point-to-point transport service of better quality and higher fares. In this connection, the Government is studying whether to introduce premium taxi service, while enhancing the regime for approving and regulating hire cars (including ways to facilitate the entry of new service providers into the hire car market). We hope that by working on the three areas together, the passenger demand on enhanced point-to-point transport service will be more comprehensively met. The Government is studying the introduction of premium taxis through a franchise model given the limitations of the existing taxi operation model in ensuring the overall long-term quality of taxi service. At present, some 18 000 ordinary taxi licences have been issued and they are all permanent in nature. These licences have been issued without any conditions directly related to service quality. As such, we cannot impose any penalty against unsatisfactory services through the licence conditions. Regulation of taxi services can only be carried out by enforcement actions under the Road Traffic Ordinance and its subsidiary legislations. Yet, the effectiveness of enforcement is subject to constraints in respect of the high threshold for prosecution and gathering of evidence. Moreover, the ownership of ordinary taxi licences is scattered. There are over 9 000 licence holders. Taxi owners and drivers do not usually have an employer-employee relationship. Incomes of taxi drivers are not directly related to their service quality. Thus, there is a lack of an incentive mechanism to ensure drivers' service quality. The service quality varies as it depends on the willingness or performance of individual owners or drivers. Premium taxis are introduced to provide a passenger choice other than ordinary taxis. This helps improve the taxi service and meet the community's demand for diversified services.


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Through a franchise model, the granting of time-limited franchises to a few companies to operate premium taxis will enable the Government to set service standards and monitor the operators' performance through franchise terms. Operators will have to maintain an employer-employee relationship with their drivers. Drivers' performance will be monitored and managed centrally by operators. Moreover, operators will have to be of a certain business scale in order to benefit from economies of scale. Regulation of public transport services through franchise or similar regimes is not a new idea. The most noteworthy example is the franchised bus service. The Government is examining in detail other operational issues under the franchise, such as the number of premium taxis, vehicle types, compartment facilities, restriction on vehicle age, fare structure and level, and so on. When determining the number of premium taxis, we will review the overall supply and demand of taxi service in Hong Kong, community's demand, operating environment of the taxi trade and traffic impact, and so on. This is to ensure an orderly implementation of premium taxis and to continue to maintain reasonable competition and long-term sustainability of various public transport services. As premium taxis will be a kind of public transport service, the Government, when setting the fare level, will carefully strike a balance between the higher operating cost to be borne by the operators for better service quality and affordability for the target passengers. We will also conduct an in-depth study on how to adjust the fares as and when necessary. When setting service standards, we will canvass views from the public and trade as well as make reference to the experience of other places. With regard to the rights of drivers, the vast majority of ordinary taxi drivers are currently self-employed. Their income varies mainly with the fluctuation in patronage, fares and rental expenses. For premium taxis, the future operators will have to maintain an employer-employee relationship with their drivers under the franchise, and thus be regulated by the Employment Ordinance and other ordinances relating to employees' rights. Drivers' right will be protected as their remuneration and fringe benefits will be properly handled. It is worth noting that the drivers' remuneration will become one of the operating costs. As such, such costs will be taken into account when the Government considers fare adjustment for premium taxis in future.


Some members of the taxi trade have formed their own fleet to provide hire-as-a-whole service for passengers (that is, a different ordinary taxi service with fare to be agreed between parties), with a view to enhancing their operation and service quality. Meanwhile, as far as we know, some members of the trade are also preparing to launch a taxi-hailing mobile application that can be used by all ordinary taxis in Hong Kong for passengers' convenience. The Government welcomes the above-mentioned trade's effort. The Transport Department will continue to liaise closely with the trade to assist them in implementing various measures for enhancing the taxi service. We trust that the trade's effort in enhancing the taxi service will complement with the Government's plan to introduce premium taxis and enhance hire car service, thereby improving the point-to-point personalized transport service in Hong Kong and providing diversified choices for passengers. We plan to brief the Legislative Council Panel on Transport on the progress of the study on introduction of premium taxis in mid-2016, and will strive to complete the study in the third quarter of 2016. If it is confirmed that the introduction of premium taxis is feasible, we will immediately proceed with the necessary legislative amendments for early implementation. MR FRANKIE YICK (in Cantonese): Secretary, first of all, I doubt the effectiveness of the franchise model in monitoring the operation of taxis. Yet, I am sure that the Deputy President will not allow me to debate the issue with the Secretary here, so I will provide the Secretary with some viewpoints of mine in writing later. The Secretary has clearly stated in the main reply that the Bureau is aware that in response to the public call for taxi services, the taxi trade has set up the Hong Kong Taxi Industry Council with an aim to improve service standard. It has embarked on the development of a taxi-hailing mobile application that can be used by all taxis in Hong Kong, and liaised with the Employees Retraining Board to organize a specifically tailor-made training course for taxi drivers on driving and service attitudes, so as to tie in with the reward and punishment system relating to the upcoming taxi-hailing mobile application. Meanwhile, it will also introduce to the market … DEPUTY PRESIDENT (in Cantonese): Mr YICK, what is your supplementary question?


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MR FRANKIE YICK (in Cantonese): Deputy President, I will ask my supplementary question in a moment. The Hong Kong Taxi Industry Council will introduce to the market taxi services operated by different fleets, which shows that the taxi trade is working hard to improve service standard. In this connection, I would like to ask the Secretary if the Bureau will allow some time for the trade to implement the above-mentioned improvement measures, and see if their efforts can address the public calls for taxi service before considering to introduce other forms of premium taxi services? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, the Government informed the Legislative Council Panel on Transport in late 2015 that it would conduct studies on introducing premium taxi as well as improving the regulation and various arrangements of car hire service, and we have been extremely careful in considering these proposals. We recalled that last year, there were many views from the community on taxi service and there are voices calling for more choices in respect of point-to-point personalized transport service. The Government, first of all, welcomes the efforts of the existing taxi owners or drivers, who have formed different groups, to improve service quality in their own ways by all means, and we hope they will continue to do so. Yet, this does not mean that we should not respond to the different needs of the community in parallel for I am sure it is the common wish of the people to have more choices. Therefore, we will not focus merely on the feasibility of introducing premium taxis, but will also consider how the existing car hire service can be improved, with a view to providing different point-to-point transport service for public convenience. MR YIU SI-WING (in Cantonese): Deputy President, the Secretary also mentioned in the main reply earlier on that complaints about taxi service has been on the rise in the recent decade and has seriously tarnished Hong Kong's reputation. The Government is prepared to introduce premium taxi service or franchise to improve the overall service quality, which I think is well-intentioned, but given that according to the third paragraph of the main reply, some 18 000 taxi licences have been issued in Hong Kong, the issuance of new licences would only intensify competition in the industry and put greater pressure on road traffic. To avoid vicious competition, the Government has put forward two proposals, with one being the introduction of premium taxi licences. Just as Mr YICK has


said, I think the Government should solicit views from the taxi trade, which also has its own thinking. It is possible that by making adjustments, it may provide quality service. I think this is worth … DEPUTY PRESIDENT (in Cantonese): Mr YIU, what is your supplementary question? MR YIU SI-WING (in Cantonese): … considering by the Government. As for the other proposal to further improve the licensing arrangements for hire car service, I however would like to call on the Government to give further consideration to it because, as I am aware, applications submitted by some companies almost a year ago have yet to be approved. I would like to ask if the Secretary would consider streamlining the application procedures for licence for these companies so as to enable them to provide car hire services of better quality? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, Mr YIU mentioned that if the Government, after conducting the study, considers the proposal desirable and introduces premium taxi service, it should ensure that there is reasonable and healthy competition. We agree to this point. Therefore, in my main reply, I also mentioned that when we introduce the premium taxi service, we will definitely consider in a holistic manner the number of premium taxis and other relevant details having regard to the overall situation of this kind of point-to-point taxi service in Hong Kong, so as to ensure reasonable and healthy competition as well as long-term sustainability of various public transport services. The introduction of premium taxi, however, is not intended to replace the existing ordinary taxis, but to boost the service quality of ordinary taxis at the same time. Instead of establishing a licensing regime for premium taxis, we hope to adopt a franchise model. Therefore, in the future, the licences issued will no longer be irrevocable or transferrable. Regarding the car hire service, we propose to improve the monitoring and management system concerned to, inter alia, make the assessment criteria for the relevant applications more responsive to society's demand for such service, including the hire of limousine service.


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MR MICHAEL TIEN (in Cantonese): Deputy President, the number of complaints relating to taxi service has increased significantly in the recent decade, which I am sure the Secretary is also aware. Among them, the number of complaints about refusal to hire has risen three times from some 700 to 2 500. The situation is nonetheless even worse for overcharging, as the number of complaints has risen four times from 400 to 1 600. Although the Police always uncover drivers' misdeeds in every decoy operation, I trust that the majority of the taxi drivers are law-abiding. Regarding the public call for improving people's impression of the taxi trade and thus the relations between them, I think the key lies in how the two major problems of refusal to hire and overcharging can be eradicated. During my last meeting with the Secretary, I have suggested that the key to solving these problems is to stipulate in the license conditions of premium taxis that drivers can only serve passengers who have pre-booked via the mobile application but cannot circulate around the streets in searching for customers. Therefore, instead of operating as a taxi purely, premium taxi service is similar in nature to car hire service. The licence condition concerned has two advantages: first, drivers cannot refuse hire as they cannot ascertain the destination of the passengers, and second, given that the mobile application will keep records of the taxi fares, this makes the drivers impossible to charge additional fares … DEPUTY PRESIDENT (in Cantonese): Mr James TIEN, please ask your supplementary question. MR MICHAEL TIEN (in Cantonese): … My supplementary question is very simple. Secretary, I think this is the only way to completely eradicate the hire refusal and overcharging problems, what do you think? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, the premium taxi that the Government has in mind bears many resemblances to ordinary taxi, for example, drivers must charge according to the taximeter, may not refuse hire, may circulate around the streets in searching for customers, and may provide hire-as-a-whole service with fare to be agreed between parties. All these will be retained. However, given the stricter


requirement for premium taxi service, the fare will probably be higher. Furthermore, as the franchise regulator, the Government is in a better position to ensure service quality and can therefore better respond to passengers' needs. With regard to the current malpractices, including the refusal to hire or not using the most direct practicable route, I have actually explained the prosecution action of the Police and the sentences for such malpractices imposed by the Court in reply to an oral question raised by a Member at a Legislative Council meeting earlier on. We can see that, on one hand, there is an increase in the number of prosecutions, and on the other hand, the Police will step up its enforcement action. MR MICHAEL TIEN (in Cantonese): Secretary … DEPUTY PRESIDENT (in Cantonese): Mr TIEN, which part of your supplementary question has not been answered? MR MICHAEL TIEN (in Cantonese): The Secretary has not answered if he agreed with the relevant approach. He only has to answer "agree" or "disagree". The proposed mobile application is the only way to completely eradicate the above-mentioned two problems, and the Secretary's supervision has failed. DEPUTY PRESIDENT (in Cantonese): Mr TIEN, please sit down as you have raised your follow-up question. Secretary, please reply. SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, I thought I have replied. If Mr TIEN's focus was on the use of mobile application, we do agree that it should be used by all means. In examining the specific service arrangements of premium taxis, we will take into consideration how the most advanced technology and mobile applications can be used.


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MR TANG KA-PIU (in Cantonese): Deputy President, I very much agree with the initial ideas of premium taxi, particularly on two points: firstly, the taxi operator and drivers must maintain an employer-employee relationship, and secondly, all issued licences are non-transferable. I consider this a very good attempt. I would like to ask how existing taxi service can be enhanced, or more specifically, as many people find it very difficult to get a taxi at night from Hong Kong Island to Kowloon side because taxi drivers often seem pretty reluctant to carry them, I wish to focus on this problem. In the face of this specific problem, has the Secretary considered how it can be resolved more easily? Let me cite an example, the FTU has all along been calling for the adoption of standard tolls for the three road harbour crossings at night time and for empty taxis in their return journey, such that taxi drivers would be more willing to carry passengers who take taxis at night. Another problem is concerned with long-haul fares … DEPUTY PRESIDENT (in Cantonese): Mr TANG, you have raised your supplementary question. Secretary, please reply. SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, be it day or night, it is an offence for any taxi driver to refuse hire. Of course, we have discussed in previous meetings of the Legislative Council or panels on how to eliminate refusal to hire by all means through, first, law enforcement by the Police, and second, enhanced communication between the authorities and taxi trade organizations. Regarding the issue of long-haul fares raised by Mr TANG, according to the current taxi fare structure, the fares of long-haul trips should be relatively lower whereas those of short-haul trips are relatively higher. This is the current charging method. In addition, the proposal to adopt standard tolls for the three road harbour crossings, either the whole day or at night time, would have implications on the traffic of these harbour crossings and their link roads. Therefore, we cannot


merely focus on the fact that taxi drivers might cherry pick passengers based on their choice of harbour crossing. The taxi industry is positioned in a way that drivers cannot refuse hire and are supposed to carry passengers to any destination. MR CHARLES PETER MOK (in Cantonese): Deputy President, as stated by the Secretary in the main reply, the ownership of some 18 000 taxi licences issued is currently scattered over 9 000 licence holders. Yet, this is just a numbers game aiming to divert attention. The fact is, it has been reported that according to the online data of Taxixchange, of the 15 000-odd urban taxi licences issued, only one third are "single taxi" licences, whereas those held by the 10 licence holders who have the largest number of taxi licences altogether account for 12.5% of the market, that is, more than 1 900 taxi licences. The situation is even worse for New Territories taxi licences because the 10 licence holders who have the largest number of taxi licences altogether held 24% of the taxi licences in the market. For taxi dealers holding the largest number of taxi licences, the market value of their urban, New Territories and Lantau taxi licences add up to a total of over $500-odd million. Therefore, if the Government introduces the franchise model before addressing the ownership issue, the new premium taxis will only create a new monopoly. Therefore, I do not agree with Mr Frankie YICK's remark that this is over-regulation. On the contrary, I am worried that there may be inadequate regulation, which would again lead to monopoly when the licences fall into the hands of those few taxi dealers. What can we do then? If the Government cannot even tackle the fundamental problem of the taxi industry, how can the introduction of premium taxi solve the problem? Therefore, Deputy President, my supplementary question is: Will the Government consider taking the opportunity of the review to explore the introduction of a statutory renewal system, and the imposition of licence conditions related to service quality? Nonetheless, I am not referring to the licences of premium taxis, but the 10 000-odd licences already issued to ordinary taxis. Is the Government able to do this? Only this can provide a long-term solution to the taxi problem in Hong Kong. MR GARY FAN (in Cantonese): Deputy President, I request a headcount.


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DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber) DEPUTY PRESIDENT (in Cantonese): Secretary for Transport and Housing, please reply. SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): Deputy President, the so-called "licence holders" mentioned by Mr Charles Peter MOK earlier should be accurately referred to as registered taxi owners. Some of them do own quite a large number of taxi licences. According to rough estimate, the total number of taxi licences held by the so-called "big ten holders" accounts for 18% of the market's total, slightly below 20%, which reflects the scattered ownership of licences. Worse still, a more concrete restriction is that the taxi licences issued are of permanent nature, which means that, firstly, the Government cannot revoke them, and secondly, they are private properties. In that case, the licences cannot be revoked by any means. We can only regulate the specific acts, such as refusal to hire and not using the most direct practicable route, under the Road Traffic Ordinance as I mentioned in the main reply. Other than this, under the existing framework, what we can do in respect of the key elements affecting service quality is quite limited. MR CHARLES PETER MOK (in Cantonese): Deputy President, my question was whether the Secretary would conduct a study from a legislative perspective? Will he not do so? The Secretary has not answered whether he will do it or not. DEPUTY PRESIDENT (in Cantonese): Secretary, do you have anything to add? SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): There is nothing we can do in the legislation as the licences issued are of a permanent nature, and there is no need for renewal. DEPUTY PRESIDENT (in Cantonese): Oral questions end here.


WRITTEN ANSWERS TO QUESTIONS Enhancing Hong Kong's Competitiveness 7. MR MARTIN LIAO (in Chinese): President, it has been reported that a number of reports published recently by authoritative organizations have pointed out that alarm has been sounded for Hong Kong's competitiveness. For instance, the Global Competitiveness Report 2015-2016 published by the World Economic Forum (the Forum Report) has showed that, among the 140 economies covered by this Report, although Hong Kong's overall ranking in 2015-2016 in the Global Competitiveness Index has maintained its 7th place attained in the previous year, her ranking in innovation is only 27th, which is clearly on the low side and shows a downward trend. Meanwhile, Hong Kong's ranking in financial market development has dropped from the first to the third place. The World Bank Group's "Doing Business 2016" report has also indicated that Hong Kong's ranking in ease of doing business has dropped from the third to the fifth place. On the other hand, the Blue Book of Urban Competitiveness: Annual Report on China's Urban Competitiveness No. 13 published by the Chinese Academy of Social Sciences (the Academy Report) has pointed out that, among the 294 cities in China, Hong Kong's latest ranking in overall economic competitiveness has dropped, for the first time in 12 years, from the first to the second place, being surpassed by Shenzhen. Also, in respect of several competitiveness indices, Hong Kong has been caught up by a number of mainland cities. In this connection, will the Government inform this Council:

(1) as the Forum Report has indicated that Hong Kong's ranking is lower than those of the Four Asian Tigers in three indices, namely (i) capacity for innovation, (ii) availability of scientists and engineers, and (iii) university-industry collaboration in research and development, whether the authorities will introduce targeted measures, such as provision of tax concessions, to boost Hong Kong's competitiveness in the aforesaid three areas; if they will, of the details; if not, the reasons for that;

(2) as some members of the financial sector have pointed out that the

main reason for the drop of Hong Kong's ranking of competitiveness in financial market development, as indicated in the Forum Report, is the insufficient innovation in Hong Kong's financial industry, in


3775

particular it is still at an early stage of development in respect of innovative online financial services, whereas Internet shopping and payment, micro-credit, peer-to-peer lending, crowd funding, online banking services, etc. are developing quickly on the Mainland, of the new measures the Government has put in place to strengthen the competitiveness of Hong Kong's financial industry; and

(3) as the Academy Report has pointed out that since Hong Kong has

put too much emphasis on five major industries, namely trading, finance, shipping, tourism and professional services, but paid insufficient attention to quite a number of small-scale emerging industries which have immense potential, resulting in a lack of new industries to support long-term economic development, and coupled with the narrowed gap between Hong Kong and mainland cities, Hong Kong is facing the risk of being marginalized, whether the authorities will formulate more new measures to promote diversification of the economy and ease of doing business in Hong Kong, so as to enhance Hong Kong's overall competitiveness; if they will, of the details; if not, the reasons for that?

SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Chinese): President, the Government puts great emphasis on the enhancement of Hong Kong's competitiveness, in order to secure the healthy development of Hong Kong's economy in the long term. Having consulted the Innovation and Technology Bureau and the Financial Services and the Treasury Bureau, my reply to the three parts of the question is as follows:

(1) To promote sustained and diversified economic and social development, the Government is determined to develop the local innovation and technology industries, in order to drive the upgrading and transformation of our overall economic structure, thereby enhancing Hong Kong's competitiveness.

With its robust information and communications technology

infrastructure, sound legal system and intellectual property protection regime, Hong Kong is well-positioned to develop high value-added and high-tech innovation and technology industries. In


fact, Hong Kong's innovative capabilities, potential and room for development are already recognized by advanced institutions worldwide. For example, the Karolinska Institutet of Sweden will set up in Hong Kong its first overseas research facility, while the Massachusetts Institute of Technology of the United States will also establish its first overseas Innovation Node in Hong Kong.

Talents are the most important factor of success for developing

innovation and technology. Hong Kong has quality talents for scientific research. For instance, at the 2015 State Science and Technology Awards, five of the winning projects were led or participated by Hong Kong scientific researchers. The Academy of Sciences of Hong Kong, which was established in December last year, could also facilitate the convergence of top-notch scientific research talents. The Innovation and Technology Bureau will continue to actively introduce measures to attract scientific research talents and experts to Hong Kong, so as to lead local young people to join the force in innovation and technology to fulfil their potentials, thereby enhancing Hong Kong's competitiveness.

The 2016 Policy Address introduces a number of new measures for

the local innovation and technology development. They include the establishment of a $2 billion Midstream Research Fund, which supports universities in carrying out more midstream and translational research in key technology areas. The Government also proposes to set up a $2 billion Innovation and Technology Venture Fund for co-investing with private venture capital funds on local innovation and technology start-ups on a matching basis. In addition, Cyberport will allocate $200 million to set up a Cyberport Macro Fund for investment in its information and communication technology start-ups. The above measures can promote research and development and strengthen support for technology start-ups, giving new impetus to the development of innovation and technology in Hong Kong.

(2) Hong Kong is an open and vibrant international financial centre with

a wide range of products and expertise as well as a sound financial infrastructure and regulatory framework. The Government has been implementing measures to enhance Hong Kong's


3777

competitiveness as an international financial centre, including broadening our legal framework and improving the tax environment, strengthening our asset management platform and corporate treasury services, enhancing mutual market access, as well as deepening our offshore Renminbi business.

Financial technologies (Fintech) can enhance operational efficiency

of the financial services industry, and has the potential of transforming traditional products and processes. As an international financial centre with a highly developed information and communication technology sector, Hong Kong is an ideal place for both financial institutions and start-ups to develop Fintech business. The Government and our financial regulators will provide a conducive environment for Fintech development. Using payment service as an example, the regulatory regime for stored value facilities and retail payment systems, which commenced operation in November last year, helps ensure that these facilities and systems can operate within a stable and safe environment. The new regulatory regime will strengthen the public's confidence in using these products and services, and foster the development and innovation of the payment industry. Also, with the Government's support, the local banking sector launched the e-Cheque service at the end of last year. The e-Cheque service offers an environmentally-friendly, safe and sound solution to enterprises and the public for handling payments.

The Financial Services and the Treasury Bureau established the

Steering Group on Fintech in April last year to examine, in collaboration with the representatives from the industry, research and development institutions as well as regulatory authorities, opportunities brought about by the development of Fintech and measures to promote Hong Kong as a Fintech hub. Development of Fintech involves government policy, regulatory infrastructure, talent development, as well as behavioural and cultural adaptation by traditional financial services providers, start-ups and consumers. We will continue to engage stakeholders to take stock of the experience of Fintech development in other places, and look into measures to foster the development of Fintech in Hong Kong.


(3) The Government attaches great importance to the diversified development of industries, with a view to maintaining the overall competitiveness of Hong Kong. Specifically, apart from continuing to expand and strengthen the four pillar industries (namely trading and logistics, tourism, financial services, and business and professional services) where Hong Kong enjoys an advantage, the Government will actively identify emerging industries with potential in order to promote the diversified development of our economy, so that Hong Kong can better respond to the world's ever-changing economic environment, and further enhance our competitiveness.

The Government supports the further development of creative

industries through Create Hong Kong (CreateHK) as well as the CreateSmart Initiative (CSI) and the Film Development Fund (FDF) administered by CreateHK. The Government will inject an additional $400 million into the CSI and will in the coming years accord priority, where appropriate, to those programmes which nurture start-ups and talents, promote Hong Kong designers and brands, and so on. The Government will also expand the scale of the Design Incubation Programme (DIP) so as to increase the average annual intake of the DIP from 20 at present to 30 in the coming three financial years from 2016-2017 to 2018-2019. The overall target is to admit 90 additional incubatees within three years. In addition, to promote the development of the fashion industry, the Government will roll out pilot measures over three years to boost promotion of local fashion design and brands, provide technical training and support for the trade and launch the Fashion Incubation Programme.

The Government will continue to foster the development of the film

industry, including encouraging more local film production, nurturing new talents, expanding audiences and promoting the Hong Kong film brand. We further injected $200 million into the FDF last year, having implemented measures to enhance the Film Production Financing Scheme to support the small-to-medium-budget film productions and launched a new Film Production Grant Scheme to provide low-budget film productions


3779

with cash subsidies. The Government will also continue to implement the First Feature Film Initiative to nurture talents for the film industry.

In addition to giving impetus to economic growth, innovation and

technology also underpin the development of other economic sectors. The Innovation and Technology Bureau will actively promote "re-industrialization", encouraging the development of high value-added industries and manufacturing processes, promoting smart production and bringing the industrial development in Hong Kong to a new level.

Since its establishment in 2013, the Economic Development

Commission (EDC), led personally by the Chief Executive, has been studying how to make the best use of Hong Kong's prevailing advantages and opportunities, conducting in-depth discussions on the visionary direction of the overall strategy and policy to broaden our economic base and enhance our long-term development, and identifying industries which present opportunities for Hong Kong's further economic growth, with a view to recommending policies and other support measures for facilitating the sustained development of the industries concerned. Over the past two years, the four Working Groups under the EDC (namely the Working Group on Transportation, the Working Group on Convention and Exhibition Industries and Tourism, the Working Group on Manufacturing Industries, Innovative Technology, and Cultural and Creative Industries (MICWG), and the Working Group on Professional Services) have submitted to the EDC specific recommendations on promoting the sustained development of the relevant industries, which were endorsed by the EDC and accepted by the Government. Taking the MICWG as an example, the recommendations submitted include: offering overseas internship opportunities to more young design talents; enhancing support for the post-production sector of the film industry; refining the Innovation and Technology Fund; and promoting the development of the fashion industry. The Government is progressively implementing the recommendations and expects EDC to submit further specific recommendations.


Collection of Rates and Government Rent 8. MR CHAN KAM-LAM (in Chinese): President, some property owners have relayed to me that each year they have to pay both rates and government rent at 5% and 3% respectively of the rateable value of their properties. In recent years, following the continuous rise in rent levels, the relevant amounts payable by them have been on the rise even after taking into account the rates concessions granted by the Government, causing increasingly heavy burdens on them. In this connection, will the Government inform this Council:

(1) of the respective amounts of total revenues collected by the Government from rates and government rent in each of the past five years and the year-on-year rates of increase of such amounts, together with the cumulative rates of increase in the past five years;

(2) of the (i) number of units and (ii) respective annual total amounts of

rates (before concessions) and government rent payable (set out in tables of the same format as the table below), in respect of each type of buildings (i.e. private residential building, public rental housing estates, commercial buildings and industrial buildings) in each of the past five years, broken down by the groups to which the annual amounts payable for each unit belong, as set out in the table below); and

Type of building: _____________ Year: _____________

Rates Government rent

Amount of rates payable for the

year (i)

(ii) ($)

Amount of government rent payable for the

year

(i) (ii) ($)

Below $2,500 Below $2,500 $2,500 to $5,000 $2,500 to $5,000 $5,001 to $7,500 $5,001 to $7,500 $7,501 to $10,000 $7,501 to $10,000


3781

Rates Government rent

Amount of rates payable for the

year (i)

(ii) ($)

Amount of government rent payable for the

year

(i) (ii) ($)

$10,001 to $15,000 $10,001 to $15,000 $15,001 to $20,000 $15,001 to $20,000 $20,001 to $30,000 $20,001 to $30,000 Above $30,000 Above $30,000 Total: Total:

(3) given that the current overall property prices in Hong Kong have

soared by more than 77% as compared with those at the peak in 1997, whether the authorities will consider lowering the rates percentage charge, for instance, from the existing 5% to 3%, so as to alleviate the financial burden on members of the public (in particular property owners residing in properties owned by themselves)?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, rates accounts for about 5% of the Government's annual revenue. Taking financial year 2014-2015 as an example, the actual receipt from rates (after deducting the amount for rates concession) was over $22.2 billion, accounting for about 4.7% of the total government revenue. Rates is a broad-based source of government revenue and, with 3.15 million tenements liable to rates in Hong Kong, rates provides a relatively stable source of government revenue. Hence, it is necessary for the Government to preserve and stabilize the base of this important source of revenue, so as to meet the expenditure requirements and long-term financial commitments of the Government. In fact, the Rating and Valuation Department has been conducting general revaluation of the rateable value of properties in Hong Kong on an annual basis, so as to capture the changes in their market rental values. This regular adjustment mechanism can already reflect the changes in the rateable values of the properties under the latest circumstances of the economy and property market, and is more appropriate and objective when compared with adjusting the rates percentage charge.


The Government's reply to each of the three parts of the question is as follows:

(1) The amount of total revenue collected by the Government from rates and Government rent in each of the past five years and the year-on-year rates of change are as follows:

Year

Total revenue from rates

(after deducting

rates concessions) ($ million)

Year-on-year rate of change

Total revenue from Government

rent# ($ million)

Year-on-year rate of change

2014-2015 22,272 +49.4% 9,289 +8.1%

2013-2014 14,911 +33.1% 8,591 +9.3%

2012-2013 11,204 +15.2% 7,857 +21.4%

2011-2012 9,722 +8.6% 6,470 +2.6%

2010-2011 8,956 -10.1% 6,305 +7.4% Note: # This refers to the Government rent charged at 3% of rateable values in

accordance with the Government Rent (Assessment and Collection) Ordinance.

The revenue from rates and Government rent is affected by the

number of tenements liable to rates and Government rent, and the rateable value of these tenements. For rates, the receipt also reflects the change in financial implications of rates concessions across different years.

In 2014-2015, the total revenue from rates and Government rent is

148.7% and 47.3% higher than that in 2010-2011 respectively.


3783

(2) The number of units and the annual amount of rates and Government rent payable for each property type from 2010-2011 to 2014-2015 is set out in the Annex.

(3) As mentioned above, rates provides a broad-based and stable source

of government revenue. Reducing the rates percentage charge will have long-term negative implications on government revenue. However, the Government provided over the years rates concession as one of the relief measures from time to time.

In formulating the Budget, the Government will, as in the past, take

into account Hong Kong's economic conditions, the Government's financial affordability, and the needs of various sectors in the community, and will carefully consider and formulate various fiscal measures, including the issue of whether to introduce any relief measures concerning rates.

Annex

Financial Year 2014-2015 (based on the Valuation List and Government Rent Roll as at 1 April 2014)

Annual Rates Payable by

Each Assessment

($)

Number of Assessments

Total Amount of Annual Rates Receivable

($)

Annual Government Rent Payable

by Each Assessment

($)


Total Amount of Annual

Government Rent Receivable

($)

Private Domestic <2,500 139 041 240,275,562 <2,500 534 701 967,881,364 2,500-5,000 750 998 2,787,178,662 2,500-5,000 523 856 1,793,260,811 5,001-7,500 416 993 2,519,633,226 5,001-7,500 118 451 700,181,820 7,501-10,000 189 275 1,622,507,598 7,501-10,000 34 660 295,160,470 10,001-15,000 125 239 1,498,057,875 10,001-15,000 25 793 309,767,011 15,001-20,000 43 005 731,733,183 15,001-20,000 8 991 154,408,196 20,001-30,000 37 851 899,042,967 20,001-30,000 5 314 126,187,668 >30,000 29 072 1,541,169,996 >30,000 2 991 170,318,635 Total: 1 731 474 11,839,599,069 Total: 1 254 757 4,517,165,975




Each Assessment

($)



($)


by Each Assessment

($)




($)

Public Housing Estates <2,500 41 453 70,311,738 <2,500 59 946 75,943,548 2,500-5,000 20 238 63,704,922 2,500-5,000 1 339 3,709,771 5,001-7,500 837 4,764,714 5,001-7,500 2 5,303 7,501-10,000 2 18,378 7,501-10,000 0 0 10,001-15,000 3 35,856 10,001-15,000 0 0 15,001-20,000 6 105,708 15,001-20,000 0 0 20,001-30,000 7 180,156 20,001-30,000 8 168,300 >30,000 1 248 1,841,438,028 >30,000 782 97,349,184 Total: 63 794 1,980,559,500 Total: 62 077 177,176,106

Office <2,500 2 034 4,064,220 <2,500 1 484 2,515,372 2,500-5,000 13 164 50,326,890 2,500-5,000 2 494 9,147,031 5,001-7,500 11 383 70,051,440 5,001-7,500 2 032 12,504,697 7,501-10,000 8 015 69,519,180 7,501-10,000 1 317 11,441,095 10,001-15,000 10 502 128,128,740 10,001-15,000 1 899 23,381,543 15,001-20,000 5 893 101,276,700 15,001-20,000 1 039 17,885,426 20,001-30,000 7 311 177,079,200 20,001-30,000 1 279 31,155,606 >30,000 17 851 2,584,138,410 >30,000 3 563 540,353,455 Total: 76 153 3,184,584,780 Total: 15 107 648,384,225

Commercial <2,500 15 913 23,065,224 <2,500 14 296 19,251,869 2,500-5,000 17 918 65,913,198 2,500-5,000 11 142 40,780,537 5,001-7,500 13 361 82,441,446 5,001-7,500 8 373 51,506,168 7,501-10,000 10 417 90,413,850 7,501-10,000 6 161 53,526,425 10,001-15,000 16 114 198,257,001 10,001-15,000 7 891 96,748,229 15,001-20,000 10 630 183,323,340 15,001-20,000 4 696 81,144,396 20,001-30,000 13 943 339,500,400 20,001-30,000 5 145 124,927,261 >30,000 32 725 4,095,920,586 >30,000 9 900 995,593,442 Total: 131 021 5,078,835,045 Total: 67 604 1,463,478,327


3785



Each Assessment

($)



($)


by Each Assessment

($)




($)

Industrial <2,500 6 891 12,819,195 <2,500 24 834 45,836,294 2,500-5,000 30 600 115,289,265 2,500-5,000 31 670 112,699,004 5,001-7,500 21 651 133,207,095 5,001-7,500 11 729 71,043,174 7,501-10,000 12 116 104,686,269 7,501-10,000 5 197 44,795,201 10,001-15,000 11 972 145,452,840 10,001-15,000 4 760 57,360,776 15,001-20,000 5 277 91,084,302 15,001-20,000 2 116 36,358,738 20,001-30,000 5 006 121,493,250 20,001-30,000 1 967 47,836,022 >30,000 7 020 670,087,266 >30,000 3 160 287,148,812 Total: 100 533 1,394,119,482 Total: 85 433 703,078,021



Each Assessment

($)



($)


by Each Assessment

($)




($)

Private Domestic <2,500 182 449 326,018,542 <2,500 607 219 1,073,389,374 2,500-5,000 798 799 2,916,070,023 2,500-5,000 465 202 1,580,916,604 5,001-7,500 363 658 2,192,324,307 5,001-7,500 99 103 587,338,778 7,501-10,000 161 776 1,385,907,135 7,501-10,000 29 110 249,631,290 10,001-15,000 107 728 1,291,243,314 10,001-15,000 23 139 277,186,883 15,001-20,000 39 909 680,619,726 15,001-20,000 8 123 138,920,555 20,001-30,000 33 934 803,265,834 20,001-30,000 5 128 121,698,905 >30,000 28 688 1,533,282,492 >30,000 3 014 169,299,520 Total: 1 716 941 11,128,731,373 Total: 1 240 038 4,198,381,909




Each Assessment

($)



($)


by Each Assessment

($)




($)

Public Housing Estates <2,500 46 978 77,214,294 <2,500 63 882 76,758,543 2,500-5,000 18 162 55,830,513 2,500-5,000 546 1,544,422 5,001-7,500 530 2,898,342 5,001-7,500 0 0 7,501-10,000 3 27,150 7,501-10,000 0 0 10,001-15,000 3 38,058 10,001-15,000 0 0 15,001-20,000 7 123,942 15,001-20,000 1 19,483 20,001-30,000 7 191,916 20,001-30,000 8 173,995 >30,000 1 227 1,686,879,930 >30,000 781 91,272,157 Total: 66 917 1,823,204,145 Total: 65 218 169,768,600

Office <2,500 3 214 6,356,133 <2,500 1 901 3,204,646 2,500-5,000 15 494 57,977,400 2,500-5,000 2 543 9,574,322 5,001-7,500 11 253 69,747,750 5,001-7,500 1 983 12,138,757 7,501-10,000 7 498 64,864,620 7,501-10,000 1 232 10,728,230 10,001-15,000 9 924 120,453,030 10,001-15,000 1 726 21,049,963 15,001-20,000 5 404 92,753,400 15,001-20,000 985 17,065,159 20,001-30,000 6 735 162,876,300 20,001-30,000 1 096 26,475,775 >30,000 16 370 2,473,267,050 >30,000 3 240 532,720,858 Total: 75 892 3,048,295,683 Total: 14 706 632,957,710



3787



Each Assessment

($)



($)


by Each Assessment

($)




($)




Each Assessment

($)



($)


by Each Assessment

($)




($)

Private Domestic <2,500 267 824 493,765,833 <2,500 708 326 1,202,611,498 2,500-5,000 823 642 2,927,151,756 2,500-5,000 386 263 1,309,819,131 5,001-7,500 309 042 1,854,013,725 5,001-7,500 74 026 442,521,715 7,501-10,000 126 951 1,080,169,152 7,501-10,000 24 502 210,309,847 10,001-15,000 89 634 1,076,385,930 10,001-15,000 19 643 235,233,013 15,001-20,000 33 820 581,570,889 15,001-20,000 7 406 126,400,909 20,001-30,000 29 057 691,466,889 20,001-30,000 4 352 103,352,614 >30,000 24 639 1,330,024,992 >30,000 2 590 148,801,608 Total: 1 704 609 10,034,549,166 Total: 1 227 108 3,779,050,335




Each Assessment

($)



($)


by Each Assessment

($)




($)

Public Housing Estates <2,500 54 074 85,283,028 <2,500 66 425 72,616,450 2,500-5,000 13 604 40,507,944 2,500-5,000 305 827,251 5,001-7,500 294 1,549,914 5,001-7,500 0 0 7,501-10,000 3 27,954 7,501-10,000 0 0 10,001-15,000 3 37,464 10,001-15,000 0 0 15,001-20,000 7 118,932 15,001-20,000 2 38,016 20,001-30,000 6 160,788 20,001-30,000 9 204,077 >30,000 1 208 1,493,514,336 >30,000 785 84,965,440 Total: 69 199 1,621,200,360 Total: 67 526 158,651,234

Office <2,500 4 404 8,702,949 <2,500 2 140 3,546,934 2,500-5,000 16 511 61,084,020 2,500-5,000 2 754 10,303,823 5,001-7,500 11 627 71,900,400 5,001-7,500 1 977 12,042,680 7,501-10,000 7 568 65,475,660 7,501-10,000 1 155 10,032,692 10,001-15,000 9 319 113,743,080 10,001-15,000 1 602 19,418,501 15,001-20,000 5 183 89,176,200 15,001-20,000 891 15,351,890 20,001-30,000 6 163 148,937,400 20,001-30,000 1 012 24,521,011 >30,000 15 221 2,273,614,200 >30,000 2 965 486,953,478 Total: 75 996 2,832,633,909 Total: 14 496 582,171,009



3789



Each Assessment

($)



($)


by Each Assessment

($)




($)




Each Assessment

($)



($)


by Each Assessment

($)




($)

Private Domestic <2,500 354 684 659,328,573 <2,500 778 007 1,272,134,407 2,500-5,000 827 150 2,898,431,718 2,500-5,000 329 015 1,106,119,957 5,001-7,500 260 846 1,574,715,564 5,001-7,500 57 522 344,167,423 7,501-10,000 98 886 842,605,581 7,501-10,000 21 070 181,308,271 10,001-15,000 73 025 877,162,974 10,001-15,000 16 131 193,584,258 15,001-20,000 30 910 529,525,764 15,001-20,000 6 421 108,429,624 20,001-30,000 24 948 591,994,479 20,001-30,000 3 759 88,601,549 >30,000 21 545 1,147,792,620 >30,000 2 251 125,990,753 Total: 1 691 994 9,121,557,273 Total: 1 214 176 3,420,336,242




Each Assessment

($)



($)


by Each Assessment

($)




($)

Public Housing Estates <2,500 59 657 91,200,228 <2,500 68 212 69,424,326 2,500-5,000 9 826 29,215,782 2,500-5,000 108 274,187 5,001-7,500 78 402,612 5,001-7,500 0 0 7,501-10,000 3 26,586 7,501-10,000 0 0 10,001-15,000 4 50,364 10,001-15,000 0 0 15,001-20,000 6 98,586 15,001-20,000 2 36,227 20,001-30,000 7 183,462 20,001-30,000 9 194,382 >30,000 1 190 1,344,655,368 >30,000 780 72,866,365 Total: 70 771 1,465,832,988 Total: 69 111 142,795,487

Office <2,500 6 251 12,207,576 <2,500 2 516 4,115,756 2,500-5,000 18 371 67,684,650 2,500-5,000 3 181 11,705,281 5,001-7,500 11 751 72,416,580 5,001-7,500 1 865 11,501,424 7,501-10,000 7 152 61,138,200 7,501-10,000 1 181 10,355,522 10,001-15,000 9,209 111,047,850 10,001-15,000 1 288 15,546,766 15,001-20,000 4 971 84,716,400 15,001-20,000 797 13,709,966 20,001-30,000 5 919 143,678,700 20,001-30,000 921 22,432,626 >30,000 12 648 1,701,100,500 >30,000 2 444 366,573,640 Total: 76 272 2,253,990,456 Total: 14 193 455,940,981

Commercial <2,500 22 913 31,773,279 <2,500 19 092 24,256,265 2,500-5,000 21 226 77,498,820 2,500-5,000 12 958 47,433,672 5,001-7,500 15 454 95,784,762 5,001-7,500 8 360 51,383,513 7,501-10,000 10,671 92,411,310 7,501-10,000 5 383 46,566,283 10,001-15,000 15 729 192,275,955 10,001-15,000 6 543 80,094,263 15,001-20,000 9 275 159,492,525 15,001-20,000 3 650 63,181,228 20,001-30,000 11 520 280,008,315 20,001-30,000 3 934 95,726,606 >30,000 24 476 2,624,231,694 >30,000 6 748 609,102,713 Total: 131 264 3,553,476,660 Total: 66 668 1,017,744,543


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Each Assessment

($)



($)


by Each Assessment

($)




($)




Each Assessment

($)



($)


by Each Assessment

($)




($)

Private Domestic <2,500 521 748 971,006,751 <2,500 885 789 1,351,991,569 2,500-5,000 773 024 2,645,022,261 2,500-5,000 238 644 783,941,814 5,001-7,500 197 295 1,182,916,722 5,001-7,500 38 860 232,979,936 7,501-10,000 68 328 583,876,632 7,501-10,000 16 289 139,314,884 10,001-15,000 56 162 673,957,080 10,001-15,000 12 995 156,125,522 15,001-20,000 25 344 431,668,281 15,001-20,000 4 766 81,702,142 20,001-30,000 19 999 472,886,484 20,001-30,000 2 625 62,820,839 >30,000 16 477 860,361,672 >30,000 1 575 90,211,313 Total: 1 678 377 7,821,695,883 Total: 1 201 543 2,899,088,019




Each Assessment

($)



($)


by Each Assessment

($)




($)

Public Housing Estates <2,500 65 791 94,619,994 <2,500 69 987 63,873,716 2,500-5,000 5 443 15,834,504 2,500-5,000 4 3,622 5,001-7,500 1 6,036 5,001-7,500 0 0 7,501-10,000 3 24,156 7,501-10,000 0 0 10,001-15,000 8 102,678 10,001-15,000 0 0 15,001-20,000 2 32,358 15,001-20,000 3 52,398 20,001-30,000 10 249,180 20,001-30,000 8 157,360 >30,000 1 165 1,170,313,971 >30,000 631 65,030,936 Total: 72 423 1,281,182,877 Total: 70 633 129,118,032

Office <2,500 9 080 17,213,940 <2,500 3 093 4,947,800 2,500-5,000 19 475 70,587,180 2,500-5,000 2 907 10,494,389 5,001-7,500 11 511 70,636,320 5,001-7,500 1 715 10,424,959 7,501-10,000 6 521 56,410,200 7,501-10,000 1 222 10,503,698 10,001-15,000 8 603 104,306,550 10,001-15,000 1 178 14,616,392 15,001-20,000 4 343 73,877,100 15,001-20,000 639 10,994,094 20,001-30,000 5 274 127,298,700 20,001-30,000 782 18,892,274 >30,000 11 159 1,538,766,720 >30,000 2 130 334,417,669 Total: 75 966 2,059,096,710 Total: 13 666 415,291,275

Commercial <2,500 24 864 33,977,067 <2,500 20 071 24,732,266 2,500-5,000 21 696 79,080,213 2,500-5,000 13 165 48,137,801 5,001-7,500 15 908 98,298,657 5,001-7,500 7 777 47,882,581 7,501-10,000 10 512 90,882,855 7,501-10,000 4 973 43,019,150 10,001-15,000 15 315 186,726,045 10,001-15,000 5 972 73,105,083 15,001-20,000 8 695 149,646,420 15,001-20,000 3 412 58,971,067 20,001-30,000 10 949 266,422,137 20,001-30,000 3 521 85,560,952 >30,000 22 379 2,317,954,761 >30,000 5 872 511,202,340 Total: 130 318 3,222,988,155 Total: 64 763 892,611,240


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Each Assessment

($)



($)


by Each Assessment

($)




($)

Industrial

<2,500 21 333 39,073,665 <2,500 42 329 66,746,824

2,500-5,000 35 228 126,502,905 2,500-5,000 24 662 85,451,648

5,001-7,500 17 678 107,273,355 5,001-7,500 6 776 41,084,424

7,501-10,000 7 203 62,004,420 7,501-10,000 3 030 25,871,292

10,001-15,000 7 581 92,755,410 10,001-15,000 2 935 35,496,090

15,001-20,000 2 998 52,200,840 15,001-20,000 1 228 21,164,454

20,001-30,000 3 099 75,362,310 20,001-30,000 1 366 32,838,035

>30,000 4 353 392,906,457 >30,000 1 989 165,123,677

Total: 99 473 948,079,362 Total: 84 315 473,776,444 Facilitating Hong Kong People Graduated from Overseas Medical Programmes to Return to and Practise in Hong Kong 9. MR TOMMY CHEUNG (in Chinese): President, recently, some members of the public have sought my assistance, saying that their children are studying medical programmes in Ireland and Australia, and that as places for internship training in such countries are in short supply in recent years, the relevant authorities cannot guarantee internship arrangements for international students. Given that the Medical Council of Hong Kong (MCHK) has stipulated that medical graduates applying for taking its Licensing Examination must have obtained qualifications acceptable to MCHK and completed recognized medical training, including a period of internship training as approved by MCHK, these members of the public are worried that their children will be disallowed to take the Licensing Examination for the reason of not having completed the internship training period. In this connection, will the Government inform this Council:


(1) whether it has liaised with the consuls of advanced countries in Hong Kong and related agencies to find out if it has become a common practice in the countries concerned not to guarantee internship training arrangements for international medical graduates; if it has liaised with them and found that it is the case, whether it has assessed the impacts of such a practice on those Hong Kong people currently studying medical programmes abroad, and its long-term impact on the supply of medical practitioners in Hong Kong; if it has not made such liaison or assessment, whether it will do so;

(2) of the number of Hong Kong people who had graduated from

overseas medical programmes passing MCHK's Licensing Examination in each of the past five years;

(3) whether it has discussed with MCHK about allowing medical

graduates who graduated from recognized overseas medical programmes but have not completed internship training there, to take MCHK's Licensing Examination and to complete the internship training in Hong Kong afterwards, for registration as medical practitioners; if such an arrangement will be implemented, of the implementation date; if not, the reasons for that; and

(4) whether the Steering Committee on Strategic Review on Healthcare

Manpower Planning and Professional Development has studied the formulation of measures to encourage Hong Kong people who graduated from recognized overseas medical programmes to return to and practise in Hong Kong; if the Committee has, of the details of the study; if not, whether the Committee will conduct such a study?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, the Medical Council of Hong Kong (MCHK) is an independent statutory body established under the Medical Registration Ordinance (Cap. 161). It is responsible for handling matters relating to the registration and disciplinary regulations of medical practitioners in Hong Kong. One of the main functions of MCHK is to administer and conduct the Licensing Examination for non-locally trained doctors.


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According to the Medical Registration Ordinance, except medical graduates of the University of Hong Kong (HKU) and The Chinese University of Hong Kong (CUHK), all persons who wish to register as medical practitioners in Hong Kong, regardless of whether they have obtained qualifications to practise as a medical practitioner outside Hong Kong, are required to sit the Licensing Examination of the MCHK and complete the internship assessment in Hong Kong. They have to fulfil the conditions set out in the Medical Registration Ordinance before taking the Licensing Examination. My reply to the four parts of the question raised by Mr Tommy CHEUNG is as follows:

(1) The content and arrangements of medical programmes offered by non-local medical schools, including whether the provision of internship for international students is guaranteed, are determined by individual institutions in accordance with their local regulations and having regard to their local circumstances. The Food and Health Bureau will keep in view the issue that some non-local medical schools do not guarantee the provision of internship training for international students, including Hong Kong students. Depending on the circumstances, we will seek to understand the matter further through appropriate channels when necessary. As it is difficult to predict whether Hong Kong students studying medical programmes abroad will seek to practise in Hong Kong, we cannot assess the precise impact of such arrangement by some non-local medical schools on the supply of doctors in Hong Kong. The Government will continue to closely monitor the doctor manpower in Hong Kong and strive to ensure sufficient supply of doctors in our healthcare system to cope with demand.

(2) When applying for the Licensing Examination, an applicant is not

required to provide his/her nationality or declare whether he/she is a Hong Kong permanent resident. As such, the MCHK does not have the number of Hong Kong permanent residents who passed the Licensing Examination. The number of persons who passed the Licensing Examination in the past five years is listed as follows:


Year Number of persons who passed

the Licensing Examination 2011 21 2012 47 2013 46 2014 74 2015 40

(3) The Licensing Examination of MCHK aims to ensure that those who

wish to register as medical practitioners in Hong Kong after receiving medical training elsewhere have attained a professional standard comparable to that of local medical graduates, so as to maintain the quality of our medical services and safeguard public health.

In accordance with section 7A of the Medical Registration

Ordinance (Cap. 161), applicants for the Licensing Examination of the MCHK must have satisfactorily completed not less than five years of full-time medical training at the time of application, including a period of internship as approved by the MCHK. Applicants who have not received internship training are not eligible to take the Licensing Examination.

(4) To facilitate the sustainable development of our healthcare system,

the Government is conducting a strategic review on healthcare manpower planning and professional development (the Review). It is expected that the Review will be completed in mid-2016. The Government will implement the recommendations in phases, with an aim to meeting the future demand for healthcare manpower and keeping the regulatory regimes for healthcare professions in pace with the times.

The public is most concerned about proposals related to doctors to

which we will accord first priority. The Government plans to introduce a bill into the Legislative Council in the first quarter of 2016 to amend the Medical Registration Ordinance, which will cover, among other things, Mr Tommy CHEUNG's proposed


3797

Member's Bill to add four lay members in the MCHK, improve its complaint investigation and disciplinary inquiry mechanism, and enhance its administrative flexibility in admitting non-locally trained doctors to meet local demand.

To encourage more non-locally trained doctors to practise in Hong

Kong, the Government is proactively looking into providing more flexibility to the relevant mechanism by extending the valid period of limited registration from not more than one year to not more than three years, so that the public organizations concerned (including the Hospital Authority, the Department of Health, the HKU and CUHK) can recruit doctors from abroad more effectively.

Furthermore, the MCHK has introduced improvement measures to

facilitate non-locally trained doctors to practise in Hong Kong. Starting from 2014, the MCHK has increased the frequency of the Licensing Examination from once to twice a year. In the past five years, an annual average of about 50 candidates passed the Licensing Examination. The MCHK has also relaxed the requirements on the period of internship assessment. Applicants who have passed the Licensing Examination and have a specialist qualification may apply to the MCHK for exemption from internship assessment of the relevant specialty. Under the new arrangement, the period of internship assessment can be shortened from one year to half year. This new arrangement is applicable to those who start their internship assessment on or after 1 January 2016.

One Person, One Flower Scheme 10. MR ANDREW LEUNG (in Chinese): President, since 2000, the Leisure and Cultural Services Department (LCSD) has organized the One Person, One Flower Scheme annually with the aim of promoting a green culture among students from kindergartens, primary, secondary and special schools, and cultivating their interest in growing plants and concern for the community. Under the Scheme, each year LCSD chooses one particular species of flower as the theme flower, organizes talks on the techniques for growing the theme flower and gives each participating student a seedling of the theme flower for him to


plant either at home or in schools. The schools and students concerned may subsequently present the potted plants nurtured by them to nearby centres for the elderly or organizations alike to show care and concern for the community. Catharanthus roseus, commonly known as Periwinkle, is the theme flower for this year's One Person, One Flower Scheme. However, some kindergartens have found that the latex exuding from the broken stem of Periwinkle may cause skin allergy in some students. In this connection, will the Government inform this Council:

(1) whether it has assessed (i) the effectiveness of the One Person, One Flower Scheme since its implementation, and (ii) if the objectives set have been achieved; if it has assessed, of the details; if not, the reasons for that;

(2) of the organizations from which LCSD bought the flower seedlings

that were distributed to schools in the past five years, and the amount of expenditure incurred;

(3) given that it has been set out in the implementation procedures in the

prospectus of this year's One Person, One Flower Scheme that the latex exuding from Periwinkle may cause skin allergy, why LCSD has still chosen that species as the theme flower for this year; and

(4) given that quite a number of parents have relayed to me that because

LCSD had for several times chosen non-hardy flowers as the theme flowers for the One Person, One Flower Scheme and distributed the seedlings to students in winter, a large number of these seedlings withered and some parents time and again purchased flowers at their own expense because their children had to submit them as homework, whether LCSD will consider changing its practice to implement the Scheme during the summer holidays; if LCSD will, of the implementation timetable; if not, the reasons for that?

SECRETARY FOR HOME AFFAIRS (in Chinese): President,

(1) (i) Since 2001, the Leisure and Cultural Services Department (LCSD) has organized the One Person, One Flower Scheme to promote a green culture among students from secondary,


3799

primary, and special schools and kindergartens in Hong Kong, to cultivate their interest in growing plants and to develop their concern for the community. The past five years have seen more than 360 000 students from over 1 100 schools participating annually in the Scheme.

The number of schools and students which participated in the

Scheme over the past five years are as follows:

Year Number of

participating schools

Number of participating

students 2011-2012 1 136 363 520 2012-2013 1 162 371 840 2013-2014 1 174 375 680 2014-2015 1 160 371 540 2015-2016 1 129 361 280

(ii) The Scheme has been well received by schools, teachers,

parents and students since its inception. The LCSD maintains contact with participating schools to understand the implementation progress of the Scheme. Each participating school will submit a report to the LCSD upon completion of the project. The LCSD will review the Scheme every year to assess its effectiveness and fine-tune the arrangements of the project in the light of applications received, the number of participating schools and students as well as the feedback from the schools. Judging from the number of participating schools and students as well as the views collected, the LCSD believes that the objectives set for the Scheme have been achieved.

(2) In sourcing flower seedlings for the Scheme, the LCSD engages

suppliers through open tendering in accordance with the established procurement procedures of the Department. Suppliers of the seedlings for the Scheme and the expenditure involved in the past five years are as follows:


Year Supplier Total expenditure ($) 2011-2012 Sum Kee Yuen 213,400 2012-2013 Sum Kee Yuen 279,500 2013-2014 Wing Ho Yuen 735,000 2014-2015 Sum Kee Yuen 336,000 2015-2016 Sum Kee Yuen 274,700

(3) The LCSD prefers species that are suited to the Hong Kong climate

and are easy to grow and care for when considering the choice of theme flower for the Scheme each year. Periwinkle (Catharanthus roseus) has been chosen this year primarily for its diverse colours, ease of growth and care, prolonged flowering period with almost continuous blooming, and low risk of infection by pests and diseases. It is a species highly suitable for beginners. Periwinkle is a common ornamental plant of medicinal value but is not suitable for consumption. While it is not common for contact with the milky latex from the stem of Periwinkle to cause allergic reactions, the LCSD has taken the possibility into account by providing participating schools with information on care and points to note. When Periwinkle was the theme flower of the Scheme in 2001, there were no reported cases of allergies caused by contact with the plant.

(4) The LCSD tends to choose a different theme flower each year so that

participating students may learn to grow and care for various plant species. Where the choice of theme flower is concerned, there are more options from plants that flower in winter and spring. The LCSD works out the timetable for the Scheme, having regard to factors such as the flowering period of the chosen plant, the operation of the schools and the arrangements for relevant activities. Every May, schools across Hong Kong are invited in writing to take part in the Scheme. Talks on growing the theme flower are organized in September for participating schools, with leaflets distributed to provide information on growth habits and care as well as points to note. The seedlings are delivered to participating schools in November. Students may then start planting either in school or at home so that the plants will grow in time for the flowering period. Considering that it will be more difficult to distribute information leaflets to students and arrange seminars for them during the summer holidays, the LCSD has no plan to alter the implementation timetable for the Scheme at the moment.


3801

Nevertheless, the Department will review the arrangements of the Scheme from time to time. The LCSD has not received any feedback from participating schools regarding the implementation timetable or any requests for implementing the Scheme during the summer holidays.

In case of report of withered seedlings from participating schools,

the LCSD will provide the schools with replacement seedlings upon request.

Commissions Received by Estate Agents 11. MRS REGINA IP (in Chinese): President, some estate agents have told me that with the uncertain economic outlook of Hong Kong and the onset of a cycle of rising interest rates, the transactions of private residential units have continued to shrink recently. Moreover, in order to promote the sale of their stock, some real estate developers (developers) have one after another brought down the prices of the units for sale but at the same time requested estate agents to reduce their commissions so as to make up for some of the losses. Amid the double blows of low transaction volume and reduction of commissions, the incomes of estate agents have been substantially reduced and very unstable, and the living of estate agents has therefore become more and more difficult. In this connection, will the Government inform this Council:

(1) whether it has collected information on the various types of commissions received by estate agents expressed as percentages of property prices; if it has, of the respective average percentages in each of the past three years, and how such percentages compare to the relevant figures of overseas countries; if not, the reasons for that;

(2) whether it has looked into the situation of developers requesting

estate agents to reduce their commissions; if it has, of the details; if not, the reasons for that;

(3) whether it has plans to impose regulation on the practice of

developers requesting estate agents to reduce their commissions; if it does, of the details; if not, the reasons for that; and


(4) whether it will, by making reference to the practices of some countries (e.g. the United States and Canada), legislate to stipulate the levels of the various types of commissions to be received by estate agents, so as to ensure a reasonable return for the work of estate agents; if it will, of the details; if not, the reasons for that, and the means through which the authorities can ensure a reasonable return for the work of estate agents?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, my reply to the questions raised by Mrs Regina IP is as follows:

(1) The Estate Agents Authority (EAA) is a statutory body set up under the Estate Agents Ordinance (Cap. 511) (the Ordinance). Its main functions include regulating the estate agency trade for protection of consumer interests. The amount or the rate of commission of estate agents is not prescribed under the Ordinance. The actual amount of commission received by the estate agents is their commercial and operational information, which is outside the remit of the EAA. The EAA has not collected such information.

(2) The EAA has been maintaining communication with the estate

agency trade through different channels, such as, regular trade liaison meetings and focus group meetings. The EAA has not heard of developers asking estate agents to reduce their commission.

(3) and (4) Hong Kong is a free market economy. Estate agents are free to

negotiate with their clients (including both the developers and the consumers) on the amount or the rate of commission having regard to various factors, such as, the demand and supply in the market and the actual circumstances of individual transactions. This arrangement is more flexible and facilitates the conclusion of the agreement on the sale and purchase of properties among all parties concerned. The Government has no plan to regulate the commission of estate agents.


3803

Medical Support for Persons Affected by Incidents of Excessive Lead Content in Drinking Water 12. DR HELENA WONG (in Chinese): President, the Government indicated in December last year that it would provide medical support for persons affected by the incidents of excessive lead content in drinking water and found to have borderline raised blood lead levels. For instance, the Department of Health (DH) would conduct lead exposure assessments for all of those persons who had been tested to have borderline raised blood lead levels, and would perform preliminary developmental assessments for children aged under 12 among such persons (preliminary developmental assessments). DH would then take follow-up actions according to the assessment results. In addition, the Hospital Authority would arrange health evaluations for children aged 12 or above, adults, pregnant women and lactating women with borderline raised blood lead levels (health evaluations), and would take follow-up actions according to the evaluation results. Nonetheless, some persons affected by the incidents have relayed to me that the Government has yet to give a detailed account of such medical support. In this connection, will the Government inform this Council:

(1) of the details of the aforesaid preliminary developmental assessments, including the assessment tools used; the results of the assessments conducted, including the respective numbers of children assessed as having no developmental problems at the present stage and those showing symptoms of developmental delay; the details of the medical support provided by DH for those children who have shown symptoms of developmental delay; and

(2) of the details of the aforesaid health evaluations; the details of the

results of the evaluations conducted as well as the follow-up work undertaken?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, as institutions accountable for the public health, the Food and Health Bureau, the Department of Health (DH) and the Hospital Authority (HA) fully understand the public's concerns regarding the effects of excessive lead in drinking water on human's blood lead level. In this regard, upon the release of the latest blood test


results, we strive to disseminate the information to the public through press conferences or press releases on the same day. At the same time, the DH also informs the citizens whose blood lead levels are below the reference value to make them relieved. Whenever we announce the blood test results, we also, without disclosing any personal data, provide the range of blood lead levels (including the highest and lowest readings) of those citizens with borderline raised blood lead levels; statistics by groups of the concerned citizens belonged to; as well as the information of concerned public rental housing estates or schools. According to established measures under the care plan, the DH will perform lead exposure assessment for all citizens with borderline raised blood lead levels, and will arrange preliminary developmental assessment if they are children aged under 12. The HA will arrange health evaluation and follow-up for citizens with borderline raised blood lead levels who are children aged 12 or above, adults, pregnant women or lactating women, and arrange ongoing blood lead level monitoring for those persons with borderline raised blood lead levels.

(1) Based on the blood test results, the DH will arrange preliminary developmental assessment for children with borderline raised blood lead levels at the Child Assessment Service or the Student Health Service (SHS). For early identification of developmental problems, the assessment team will first obtain information from parents on their children's development, behaviour and learning, and assess the motor skills, cognitive function, language and communication ability, self-care and behavioural aspects, and so on, of the children through taking medical history, reviewing school reports, conducting clinical observation and using developmental assessment tools.

Child development is a continuous process which may change as the

child grows. Therefore, child development requires continuous monitoring. With respect to the current incident, we offer preliminary developmental assessment for the affected children, and will arrange follow-up depending on the situations of individual children. Children identified with developmental problems will be referred to appropriate rehabilitation services, such as training, special education support, and medical follow-up. Children with no


3805

development problem detected will receive continuous monitoring through developmental surveillance at the Maternal and Child Health Centres or the SHS.

As of 8 January 2016, the DH has arranged preliminary

developmental assessment for 126 children with borderline raised blood lead levels. Among them, 83 children had no developmental problem detected at this stage, and 33 children required reassessment. Another 10 children were found to have symptoms of developmental delay and they have been referred to appropriate rehabilitation services for follow-up.

(2) The HA conducts health evaluation for relevant individuals with

blood lead level slightly exceeding the reference values. The content of the health evaluation includes:

(i) explanation of the blood lead level results, and provision of

health education and counselling on the effect of lead on human bodies;

(ii) review of the lead exposure assessment and clarification of

any other suspected sources of lead exposure; (iii) provision of information sheet on blood lead level assessment

and on the effects of lead on lactation; (iv) blood pressure measurement; and (v) arranging blood lead level review tests for individuals

concerned in about three months' time. As for pregnant women, antenatal consultation will be arranged within two weeks and blood lead level review test within one month.

The results of the health evaluation indicate that none of the citizens

with borderline raised blood lead levels have imminent health risks. The HA will, having regard to the result of the blood lead level review tests, continue to follow up as appropriate.


Regulation of Use of Antibiotics in Food Animals 13. MS STARRY LEE (in Chinese): President, it has been reported that currently, half of the antibiotics across the world are used in agriculture, and the relevant ratio in the United States even stands at 80%. This situation has aroused the concern that long-term consumption of food containing antibiotics may increase the opportunities of the emergence of antibiotic-resistant bacteria. Earlier on, the Consumer Council has written to nine local fast food chains to enquire about their policies on procuring and using food ingredients containing antibiotics, and urge them to devise plans to phase out the procurement of food ingredients containing antibiotics and release the relevant information to the public in a timely manner. Nevertheless, no concrete responses have been received so far. On the other hand, three major fast food chains in the United States have pledged that they will gradually stop using food ingredients containing antibiotics, and feeding of antibiotics to food animals in Denmark is permitted only for treatment of diseases. In this connection, will the Government inform this Council:

(1) whether it conducted, in the past five years, any study on the health risks of consuming food containing antibiotics; if it did, of the details; if not, the reasons for that;

(2) whether it will consider encouraging local fast food chains to make

public their policies on using food ingredients containing antibiotics, so as to enable consumers to make informed choices; if it will, of the details; if not, the reasons for that; and

(3) given that the Public Health (Animals and Birds) (Chemical

Residues) Regulation (Cap. 139, sub. leg. N) has listed two types of antibiotics as prohibited chemicals, and specified the maximum residue limits of 37 types of antibiotics and antibacterial compounds in meat and animal tissues, whether the authorities will review the Regulation and bring the relevant regulations on the limits of antibiotics in food animals in line with those in force in advanced countries/regions (e.g. the European Union), so as to enhance food safety; if they will, of the details; if not, the reasons for that?


3807

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, in recent years, consumers from different parts of the world have expressed concerns over the use of antibiotics in modern livestock farming, which may result in contamination of food animals for human consumption with antibiotic residues. According to the Food and Agriculture Organization of the United Nations, the use of veterinary drugs (including antibiotics) is beneficial to animal health, but it should be used judiciously in order to reduce the emergence of drug-resistant bacteria in food animals, thereby lowering public health risks. As chemical drugs that effectively work against bacteria and protozoans, antibiotics play an important role in the food production process. Not only would they help protect the health and welfare of food animals, but they are also conducive to meeting the increasing global demand for safe food of animal origin (including milk, meat and eggs). The Government has all along adopted the "from farm to table" strategy. Through establishing a regulatory system and safety standards, complemented by proper monitoring, surveillance, testing, self-discipline and public education, the Government seeks to ensure the proper use of antibiotics in husbandry and safeguard public health and food safety. Pursuant to the above strategy, the Government enacted the Public Health (Animals and Birds) (Chemical Residues) Regulation (Cap. 139N) and the Harmful Substances in Food Regulations (Cap. 132AF) to regulate the feeding of drugs and chemicals to food animals as well as the level of antibiotic residues in food, with a view to ensuring the safety of meat products. Besides, the Centre for Food Safety (CFS) takes food samples at import, wholesale and retail levels for chemical testing (including testing for antibiotics) under the routine Food Surveillance Programme to ensure their compliance with local statutory requirements and fitness for human consumption. My reply to the various parts of the question is as follows:

(1) As pointed out in paragraph 2 above, the CFS exercises the power conferred by the Harmful Substances in Food Regulations (Cap. 132AF) to regulate the level of about 40 veterinary drugs (including antibiotics) in food. If any food is found to contain residues of veterinary drugs (including antibiotics) not specified under the Regulations, the CFS conducts risk assessment to determine whether consumption of such food is hazardous or harmful to health.


The CFS has put in place an ongoing monitoring mechanism in local slaughterhouses to detect the presence of residues of veterinary drugs (including antibiotics) in animals to be slaughtered to ensure that the meat and offal of these animals are safe for human consumption. Under its routine Food Surveillance Programme, the CFS from 2011 to 2015 took more than 12 400 samples of meat, poultry and aquatic products in total for antibiotic residue testing. Eight samples were detected with antibiotics exceeding the maximum concentration level permitted by law and six samples (0.1%) were found to contain a prohibited substance called chloramphenicol. Testing results of all the other samples were satisfactory. According to risk assessment based on the above testing results, the presence of antibiotic residues in food supplied in Hong Kong does not pose a major risk to public health.

(2) It takes the co-operation of the Government, trade and consumers to

safeguard food safety. We welcome the initiative of the local catering sector to provide further food safety related information to address consumers' concern. The CFS also reminds the trade from time to time to observe the guidelines on the use of antibiotics issued by relevant international organizations to ensure that antibiotics are used in animals only under the supervision of veterinary surgeons. The Agriculture, Fisheries and Conservation Department has also prepared the Handbook on the Use of Antibiotics for reference by poultry and livestock farmers, and provides them with necessary technical support. For the procurement of food of animal origin, the local catering sector should procure such food from suppliers who follow good practices on the use of veterinary drugs. Fresh pork, beef and mutton (that is, non-chilled or non-frozen meat) must come from livestock slaughtered in licensed slaughterhouses locally. The import of chilled/frozen meat or poultry meat requires an import licence issued by the CFS, together with a health certificate issued by the relevant authority of the exporting jurisdictions to certify that the imported meat or poultry meat is free from any harmful substances and fit for human consumption.

(3) At present, the Public Health and Municipal Services Ordinance

(Cap. 132) stipulates that all food for sale must be fit for human


3809

consumption. The Harmful Substances in Food Regulations (Cap. 132AF) govern the import and sale of food containing harmful substances, including veterinary drug residues. As regards the use of veterinary drugs in food animals, it is regulated by the Public Health (Animals and Birds) (Chemical Residues) Regulation (Cap. 139N). To safeguard public health, we keep in view the international development and circumstances relating to the use of antibiotics as well as regulatory control of food safety (including level of antibiotic residues in food), and review the relevant legislation and regulatory arrangements. We plan to brief the Panel on Food Safety and Environmental Hygiene of the Legislative Council in the second quarter of 2016 on the latest position of our efforts to regulate animal feed for livestock and cultured fish and the presence of veterinary drug residues.

Abuse of Judicial Review and Legal Aid Systems 14. MR NG LEUNG-SING (in Chinese): President, it was reported that in a speech delivered early last month, a former permanent judge of the Court of Final Appeal strongly criticized the abuse of the judicial review (JR) system by some people in recent years and stressed that JR should not be employed as a means to challenge government policies. He also pointed out that some JR cases in recent years were apparently groundless and an abuse of procedure, while some others had brought significant economic losses to society. For instance, a JR case resulted in substantial cost increases and delay in work commencement of the Hong Kong-Zhuhai-Macao Bridge project. Moreover, some commentaries pointed out that some people had lodged JRs for the purpose of paralysing the implementation of government policies and had been easily granted legal aid by the Legal Aid Department (LAD). As a result, a large amount of public money was wasted and economic development was impeded. In this connection, will the Government inform this Council:

(1) of the respective numbers of applications for leave for JR received and granted by the Court, as well as the number of cases of applicants lodging appeal against the judgment that no leave was to be granted, in the past five years;


(2) of the public expenditure incurred for JR cases in each of the past five years, whether it has assessed the economic losses brought to society by such cases; if it has assessed, of the details; if not, the reasons for that;

(3) of the number of legal aid applications involving JR approved by

LAD, and the total amount of litigation costs and other expenses incurred by LAD in such cases, in the past five years; and

(4) whether it has plans to review the legal aid system to formulate

measures to prevent the abuse of the system; if it does, of the details; if not, the reasons for that?

SECRETARY FOR HOME AFFAIRS (in Chinese): President, the question straddles across different bureaux/departments and organizations, and the Government's consolidated reply is as follows:

(1) The Judiciary advised that for judicial review (JR) applications, an applicant is required to file an application for leave to apply for JR to the Court of First Instance of the High Court (CFI) in accordance with Order 53, rule 3 of the Rules of the High Court (Cap. 4A) for leave, that is, permission, to proceed with the JR application.

Where leave to apply for JR is refused, the applicant may appeal

against the Judge's order to the Court of Appeal of the High Court (CA) within 14 days after such order as stipulated under Order 53, rule 3(4). Exceptionally, an applicant may appeal directly to the Court of Final Appeal, provided a certificate to that effect is granted by the Judge in the CFI pursuant to section 27C(1) of the Court of Final Appeal Ordinance (Cap. 484).

Statistics on applications for leave to apply for JR filed from 2011 to

2015 are set out in Annex A; statistics on appeals filed in the same period against refusal of leave to apply for JR are set out in Annex B.


3811

(2) The Department of Justice (DoJ) is responsible for providing legal advice to government bureaux and departments, and represents the Government in courts for judicial proceedings. Where necessary, the DoJ also engages solicitors or barristers in private practice to provide assistance in handling cases. In respect of the handling of JR cases, the relevant briefing out expenses and court costs incurred by the DoJ in the past five years are as follows:

Year Briefing out expenses ($)

Net court costs incurred (received) ($)

2011 40,888,844 275,951.3 2012 36,986,566 (4,428,247.3) 2013 28,624,329 (12,224,897.6) 2014 37,084,182 (8,332,797.9) 2015 28,947,195 6,145,639.0

As regards other expenditure involved in the handling of the JR

cases during the period concerned (including the remuneration of government counsels and other supporting staff involved in handling the relevant cases, administrative expenses and other sundry expenses, and so on), as they are part of the general departmental expenses of the DoJ, we have not kept a separate breakdown for these expenses.

As for other public expenditure incurred in relation to JR cases,

including the cost increase of public works projects, the Government does not have the total amount concerned. However, individual Policy Bureaux or departments have estimated the public expenditure incurred in some JR cases. For example, the Transport and Housing Bureau informed the Legislative Council that the Government's expenditure in the JR regarding the Environmental Impact Assessment reports of the Hong Kong-Zhuhai-Macao Bridge (HZMB) (including the Government's legal costs as well as the legal aid costs incurred) was about $10.49 million. Besides, as affected by the JR, the commencement of the HZMB related local projects was deferred by about one year when compared with the original plan, resulting in a works cost increase of about $6.5 billion.


The commencement of a number of Government policies or works projects have been delayed due to JR cases. Although it is difficult to quantify the full impact of the delays on the overall Hong Kong economy, the delays inevitably diminish the intended benefits of these policies and work projects, hinder the development and opportunities of relevant sectors, and result in losses for the society as a whole.

(3) From 2011 to 2015, the number of legal aid applications for JR

received and the number of legal aid certificates granted by the Legal Aid Department (LAD) each year are set out below:

Year JR cases

Number of legal aid applications received

Number of legal aid certificates granted

2011 229 58 2012 506 92 2013 432 119 2014 266 74 2015 500 107

Legal aid costs related to JR cases are subsumed under the costs of

Miscellaneous Cases in the LAD. The LAD does not maintain separate statistics on the total amount of legal aid costs incurred in JR cases.

(4) The policy objective of legal aid is to ensure that no one with

reasonable grounds for pursuing or defending a legal action in the Hong Kong courts is denied access to justice due to a lack of means. To qualify for legal aid, a person has to satisfy both the means test and the merits test as stipulated in the Legal Aid Ordinance (LAO) (Cap. 91). To ensure that only those cases with reasonable grounds are granted legal aid, all legal aid applications are processed by Legal Aid Counsel appointed to serve in the LAD. In conducting


3813

the merits test, the LAD will consider the background of the case, the evidence available and the legal principles applicable to the case so as to determine whether there are reasonable grounds for legal aid to be granted. In assessing the merits, the LAD must be satisfied that there are reasonable grounds or points of law involved for which it is desirable to grant legal aid to enable the matter to be submitted to the Court for decision or judgment. For individual applications, if the available documents already demonstrate strong ground(s) for taking proceedings or that the issues raised are already covered by previous judgments or advice, legal aid may be granted to applicants who have passed the means test. If complicated legal issues are involved in the application, the LAD may seek independent legal opinion from counsel in private practice on the merits of the application under section 9(d) of LAO.

The LAD has put in place a monitoring mechanism to ensure that the

processing of legal aid applications is reasonable and to safeguard against abuse of legal aid. If an application is refused, the applicant may appeal against the decision of the Director of Legal Aid to the Registrar of the High Court in accordance with section 26 of LAO, for which the decision of the Registrar is final. Besides, according to the Legal Aid Regulations, if anyone has repeatedly applied for legal aid after being refused, the Director may order that no consideration shall be given to any future application by that person for three years if it appears to the Director that his/her conduct has amounted to an abuse of the facilities provided by LAO. If anyone believes that an applicant or aided person has given the LAD false information on merits or means, he/she can provide details to the LAD. If the case is substantiated after investigation, the LAD will discontinue legal aid and refer the case to the Police for follow-up action. The Government has been paying attention to the discussion in the community on the ways to improve the legal aid system, and will review the need to further enhance the system as and when necessary.


Annex A

Statistics provided by the Judiciary on the number of Applications for Leave to Apply for JR (2011-2015)

Year Number of Applications for Leave to

Apply for JR filed Number of Leave Applications

Granted(1) (as at 5.1.2016) 2011 103 51 2012 161 72 2013 182 67 2014 168 84 2015 259 48(2) Notes: (1) The number under this column represents the number of applications for leave to apply

for JR filed in the year in which leave was granted by the Court (either by the CFI, the CA or the Court of Final Appeal) as at the report generation date. It should be noted that statistics on the outcome of applications for leave to apply for JR may vary at different report generation date and time since they are live data.

(2) The figure should be read and interpreted with care since 155 applications, that is, 60% of

the applications filed in 2015 are still pending for determination.

Annex B

Statistics provided by the Judiciary on the number of Appeals against refusal of leave to apply for JR

(2011 to 2015)

Year Number of Appeals against refusal of leave to apply for JR filed 2011 12 2012 21 2013 30 2014 23 2015 23


3815

Problems of Shortage of Parking Spaces and Illegal Parking 15. MR WONG KWOK-KIN (in Chinese): President, earlier, some members of the public have relayed to me that the long-standing shortfall of parking spaces in East Kowloon has annoyed drivers, and some drivers have thus parked their vehicles by the roadside, thereby posing road safety hazards. Regarding the problems of shortage of parking space and illegal parking, will the Government inform this Council:

(1) of the respective numbers of public parking spaces currently available for use by the following types of vehicles, as well as their respective day-time and night-time average usage rates: (i) private cars and taxis, (ii) light goods vehicles, (iii) medium/heavy goods vehicles, (iv) container vehicles, (v) coaches and buses, and (vi) light buses, together with a breakdown by District Council (DC) district and type of parking spaces (i.e. on-street parking spaces, parking spaces in government car parks and those in private car parks);

(2) of the number of parking spaces cancelled due to change in land use

and the number of parking spaces newly added, in the past five years, broken down by DC district;

(3) of the current number of Traffic Wardens on the establishment

performing duties in each DC district; (4) of the number of fixed penalty tickets (tickets) issued by the

authorities for illegal parking in the past five years, together with a breakdown by DC district; given that the authorities conducted in early 2014 a trial of Electronic Fixed Penalty Tickets which made use of personal digital assistants and portable printers to issue tickets, of the number and percentage of the tickets issued this way among those issued since 2014; and

(5) given that the acute increase in the number of private cars in recent

years is one of the causes for the problem of illegal parking, whether the Government will consider introducing measures to reduce the number of private cars; if it will, of the details; if not, the reasons for that, and the new measures in place to slow down the increase in the number of private cars?


SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, my reply to the various parts of Mr WONG Kwok-kin's question is as follows.

(1) The Transport Department (TD) has been monitoring the supply and demand for parking spaces in Hong Kong. As at December 2015, the total number of parking spaces in the Hong Kong is around 728 000 (including public parking spaces provided by the Government, privately operated public parking spaces and parking spaces solely for private use), providing parking spaces for some 690 000 licensed vehicles in Hong KongNote. The geographical distribution of parking spaces in Hong Kong is at Annex 1.

Regarding utilization rate, the average utilization rates of short-term

tenancy car parks in various districts are set out in Annex 2, and the utilization rates of the 12 Government multi-storey car parks managed by the TD are at Annex 3. As for the utilization rates of car parks operated by other departments (for example, Housing Department and Government Property Agency, and so on) and private operators, the Government does not have such information.

We have already undertaken to conduct a parking policy review in

the 2016-2017 financial year, with priority accorded to considering and meeting the parking need of commercial vehicles. In the light of the review findings, we will examine improvement measures including updating the Hong Kong Planning Standards and Guidelines.

(2) During the period from 2011 to 2015, there was a net increase of

around 24 200 parking spaces in Hong Kong as a whole, with most districts recording a growth in the number of parking spaces. The year-on-year comparison of the changes in parking spaces in various districts due to changes in land use during 2011 to 2015 is at Annex 4. The districts with the greatest increases in the number of parking spaces were Tai Po, Yuen Long and Sai Kung, with increases of about 4 300, 3 900 and 3 300 respectively. On the other hand, the number of parking spaces has decreased in Yau Tsim Mong, Kowloon City, Wong Tai Sin and the North districts. It

Note: The number does not include vehicle types that can park at depots or usually operate on a 24-hour basis,

such as franchise buses, and so on.


3817

should be noted that instead of recording a continuous decrease in the number of parking space, districts such as Yau Tsim Mong have in fact recorded increases and decreases during different years over the past five years. The utilization rates of short-term tenancy car parks in Annex 2 also indicate that currently parking spaces are still available for use in these districts. The TD expects that the level of supply of parking spaces will increase upon the completion of new development projects in these districts.

(3) Currently, the Police assign Traffic Wardens based on the five Police

Land Regions rather than the District Council (DC) districts. As at end 2015, the numbers of officers of the Traffic Warden Grade in various Land Regions are tabulated below:

Hong Kong Island

Kowloon East

Kowloon West

New Territories

North

New Territories

South Total

Number of officers of the Traffic Warden Grade

73 30 98 30 50 281

(4) A breakdown of the fixed penalty tickets issued for illegal parking

from 2010 to 2014 based on the above Police Regions is as follows:

2010 2011 2012 2013 2014 Hong Kong Island

170 488 185 891 234 643 243 585 220 421

Kowloon East 76 987 88 386 103 440 127 363 137 273 Kowloon West 280 127 291 137 311 571 335 582 328 877 New Territories South

89 731 100 693 118 078 148 611 163 693

New Territories North

116 063 139 387 144 300 171 879 216 290

Total 733 396 805 494 912 032 1 027 020 1 066 554


The Police are still compiling the number of fixed penalty tickets issued in 2015 for illegal parking. In addition, the Police do not keep the relevant figures sorted by DC districts.

The Police completed the Electronic Fixed Penalty Tickets trial

scheme in September 2014. The trial is an internal one conducted within the Police, and has not been officially launched. According to the Police, the Electronic Fixed Penalty Tickets scheme has been included in the Police's plan for developing the Central Traffic Prosecutions Computer System, and the scheme could be launched in 2019 (fourth quarter) the earliest.

(5) The growth in vehicle fleet size is one of the factors contributing to

road traffic congestion. The number of total licensed vehicles increases substantially over the years. As at October 2015 (the full-year figure of 2015 is still being compiled), private cars, which account for 70% of all licensed vehicles, grew by about 50% in the past decade, and this increase alone constituted 90% of the total increase in licensed vehicles during the period.

To tackle the problem of road traffic congestion, the Secretary for

Transport and Housing invited the Transport Advisory Committee (TAC) in 2014 to study the matter. The TAC submitted a study report to the Government in December 2014 and recommended a series of short-, medium- and long-term measures to tackle road traffic congestion, including measures to contain vehicle growth, such as raising first registration tax and annual licence fee of private cars, and raising "fuel levy" for diesel private cars. At the meeting of the Legislative Council Panel on Transport held last May, we have already stated clearly that the Government agreed in principle with the TAC's recommendations and undertook to take them forward in phases having regard to stakeholders' views, availability of resources, latest technology, overseas experience, and so on. Last month, we took forward two of the TAC's recommendations, namely the launching of public engagement exercise for an Electronic Road Pricing pilot scheme in Central and its adjacent areas, and making a proposal to raise the fixed penalty charges for congestion-related traffic offences in tandem with inflation.


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Annex 1

Distribution of Parking Spaces in Hong Kong (as at December 2015)

DC Districts

Number of Parking Spaces

Private cars and taxis Coaches and Buses Light Goods Vehicles Medium/Heavy

Goods Vehicles

Container

Vehicles Others

Road

side

(1)(

2)

Gov

t Car

park

(3)

Priv

ate

Car

park

s(3)

Road

side

(4)

Gov

t Car

park

Priv

ate

Car

park

s

Road

side

(5)

Gov

t Car

park

Priv

ate

Car

park

s

Road

side

(5)

Gov

t Car

park

Priv

ate

Car

park

s

Road

side

(5)

Gov

t Car

park

Priv

ate

Car

park

s

Road

side

Gov

t Car

park

Priv

ate

Car

park

s

Central and

Western 396 5 104 32 229 9 8 59 198 411 413 - 32 160 - 22 - 542 421 380

Wan Chai 835 2 300 31 786 22 17 81 6 13 65 - 46 9 - - - 664 55 354

Eastern 535 2 436 44 840 46 22 286 55 335 1 136 - 222 387 - - 30 669 575 1 199

Southern 739 2 956 34 112 141 12 134 54 167 556 - 4 279 - - 3 417 251 1 131

Yau Tsim

Mong 1 498 1 823 28 309 130 22 90 376 47 1 742 - 57 225 - - 29 1 304 273 429

Sham Shui Po 1 167 3 704 23 795 4 31 392 254 1 144 694 - 23 760 - - 165 771 166 737

Kowloon City 2 296 3 377 40 442 123 - 879 132 50 1 062 - 49 376 - - 2 934 34 628

Wong Tai Sin 275 2 791 17 733 - 18 133 141 254 801 - 3 102 - - 2 394 188 1 571

Kwun Tong 380 6 899 39 660 36 27 289 138 403 2 398 - 891 593 - 8 55 620 403 2 611

Tsuen Wan 736 1 644 32 176 34 14 348 43 79 1 044 - 9 593 - - 84 492 108 586

Tuen Mun 1 229 2 093 36 018 33 45 91 297 93 1 081 - 40 817 - - 183 763 44 747

Yuen Long 1 175 1 867 35 236 82 18 276 467 43 822 - 49 354 - - 186 464 49 982

North 1 321 2 056 17 465 22 22 30 449 386 477 - 28 331 - 4 62 384 62 329

Tai Po 1 536 637 26 062 68 12 80 333 158 485 - 84 266 - - 3 232 65 671

Sai Kung 2 028 2 498 31 311 141 65 184 342 42 756 - 27 340 - 12 9 501 381 1 749

Sha Tin 1 514 3 174 65 331 43 66 124 305 148 1 601 - 10 607 - - 43 474 224 2 011

Kwai Tsing 378 5 851 28 157 24 14 304 326 528 2 101 - 101 3 092 - - 3 898 558 260 1 681

Islands 441 277 14 463 61 - 40 54 10 121 - 21 611 - - 33 132 146 145

Total: 18 479 51 487 579 125 1 019 413 3 820 3 970 4 311 17 355 - 1 696 9 902 - 46 4 787 10 315 3 705 17 941 Notes: (1) On-street parking spaces designated for drivers holding the "Disabled Person's Parking Permit" are not included in the above figures. (2) Light buses and light good vehicles can use the parking space if the length of the parking space allows. (3) Light buses and light good vehicles can use the parking spaces of indoor car parks if the ceiling height of the parking space allows. (4) Light bus can use the parking space. (5) Roadside parking spaces are often not confined to light/medium/heavy goods vehicles or container vehicles. Medium and heavy

goods vehicles and container vehicles can use the parking spaces if the length of the parking space allows.


Annex 2 Average Utilization Rates of

Short-term Tenancy Cark Parks during Night Time by District(6) (as at June 2015)

District Average Utilization Rate

Central and Western 64% Wan Chai No short-term tenancy car park in the district Eastern 73% Southern 72% Yau Tsim Mong 57% Sham Shui Po 76% Kowloon City 79% Wong Tai Sin 77% Kwun Tong 80% Tsuen Wan 71% Tuen Mun 81% Yuen Long 75% North 73% Tai Po 74% Sai Kung 73% Sha Tin 79% Kwai Tsing 67% Islands 46% Average Utilization Rate in Hong Kong

72%

Note: (6) Short-term Tenancy Car Parks mainly provide parking spaces for private cars and goods

vehicles. Since most of the goods vehicles are parked at night, the peak hours are recorded during night time.


3821

Annex 3

Utilization Rates of Government Multi-storey Car Parks Managed by the TD

(as at November 2015)

Car Park Day Time (0800 to 2300) Utilization

Night Time (2300 to 0800) Utilization

Yau Ma Tei 71% 43% Star Ferry 69% 16% City Hall 48% 8% Rumsey Street 71% 45% Murray Road 59% 26% Aberdeen 72% 86% Kwai Fong 87% 88% Tsuen Wan 85% 80% Shau Kei Wan 81% 79% Tin Hau 77% 63% Sheung Fung Street 80% 89% Kennedy Town 83% 78%

Annex 4 Year-on-year Comparison of the Changes in Parking Spaces in Various Districts

due to Changes in Land Use during 2011 to 2015

District Comparison with Previous Year(7), (8) Differences

between 2011 and 2015 2011 2012 2013 2014 2015

Central and Western

(333) 545 (157) (49) 196 535

Wan Chai (502) 919 7 (93) 292 1 125 Eastern (230) 609 (55) (61) (62) 431 Southern 244 1 429 99 (203) 75 1 400 Yau Tsim Mong

110 589 53 (2 398) 870 (886)

Sham Shui Po 144 1 740 65 183 (333) 1 655 Kowloon City (2 593) (1 085) 219 1 246 (883) (503) Wong Tai Sin 1 027 849 (366) (136) (711) (364)


District Comparison with Previous Year(7), (8) Differences

between 2011 and 2015 2011 2012 2013 2014 2015

Kwun Tong 625 2 114 491 867 (525) 2 947 Tsuen Wan 463 997 (1 664) 391 817 541 Tuen Mun (129) 1 400 163 36 295 1 894 Yuen Long (1 190) 1 144 2 468 241 21 3 874 North (193) (39) (394) (86) 108 (411) Tai Po (992) 1 283 725 1 429 878 4 315 Sai Kung 55 1 758 535 272 763 3 328 Sha Tin (965) 1 840 (299) 441 311 2 293 Kwai Tsing (1 620) 437 539 142 (34) 1 084 Islands 269 30 320 668 (59) 959 Total (5 810) 16 559 2 749 2 890 2 019 24 217 Notes: (7) Includes all types of vehicles such as motor cycles, on-street parking spaces designated

for drivers holding the "Disable Person's Parking Permit" and on-street parking spaces for Special Purpose Vehicles.

(8) Bracketed figures indicates reduction in parking spaces. Air Quality in Tung Chung 16. MR ALBERT CHAN (in Chinese): President, in reply to my oral question raised on 7 January last year, the authorities indicated that the air quality in Tung Chung had been improving progressively in the past five years from 2010 to 2014. However, quite a number of Tung Chung residents have relayed to me that the air pollution problem in Tung Chung has not been alleviated in recent years and has shown signs of deterioration instead, with the problem being more acute in summer time. In this connection, will the Government inform this Council:

(1) of the respective numbers of times, as recorded by the air quality

monitoring station in Tung Chung last year, in which the concentrations of fine suspended particulates (i.e. PM 2.5), ozone, sulphur dioxide, nitrogen dioxide and carbon monoxide exceeded the Air Quality Objectives or other relevant objectives, and the details of the exceedance of each type of pollutants, including the respective average and maximum extent of exceedance and concentrations;


3823

(2) whether the authorities analysed the major sources of air pollutants in Tung Chung last year; if they did, of the outcome, including the percentage of aircraft emissions in the pollutants; if not, the reasons for that; and

(3) whether it has formulated targeted measures to improve the air

quality in Tung Chung; if it has, of the details; if not, the reasons for that?

SECRETARY FOR THE ENVIRONMENT (in Chinese): President,

(1) We are still validating the air quality monitoring data for 2015 as the year has just come to an end. According to the preliminary analysis conducted by the Environmental Protection Department on the data recorded at the Tung Chung Air Quality Monitoring Station, the air quality in Tung Chung improved gradually between 2011 and 2015. The annual average concentration of respirable suspended particulates (PM10), fine suspended particulates (PM2.5), nitrogen dioxide, sulphur dioxide and carbon monoxide dropped 23%, 31%, 20%, 38% and 11% respectively, while that of ozone increased by 2% over the same period. Please refer to Annex 1 for details.

Except for nitrogen dioxide and ozone, the air quality in Tung Chung

in 2015 attained the current Air Quality Objectives (AQOs). For nitrogen dioxide, the hourly average concentration limit was met but the annual average concentration limit was exceeded by about 1 μg/m3 (that is, 3%). For ozone, the number of times exceeding the 8-hour average concentration limit was 19 (more than "9 times" as allowed under the AQOs), with the highest level at 242 μg/m3, which was 82 μg/m3 (that is, 51%) more than the concentration limit of 160 μg/m3. Please refer to Annex 2 for details.

(2) Ozone and nitrogen dioxide are the major air pollutants in Tung

Chung. Ozone is a regional secondary air pollutant which is not released directly from pollution sources. Its formation is related to the photochemical activities among nitrogen oxides and volatile organic compounds (VOCs) emitted in the Pearl River Delta (PRD) Region. Air pollutants can be accumulated when the conditions for


dispersing them turn poor in the PRD Region. When coupled with light northerly to north-westerly wind, the concentration of ozone could be raised to a significant level in Tung Chung.

Nitrogen dioxide mainly comes from nitrogen oxides emitted from

vehicles. The relatively high ozone concentration will also facilitate the conversion of nitrogen oxides into nitrogen dioxide.

As aircraft are flying at high altitudes most of the time except during

landing, take-off and taxiing that are close to the ground, emissions from aircraft have little impact on the air quality in Tung Chung.

(3) Ozone and nitrogen dioxide are the major air pollution problems in

Hong Kong. To improve air quality, we have been collaborating with the Guangdong Provincial Government to reduce the emissions of four major air pollutants (namely sulphur dioxide, nitrogen oxides, respirable suspended particulates and VOCs) in the PRD Region and set emission reduction targets for these pollutants for 2015 and 2020. Both governments are implementing measures to reduce the emissions from power plants, factories, vehicles and vessels in the region. These measures will improve the air quality and alleviate the ozone problem in the PRD Region.

In recent years, we have also launched various emission reduction

measures to control local emissions. The key measures targeting the emission of nitrogen oxides are as follows: - We have adopted an incentive-cum-regulatory approach to

phase out some 82 000 pre-Euro IV diesel commercial vehicles by late 2019. An ex-gratia payment scheme was launched on 1 March 2014 to assist the affected vehicle owners. As at end 2015, about 39 000 vehicles, representing 47% of the pre-Euro IV diesel commercial vehicles, took part in the scheme and were retired;

- We have deployed roadside remote sensing equipment since

1 September 2014 to strengthen the emission control of petrol and liquefied petroleum gas vehicles. We have issued Emission Testing Notices to owners of about 4 900 vehicles with excessive emissions and requested for proper maintenance;


3825

- We have subsidized franchised bus companies to progressively retrofit their Euro II and III buses with selective catalytic reduction devices to upgrade their emission performance to a level comparable to Euro IV or above;

- We issued the Fifth Technical Memorandum at the end of last

year to further tighten the emission caps of three key air pollutants from power plants from 2020 onwards. The tightened emission caps are 50% to 69% lower than the levels in 2010 (that is, the First Technical Memorandum); and

- Starting from 1 June 2015, new non-road mobile machinery

supplied for local use must comply with the statutory air pollution emission standards.

Annex 1

Annual Average Concentration of Pollutants Recorded at Tung Chung Air Quality Monitoring Station between 2011 and 2015

Air Pollutants Annual Average Concentration (μg/m3) Changes

between 2011 and 2015 2011 2012 2013 2014 2015*

Respirable Suspended Particulates (PM10)

47 45 42 39 36 -23%

Fine Suspended Particulates (PM2.5)

32 28 26 24 22 -31%

Nitrogen Dioxide 51 43 49 45 41 -20% Sulphur Dioxide 13 13 14 13 8 -38% Ozone 44 47 44 46 45 2% Carbon Monoxide 660 671 665 546 585 -11% Note: * The data is subject to validation.


Annex 2

Comparison of Air Quality in Tung Chung in 2015 with Current AQOs

Air Pollutants

AQOs 2015 (Preliminary Data)

Reference Period

Concentration Limit(μg/m3)

Number of Reference Periods

Exceeding Concentration Limit Allowed

Reference Concentration

(μg/m3)*

AQOs Achieved

Respirable Suspended Particulates (PM10)

1-year 50 - 36 Yes

1-day 100 9 93(1) Yes

Fine Suspended Particulates (PM2.5)

1-year 35 - 22 Yes

1-day 75 9 65(1) Yes

Ozone 8-hour 160 9 176(1) No Nitrogen Dioxide

1-year 40 - 41 No 1-hour 200 18 162(2) Yes

Sulphur Dioxide

10-minute 500 3 88(3) Yes 1-day 125 3 22(3) Yes

Carbon Monoxide

1-hour 30 000 0 3 506 Yes 8-hour 10 000 0 1 818 Yes

Notes: The current AQOs set the concentration limit for each pollutant averaged over a reference period and the number of reference periods exceeding concentration limit allowed in a calendar year * The highest averaged concentration unless otherwise specified (1) The 10th highest averaged concentration (2) The 19th highest averaged concentration (3) The 4th highest averaged concentration


3827

Privacy Issues Arising from New Messaging Channels 17. DR PRISCILLA LEUNG (in Chinese): President, some instant messaging applications (IMAs) for smart phones (such as WhatsApp) which require registration by mobile phone numbers before use allow users to set up messaging groups without any proof that consent of data subjects has been obtained before they are added to such groups. Some members of the public have lodged complaints with me that upon joining a tour group, the tour escort set up a messaging group which included all tour group members, resulting in disclosure of their mobile phone numbers to other tour group members without their consent and thus infringement on their privacy. Moreover, some members of the public have, from time to time, been included in messaging groups set up by strangers for sending promotional messages (e.g. information about tutorial services and property developments), thus suffering great nuisances. In this connection, will the Government inform this Council:

(1) of the number of complaints received by the authorities in each year since 2012 about disclosure of personal data of data subjects without their prior consent to a third party via IMAs, and the follow-up actions taken for such complaints; among those complaints, the number of those substantiated;

(2) of the number of complaints received by the authorities in each year

since 2012 about unsolicited electronic messages being sent through IMAs, and the follow-up actions taken for such complaints; among those complaints, the number of those substantiated, and the number of Hong Kong telephone numbers involved;

(3) whether it will review if the existing provisions of the Unsolicited

Electronic Messages Ordinance (Cap. 593) are adequate for regulating the sending of unsolicited electronic messages through new messaging channels; and

(4) whether it has issued guidelines to civil servants as well as staff of

public organizations, and carried out publicity and public education work, in order to raise awareness about the privacy issues relating to IMAs; if it has, of the details; if not, the reasons for that?


SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Chinese): President, with respect to the Member's questions, a consolidated reply incorporating information from the Commerce and Economic Development Bureau, the Constitutional and Mainland Affairs Bureau and the Innovation and Technology Bureau is as follows:

(1) Between 2012 and 2015, the Office of the Privacy Commissioner for Personal Data (PCPD) received a total of 49 complaints about disclosure of personal data via instant messaging applications (IMAs) to a third party without the prior consent of the data subject. The annual figures are as follows:

Year Number of Complaint Cases 2012 2 2013 6 2014 18 2015 23 Total 49

After PCPD's screening and handling, 25 of the above cases were not

pursued as the complainants did not provide evidence, did not agree to disclosing his/her identity to the party complained against, withdrew the complaint, or the substance of the complaint was beyond the scope of the Personal Data (Privacy) Ordinance(1); six cases were closed in the absence of a prima facie case of contravention; 15 cases were resolved through conciliation during PCPD's preliminary enquiry; and two cases were resolved through conciliation during formal investigation. As at 15 January 2016, there was one case in the process of screening.

(2) The Unsolicited Electronic Messages Ordinance (Cap. 593) (UEMO)

regulates the sending of commercial electronic messages (CEMs), for example fax messages, emails, short messages, pre-recorded telephone messages, and so on. In general, CEMs refer to

(1) Under the Personal Data (Privacy) Ordinance, personal data is information which relates to a living person,

can be used to identify that person, and exists in a form in which access to or processing is practicable.


3829

electronic messages which advertise or promote products or services. The UEMO adopts a "technology-neutral" principle in regulating the sending of CEMs, including commercial short messages sent via IMAs (for example, WhatsApp Messenger).

Using IMAs to set up groups to facilitate the sending of messages

does not necessarily constitute a contravention of the UEMO, as it depends on whether the messages concerned are of a commercial nature, as well as the purposes and the actual content of the messages. Between 2012 and 2015, the number of reports received by the Office of the Communications Authority (OFCA) on suspected contraventions of the UEMO in relation to messages sent via IMAs and the number of such reports found substantiated are as follows:

Year Number of reports

received Number of reports substantiated Note

2012 214 17 2013 259 17 2014 547 26 2015 664 6

Note: Reports in respect of which OFCA has sent advisory letters, warning letters or enforcement notices to senders after investigation

Of the reports on suspected contraventions of the UEMO in relation

to messages sent via IMAs, OFCA does not have the breakdown of the numbers of reports involving telephone numbers registered inside or outside Hong Kong. Nevertheless, according to OFCA's investigation experience, the vast majority of the reports involve WhatsApp messages sent via telephone numbers registered in Hong Kong.

Upon receipt of a report, OFCA will conduct a follow-up

investigation. In general, if the sender of the message concerned is


found to have contravened the sending rules of CEMs as stipulated in Part 2 of the UEMO, OFCA will issue an advisory letter or a warning letter to the sender. If OFCA is of the view that the contravention will likely continue or be repeated, OFCA will exercise the powers delegated by the Communications Authority (CA) to issue an enforcement notice to the sender concerned. According to the UEMO, in respect of sender's non-compliance with the sending rules of CEMs, the CA can take prosecution action if the sender contravenes an enforcement notice.

In light of the growing number of reports concerning messages sent

via WhatsApp Messenger in recent years, OFCA has brought the situation to WhatsApp Inc.'s attention and referred the phone numbers of the senders concerned in reported cases for the company to follow up as appropriate, including terminating the use of its services by the related phone numbers. Furthermore, OFCA has written to WhatsApp Inc. a number of times, suggesting it to improve its programme design so as to prevent potential spamming by WhatsApp users. In April 2015, WhatsApp Inc. subsequently introduced a new "Report Spam and Block" feature which allows users to report suspected spammers to the company direct. According to OFCA's records, after referring the phone numbers of senders under complaint to WhatsApp Inc., OFCA has not received further contravention reports concerning the phone numbers of the related senders. The number of reports concerning messages sent via WhatsApp Messenger has also decreased substantially in recent months after WhatsApp Inc.'s introduction of the aforementioned new feature. OFCA will keep in view the situation.

(3) As mentioned above, the UEMO adopts a "technology-neutral"

principle in regulating the sending of CEMs, including commercial short messages sent via IMAs.

Irrespective of whether the CEMs are sent by new messaging

channels, if their senders are found to have contravened the sending rules of CEMs as stipulated in the UEMO, OFCA will issue advisory letters or warning letters to them. From past experience, most


3831

senders under complaint are willing to take remedial actions to improve their sending of CEMs after OFCA has approached them. Therefore, we have no plan to review the UEMO in this respect.

(4) The Government attaches great importance to protecting personal

data. Within the Government, the Office of the Government Chief Information Officer (OGCIO) has formulated a comprehensive set of information security policies and guidelines. All government staff are reminded to comply with the code of practice for using various Internet services. OGCIO has also made the security guidelines on protecting mobile phones and using mobile applications available to the general public through the "Cyber Security Information Portal" <www.cybersecurity.hk>, including matters for attention when using social networking websites and IMAs.

To strengthen the awareness and knowledge of personal data

protection in the public and private sectors and among the general public, the OGCIO has made available in the "Cyber Security Information Portal" a hyperlink to the relevant guidelines(2) on protecting personal data privacy published by PCPD. Furthermore, the OGCIO invited the PCPD to conduct two seminars on personal data protection for the departmental IT security officers of government bureaux and departments in 2015, and uploaded the seminar materials in the government intranet for reference by all bureaux and departments.

PCPD has been promoting to members of the public and

organizations an awareness in protecting and respecting personal data privacy in the use of information technology through different channels, including organizing activities such as roadshows and seminars, setting up thematic websites, as well as reminding mobile application developers about matters to note in relation to protection of personal data privacy.

(2) The relevant guideline is available at <https://www.pcpd.org.hk/english/resources_centre/publications/files/

leaflet_smartphones_e.pdf>


Government Wi-Fi Programme 18. MR JEFFREY LAM (in Chinese): President, the Government has been providing "Government Wi-Fi Programme" (GovWiFi) service since 2008 by installing wireless local area networks (i.e. "Wi-Fi") at designated government premises to provide free Internet access to the public, aiming at building Hong Kong into a wireless city. It has been reported that members of the public using GovWiFi service found that the service had a low connection speed and they experienced service disconnection. The download speed of GovWiFi is particularly slow in the Hong Kong Central Library. For example, it takes more than four minutes to open a picture file which is five megabytes in size. Furthermore, GovWiFi service is still not yet available at a number of government premises at present. In this connection, will the Government inform this Council:

(1) of the current number and percentage of government buildings and premises providing GovWiFi service;

(2) of the details of the plan to extend the coverage of GovWiFi service; (3) of the details of the plan to enhance the data transmission speed of

GovWiFi service; and (4) as some specialists in electronics have pointed out that since

GovWiFi service currently only operates in the 2.4 GHz band, and quite a number of radio apparatuses also operate in such band to transmit data, resulting in the data transmission speed of GovWiFi service being lowered due to interference, whether the Government has plans to enhance GovWiFi service so that the service can operate in the 5 GHz band at the same time, so as to enhance data transmission speed; if it does, of the details; if not, the reasons for that?

SECRETARY FOR INNOVATION AND TECHNOLOGY (in Chinese): President, the use of the Internet has become an important part of citizens' daily life. The Government has all along been committed to facilitating and encouraging the development of public Wi-Fi services for the convenience of the


3833

public. The Office of the Government Chief Information Officer (OGCIO) will leverage the advanced information and communications technology infrastructure of Hong Kong to develop it into a connected Wi-Fi City. The Government Wi-Fi Programme (GovWiFi) was launched in 2008 to provide free Wi-Fi services mainly at government premises with high patronage. Apart from progressively extending the free GovWiFi service to more government premises, the OGCIO has also collaborated with the industry to launch the common branding of "Wi-Fi.HK" in August 2014 to facilitate the public in using Wi-Fi services (free or time-limited free) provided by public and private organizations. My reply to the four-part question is as follows:

(1) As at December 2015, over 3 000 Wi-Fi hotspots have been installed at around 600 government premises in the 18 districts across the territory under GovWiFi for free use by the public. These premises include all public libraries, public enquiry service centres of District Offices, community halls/centres, law court buildings and job centres. Other premises with higher coverage include cooked food markets/centres, sports venues as well as cultural and recreational centres.

(2) To facilitate the public to locate and access free public Wi-Fi

services in Hong Kong, we have collaborated with the industry to provide over 17 000 hotspots under the "Wi-Fi.HK" brand in all the 18 districts across the territory, including the Hong Kong International Airport, major tourist attractions, public telephone booths, shopping centres and shops, restaurants, cafés, convenience stores, university and tertiary institution campuses, some public hospitals (waiting halls of their Accident and Emergency Departments and specialist out-patient clinics) and government clinics, and all government premises covered by GovWiFi. Users can enjoy at least 30 minutes' free Wi-Fi services without prior registration.

The Policy Address has recently announced that we will

progressively expand the coverage of Wi-Fi.HK by doubling the number of hotspots to 34 000 within three years to provide free


Wi-Fi services to citizens and visitors at premises with high patronage including all public rental housing estates and public hospitals, markets, parks, sitting-out areas, promenades, tourist spots, public transport interchanges, land boundary control points and other public premises. We will also offer free Wi-Fi services at all youth service centres and study rooms run by the Government and non-profit-making organizations, and work with schools to improve the quality of their Wi-Fi services in order to support e-learning.

(3) To improve connection speed, we will progressively double the

overall Wi-Fi connection speed with enhanced security at government premises. For example, we have increased the connection speed for each user from about 1-2 Mbps to 4 Mbps at government premises with high patronage, including all public libraries, to facilitate the public to enjoy faster Internet services. To ensure the quality of GovWiFi service, we will monitor the bandwidth usage in different premises, and review and adjust the bandwidth and number of hotspots in the premises regularly. We will also perform monthly sample checks at GovWiFi premises to monitor service performance, including transmission speed and connection stability, and conduct round-the-clock monitoring of GovWiFi service performance to ensure cost-effectiveness.

(4) Currently, GovWiFi provides service through the 2.4 GHz band

which is good for supporting most mobile devices used by the public, including those supporting legacy Wi-Fi standards only (IEEE 802.11 b/g). We have to take into consideration the popularity of different mobile devices when considering new Wi-Fi technologies and standards. We will closely monitor the development of Wi-Fi technology and timely update related technologies and standards to enhance the service.

Bogus Marriages with Hong Kong Residents 19. DR ELIZABETH QUAT (in Chinese): President, it has been reported that a number of cross-boundary syndicates have made use of social networking web sites to recruit Hong Kong residents to participate in illegal activities relating to bogus marriages with mainlanders. Many Hong Kong residents have participated in such activities to make quick money and recommended their


3835

friends to participate so as to earn referral fees. According to some estimations, among the marriages between mainlanders and Hong Kong residents registered in Hong Kong each year, about 25% may be bogus marriages, involving nearly 7 000 Hong Kong residents. In this connection, will the Government inform this Council:

(1) in each of the past 10 years, of the number of bogus marriages

uncovered by the authorities, the number of persons suspected of contracting bogus marriages (with a breakdown by gender and age group) and the number of intermediaries involved, the respective numbers of persons prosecuted and convicted, as well as the penalties generally imposed by the Court on those convicted; the top five countries/places where most people who entered Hong Kong through bogus marriages had come from, and the respective numbers of people from such countries/places, with a breakdown by gender and age group;

(2) as there are reports that in the past few years, the percentage of

convicted cases of offences relating to bogus marriages in the suspected cases remained low (e.g. less than 10% in 2014), whether the authorities will allocate additional resources to the Immigration Department to step up efforts in combating bogus marriages and related intermediary activities; if they will, of the details; if not, the reasons for that;

(3) whether the authorities will, when handling cross-boundary

marriage registrations, step up scrutiny work with a view to identifying any suspicious situation, and strengthen information exchange with mainland authorities and other countries;

(4) as there are comments that the penalties currently imposed by the

Court on persons who committed offences relating to bogus marriages are generally far below the maximum penalties for such offences (e.g. offenders making false representation to Immigration Officers are liable to a maximum fine of $150,000 and imprisonment of 14 years), whether the authorities will enact specific offence provision against acts of bogus marriages and specify a minimum term of imprisonment in such provision, so as to enhance the deterrent effect; and


(5) whether the authorities will step up publicity efforts on social networking web sites and other channels to remind members of the public (in particular young people) not to defy the law and participate in illegal activities relating to bogus marriages for making quick money; if they will, of the details; if not, the reasons for that?

SECRETARY FOR SECURITY (in Chinese): President, the Government has always been concerned about bogus marriages. The Immigration Department (ImmD) set up a special task force in 2006 to step up enforcement action against persons seeking entry into Hong Kong by means of bogus marriages with Hong Kong residents and intermediaries aiding and abetting others to seek entry into Hong Kong through such means. When suspected cases are identified, the ImmD will collect evidence through various different channels, conduct thorough investigation on parties to the suspected bogus marriage and relevant intermediaries, and prosecute offenders where there is sufficient evidence. Our response to the various parts of Dr QUAT's question is as follows:

(1) From 2008 to 2015, the ImmD investigated into a total of 5 890 suspected cases of bogus marriage. Eight thousand six hundred and fifty-five persons were arrested as a result, out of which 1 550 persons were successfully convicted. Relevant statistics breakdown by year is at Annex 1. The ImmD does not maintain relevant statistics by year before 2008.

Amongst the 1 550 persons successfully convicted, 886 were male

and 664 were female. Apart from a small number of cases where the convicted were sentenced to Community Service Orders of 80 hours or above, the majority of the convicted were sentenced to imprisonment from four to 24 months. Separately, a case involving the head of a syndicate was sentenced to imprisonment for 48 months.

The ImmD does not maintain statistics breakdown of those

investigated or arrested for suspected bogus marriage cases by nationality or age. Amongst the said 1 550 persons successfully convicted, 1 124 were Hong Kong residents and 426 were non-Hong Kong residents.


3837

Persons successfully convicted mentioned above include intermediaries and parties to the bogus marriage. The ImmD does not maintain statistics breakdown on the number of intermediaries arrested.

(2) and (3)

The ImmD will continue to step up enforcement actions against

persons seeking entry into Hong Kong by means of bogus marriages with Hong Kong residents. Adopting a multi-prong approach, measures will include stepping up immigration examination on arrivals, combating illegal workers, stepping up operations against intermediaries, stepping up checking of doubtful marriage registration cases, exchanging intelligence and co-operating with Mainland authorities, and preventing cases of bogus marriages for the purpose of seeking to give birth in Hong Kong. Details are at Annex 2. The ImmD will monitor effectiveness of the above measures, and suitably deploy manpower to cope with operational needs and review the manpower requirements as necessary.

(4) Those involved in bogus marriage cases may commit the following

offences:

- Pursuant to section 42(1)(a) of the Immigration Ordinance (Cap. 115), any person who makes any false representation to immigration officers shall be guilty of an offence and liable on conviction to a maximum fine of $150,000 and to imprisonment for up to 14 years. Aiders and abettors are liable to the same;

- Pursuant to section 34 of the Crimes Ordinance (Cap. 200),

any person who knowingly and wilfully makes a false oath or makes or signs a false declaration for the purpose of procuring a marriage or a certificate or licence for marriage shall be guilty of an offence liable on conviction to a imprisonment for up to seven years and to a fine. Aiders and abettors are liable to the same; and


- Under common law and pursuant to section 159C(6) of the Crimes Ordinance and sections 2(3) and 6 of the Criminal Jurisdiction Ordinance (Cap. 461), a person convicted of the offence of conspiracy to defraud shall be liable to imprisonment for up to 14 years.

As mentioned in Part (1) of this response above, the majority of

those convicted in bogus marriage cases were sentenced to imprisonment from four to 24 months, with a case involving the head of a syndicate sentenced to imprisonment for 48 months. We believe that the sentences have provided effective deterrence. That said, we will closely monitor the situation and conduct a review when necessary.

(5) The ImmD reminds the public (including young people) from time to

time on the relevant legal requirements through press conferences, press releases and media interviews. The ImmD will continue to educate and disseminate the message to members of the public via various channels on the importance of observing the law and the serious consequences of committing the offences.

Annex 1

Year Number of cases Number of persons

arrested Number of persons

convicted 2008 874 908 259 2009 1 033 728 180 2010 1 283 1 504 185 2011 605 1 242 263 2012 432 1 059 240 2013 515 1 102 188 2014 687 1 096 122 2015 461 1 016 113 Total 5 890 8 655 1 550


3839

Annex 2 (i) To step up immigration examination on arrivals: The ImmD will step up

immigration examination on arriving passengers at all control points and critically scrutinize doubtful visitors coming to visit their spouses in Hong Kong on the strength of "Tanqin" (visiting relatives) exit endorsements.

(ii) To combat illegal workers: since those involved in bogus marriages mainly

seek to take up unlawful employment after their entry into Hong Kong, the ImmD will pay particular attention to Mainland residents holding "Tanqin" exit endorsements during anti-illegal worker operations.

(iii) To step up operations against intermediaries: The ImmD has noticed that

some Mainland residents have, through the arrangement of intermediaries, obtained travel documents to enter Hong Kong by contracting bogus marriages with Hong Kong residents. These intermediaries may have committed the offence of conspiracy to defraud or aiding and abetting others to make false representation to immigration officers. The ImmD will continue to step up investigations into these intermediaries.

(iv) To step up checking of doubtful marriage registration cases: Marriage

Registries have stepped up checking on suspected cases since mid-July 2011 to further combat bogus marriage cases. Investigation Sub-division of the ImmD has also initiated investigation into any suspected bogus marriage cases. With these measures in place, a number of suspected cases were swiftly detected and successfully prosecuted. The ImmD will continue to investigate into suspected bogus marriage cases through the above checking measures.

(v) To exchange intelligence and co-operate with Mainland authorities: The

ImmD will notify Mainland authorities of information on Mainland residents committing offences related to bogus marriage. This enables Mainland authorities to strictly scrutinize their future applications for exit endorsements. Mainland authorities will also refer cases of suspected bogus marriages to the ImmD for follow-up. The ImmD will conduct joint enforcement operations with the Mainland authorities when necessary.


(vi) To prevent bogus marriage cases for the purpose of seeking to give birth in Hong Kong: The ImmD set up a task force in November 2012 to analyse and investigate the delivery booking records obtained from private hospitals so as to combat cases involving Mainland pregnant women obtaining the "Confirmation Certificate on Delivery Booking" to give birth in Hong Kong through bogus marriages.

Interim Housing 20. DR KWOK KA-KI (in Chinese): President, interim housing (IH) mainly provides interim accommodation for persons affected by natural disasters or government clearance operations while waiting for public rental housing (PRH) allocation, after they have stayed in the transit centre for three months, passed the "homeless test" and fulfilled the eligibility criteria for PRH. Regarding IH, will the Government inform this Council:

(1) whether it reviewed the policies and regulations (including the

construction of new IH or otherwise, the locations for the construction of IH, the eligibility criteria for IH, the accommodation arrangements for occupants after they have moved out of IH) relating to IH in the past five years; if it did, of the details; if not, how the authorities ensure that such policies and regulations are kept abreast of the times;

(2) of the following figures in the past five years: (i) the number of

occupants of IH, broken down by the causes for their becoming homeless and thus having the need to move into IH, (ii) the number of occupants who moved out of IH, and among such occupants, the number of those who moved into PRH units, and (iii) whether the authorities followed up the moving-out cases properly to ensure that the occupants concerned were provided with appropriate housing after moving out;

(3) whether it knows, in the past five years, (i) the number of residential

units affected by the redevelopment projects implemented by the Urban Renewal Authority in collaboration with various developers, (ii) the number of sub-divisions of flat units (commonly known as "sub-divided units") for domestic use in industrial buildings


3841

eradicated by the authorities, and (iii) the number of residents affected by redevelopment projects or operations to eradicate sub-divided units, and among such residents, the number of those who moved into IH; whether the authorities have followed up such cases properly to ensure that the affected residents could find appropriate housing; and

(4) as it was reported in October last year that the Housing Department

was examining the construction of PRH buildings on Shek Lei IH site and a site nearby, and some 800 households of occupants would thus be affected, whether the authorities have drawn up a timetable for demolishing Shek Lei IH; if they have, of the details; whether the authorities have fully consulted the affected occupants on the removal arrangements, and how the authorities will rehouse them; whether the authorities will construct IH in the same district so as to rehouse the affected occupants in the same district?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, with input from the Development Bureau, my consolidated reply to the various parts of the question raised by Dr KWOK Ka-ki is as follows.

(1) and (4)

According to the prevailing policy of the Government, any persons who are rendered homeless as a result of government actions (such as clearance of unauthorized structures, Court Bailiff's execution of court orders to repossess private building units, and so on,), natural disasters or emergencies, they can, through the referral of relevant departments such as Buildings Department (BD), Lands Department, Social Welfare Department (SWD), the Bailiff Section, and so on, apply to the Housing Department (HD) for temporary accommodation in transit centres (TC) while awaiting eligibility vetting for further rehousing or in the interim period while looking for alternative accommodation themselves. Generally speaking, after these households have stayed in TC for three months and passed the "homeless test", if they fulfil the eligibility criteria for public rental housing (PRH) (including income limit, asset limit and "no domestic property" rule), the HD will arrange for their admission


to Interim Housing (IH) while awaiting PRH allocation through PRH application. Furthermore, any persons who are rendered homeless as a result of the HD's PRH tenancy enforcement or estate management actions (such as rent default, tenancy abuse, violation of Marking Scheme for Estate Management Enforcement, divorce, and so on,), if they fulfil the eligibility criteria for IH, they can also be temporarily admitted to IH while awaiting PRH allocation through fresh applications.

Currently, IHs under the Hong Kong Housing Authority (HA) are

located at Po Tin, Shek Lei and Long Bin. The HA reviews the occupancy, building conditions, maintenance cost and other factors of IH units from time to time with a view to making corresponding arrangements for better utilization of public resources. For instance, the HA previously converted some of the IH units in Po Tin into PRH units in view of the decline in demand for the former. Furthermore, the HA decided in 2013 to clear Long Bin IH for public housing development. Rehousing arrangements are being implemented as planned and affected households are gradually moving out. If the HA decides to proceed with any redevelopment plan for other IHs, the HA will give reasonable advance notice to affected households and put in place appropriate rehousing arrangements in accordance with the established practice. IH is transitional accommodation by nature. Households which are due for PRH allocation at the time of removal will be offered suitable PRH units according to their choices of PRH districts. Households which are not yet due for PRH allocation will move to other IH.

PRH is the ultimate solution to address the housing needs of

low-income families who cannot afford private rental accommodation. As set out in the Long Term Housing Strategy Annual Progress Report 2015 published in December 2015, the Government has adopted 200 000 PRH units as the supply target for the 10-year period from 2016-2017 to 2025-2026. The current stock of IH units is also expected to be sufficient to meet the demand. The HA will focus its resources to provide PRH and has no plan to build new IH at the moment.


3843

(2) As mentioned above, there are various reasons for admission into IH. Apart from Government's clearance actions, PRH tenants may also be admitted to IH if they are rendered homeless as a result of rent default, tenancy abuse, violation of Marking Scheme for Estate Management Enforcement and divorce. The HD does not maintain statistical breakdown of admissions to IH by reasons. The total number of households staying in IH over the past five years is listed below:

Year Number of households

2011 (as at end December) 2 950 2012 (as at end December) 3 031 2013 (as at end December) 3 133 2014 (as at end December) 3 227 2015 (as at end December) 3 127

Over the past five years, 3 750 households have moved out of IH,

3 123 of which have been allocated with PRH units. Reasons for those who have not been allocated with PRH include death, moving to elderly homes, acquired alternative accommodation, failure to pass the income and assets, and so on. Those who have moved out of IH may, depending on their needs, apply for PRH in the future if they meet the prevailing eligibility criteria for PRH.

(3) Similar to the Government, it is the established policy of the Urban

Renewal Authority (URA) to ensure that no one will be rendered homeless as a result of its redevelopment projects. In the past five years, 1 330 residential units, involving 1 940 households, were affected by redevelopment projects under the URA in collaboration with developers. The URA will provide compensation and rehousing arrangements for tenants affected by its redevelopment projects on a case-by-case basis, such as allowing tenants concerned to opt for buying "in-situ" flats in the future new development through the Flat-for-Flat Scheme. In addition, according to the Memorandum of Understanding(1) between the URA and the HA,

(1) In accordance with the Memorandum of Understanding entered into between the HA and the URA in June

2002 and revised in June 2012, every year the HA reserves a certain number of PRH units for rehousing clearees of the URA, while the URA shall pay the HA reservation fees equivalent to the amount of monthly rent payable for the units reserved. Tenants rehoused to PRH must have been genuinely living in the project area before and since the Freezing Survey of the project conducted by the URA and have no alternative accommodation. They must also fulfil the prevailing eligibility criteria for PRH.


eligible tenants can be allocated with PRH units. According to the URA's records, in the past five years, seven tenants were admitted to IH because they did not meet the criteria for immediate rehousing to PRH (for reasons such as less than half of the family members have lived in Hong Kong for seven years).

As regards the BD, if its enforcement actions involve relocation of tenants, the BD will closely liaise with the SWD, Home Affairs Department and the HD to provide suitable assistance to those who are affected. The BD has established social services teams to provide necessary social welfare and emotional support for affected tenants. Since 2012, the BD has stepped up enforcement actions against sub-divided units for illegal domestic use in industrial buildings, with enforcement actions being taken against 44 such units. The BD has also provided a one-off relocation subsidy, through the assistance programme endorsed by the Steering Committee on the Community Care Fund, to the aforementioned tenants who have to move out of the domestic sub-divided units in industrial buildings due to the BD's enforcement actions. As mentioned above, any persons who are rendered homeless due to government actions can apply to the HD for temporary accommodation in TC. The HD does not maintain a statistical breakdown of admissions to IH by reasons. However, according to a search of the administrative records, since 2012, 12 persons were provided with temporary accommodation in TC due to the BD's enforcement actions against sub-divided units for illegal domestic use in industrial buildings, 10 of them were subsequently admitted to IH.

Statistics in Relation to Retirement Protection 21. MR CHEUNG KWOK-CHE (in Chinese): President, the Government is conducting a public consultation exercise on the future retirement protection system. The fourth pillar of the retirement protection framework, put forward by the World Bank and mentioned in the consultation document, comprises items like "personal assets" (e.g. owner-occupied properties) and "family support" (e.g. financial support from descendants). Regarding statistics on these two items, will the Government inform this Council:


3845

(1) of the number of elderly singletons aged 65 or above in each of the past three financial years, broken down by the value of assets (excluding owner-occupied properties) they held (set out in Table 1);

(Table 1)

Financial

year

Number of elderly singletons holding assets with a value within the following range

(thousand dollars)

80

or

below

Over

80

to

100

Over

100

to

120

Over

120

to

150

Over

150

to

180

Over

180

to

210

Over

210

to

1,000

Over

1,000

to

2,000

Over

2,000

to

3,000

Over

3,000

to

4,000

Over

4,000

to

5,000

Over

5,000

2012-2013

2013-2014

2014-2015

(2) of the number of elderly couples aged 65 or above in each of the past

three financial years, broken down by the value of assets (excluding owner-occupied properties) they held (set out in Table 2);

(Table 2)

Financial

year

Number of elderly couples holding assets with a value within the following range

(thousand dollars)

125

or

below

Over

125

to

150

Over

150

to

210

Over

210

to

240

Over

240

to

270

Over

270

to

318

Over

318

to

1,000

Over

1,000

to

2,000

Over

2,000

to

3,000

Over

3,000

to

4,000

Over

4,000

to

5,000

Over

5,000

2012-2013

2013-2014

2014-2015

(3) of the number of elderly households with all members aged 65 or

above and holding owner-occupied properties in each of the past three financial years, broken down by household size and appraised property value (set out in Table 3); and


(Table 3)

Financial year

Household size

Appraised value of owner-occupied properties (thousand dollars)

2,000 or

below

Over 2,000

to 3,000

Over 3,000

to 4,000

Over 4,000

to 5,000

Over 5,000

2012-2013 One-person Two-person Three-person or above



(4) of the number of persons required to pay salaries tax who made

claims for allowances for maintaining parents or grandparents aged 65 or above in each of the past three years of assessment, as well as the total amount of allowances granted (and set out a breakdown in Tables 4 and 5 by number of dependents involved)?

(Table 4)

Year of assessment

Number of dependent parents 1 2 3 4

2012-2013 Number of claimants Total amount of allowances granted




3847

(Table 5)

Year of assessment

Number of dependent

grandparents 1 2 3 4

2012-2013 Number of claimants

Total amount of allowances granted





SECRETARY FOR LABOUR AND WELFARE (in Chinese): President, my reply to Mr CHEUNG Kwok-Che's question is set out below: (1) and (2)

The Social Welfare Department (SWD) only keeps information on the value of assets (excluding owner-occupied properties) held by elderly persons who are receiving the Old Age Living Allowance (OALA) under the Social Security Allowance (SSA) Scheme.

The OALA, which was introduced on 1 April 2013, supplements the

living expenses of persons aged 65 or above who are in need of financial support. The financial test of OALA is conducted on the basis of a single person or a married couple. The asset profile of OALA recipients (excluding owner-occupied properties) is set out in Table 1 and Table 2 below. It is worth noting that before the introduction of OALA, a means-tested Normal Old Age Allowance (NOAA) was available to elderly persons aged 65 to 69. However, since the SWD does not maintain the asset profile of the then NOAA recipients, the information requested for the 2012-2013 financial year is not available.


(Table 1)

Financial

year(1)

Number of elderly singletons(2) holding assets with a value within the following range

(thousand dollars)

80

or

below

Over

80

to

100

Over

100

to

120

Over

120

to

150

Over

150

to

180

Over

180

to

210

Over

210

to

1,000

Over

1,000

to

2,000

Over

2,000

to

3,000

Over

3,000

to

4,000

Over

4,000

to

5,000

Over

5,000

2012-2013 Not available

2013-2014 137 497 7 915 7 005 9 346 8 864 2 622 0

2014-2015 114 799 11 800 10 599 14 708 15 533 7 311

(Table 2)

Financial

year(1)

Number of elderly couples(3) holding assets with a value within the following range

(thousand dollars)

125

or

below

Over

125

to

150

Over

150

to

210

Over

210

to

240

Over

240

to

270

Over

270

to

318

Over

318

to

1,000

Over

1,000

to

2,000

Over

2,000

to

3,000

Over

3,000

to

4,000

Over

4,000

to

5,000

Over

5,000

2012-2013 Not available

2013-2014 166 228 13 441 29 053 12 025 10 147 5 137 0

2014-2015 129 808 16 071 38 166 17 036 17 719 14 424 Notes: (1) The figures refer to the number of OALA recipients in authorized cases as at end-March of the respective

financial year. (2) The figures refer to the number of OALA recipients who are singletons. (3) The figures refer to the number of OALA recipients who have a spouse, but the spouse may not necessarily be

aged 65 or above.

(3) Based on the data obtained from the General Household Survey

conducted by the Census and Statistics Department (C&SD), the number of households with all members aged 65 or above by household size and tenure of accommodation in 2012 to 2014 are set out in Table 3 below. The C&SD does not collect information on the appraised value of the properties of households.


3849

Table 3

Year Household

size

Residing in owner-occupied housing

Others^ Total With mortgage or loan

Without mortgage or loan

Total

2012 1 2 600 55 000 57 600 88 700 146 300 2 3 700 52 700 56 400 40 200 96 600 3 and over * 900 900 500 1 400 Total 6 400 108 500 114 900 129 400 244 300

2013 1 3 200 58 800 62 000 94 100 156 200 2 4 000 56 700 60 700 43 400 104 100 3 and over * 700 700 500 1 200 Total 7 300 116 100 123 400 138 000 261 400

2014 1 3 400 62 000 65 400 98 300 163 700 2 3 300 60 000 63 300 46 000 109 400 3 and over * 1 300 1 500 600 2 100 Total 6 800 123 300 130 100 144 900 275 100

Notes: Figures refer to the average situation of the respective calendar year and may not add up to the totals due to rounding. ^ Refers to households residing in non-owner-occupied housing including

tenants, rent-free households and households with accommodation provided by employers.

* Statistics are not released due to large sampling error.

(4) Under the Inland Revenue Ordinance, a taxpayer is eligible to claim

dependent parent/dependent grandparent allowance if he/she maintains a parent/grandparent who is aged 55 or above; or being under the age of 55, is eligible to claim an allowance under the Government's Disability Allowance Scheme. The Inland Revenue Department does not maintain statistics in respect of cases where the dependent parents/dependent grandparents are aged 65 or above, as requested in the question.


Incidents of Massive Quantity of Dead Fish Found in Inshore Waters and Watercourses 22. MR TANG KA-PIU (in Chinese): President, it has been reported that massive quantity of dead fish has been recently found on the surface of a number of inshore waters and watercourses (including the waters off the mariculture rafts in Sam Mun Tsai in Tai Po, Kam Tin River in Yuen Long, and Shing Mun River in Sha Tin). Last month, the authorities collected 15 tonnes of refuse which contained a large quantity of dead fish in Shing Mun River. The stench of such refuse had caused nuisance to the residents and picnickers in the vicinity of Shing Mun River. Some fish farmers also worried that the flow of polluted river water into Tolo Harbour would have long-term impact on the ecological environment of the fish culture zones there. In this connection, will the Government inform this Council:

(1) regarding incidents in which massive quantity of dead fish was found in the following watercourses in each of the past five years, of the respective (i) numbers of such incidents and (ii) quantities of dead fish found (set out in the table below);

Watercourse 2015 2014 2013 2012 2011 (i) (ii) (i) (ii) (i) (ii) (i) (ii) (i) (ii)

Shing Mun River Lam Tsuen River Tung Chung River Shan Pui River Kam Tin River Tuen Mun River

(2) whether it has investigated the causes of the recent incident of

massive quantity of dead fish being found in Shing Mun River, and whether the ecological environment of the watercourse has been adversely affected as a result; if the watercourse has been affected, whether it has taken remedial measures; if it has, of the details and the latest situation;

(3) of the details of the cleaning work undertaken at Shing Mun River at

present and the staff establishment involved; whether it has plans to strengthen such work;


3851

(4) whether inter-departmental meetings are held in respect of the environmental hygiene of various watercourses on a regular basis and in the light of incidents of massive quantity of dead fish found in those watercourses, for the purpose of discussing and co-ordinating the relevant cleaning work of the watercourses; if so, of the details; if not, the reasons for that; and

(5) given that in reply to my written question raised in November last

year, the authorities indicated that a consultancy study would be conducted on the works to revitalize nullahs and watercourses and they would explore specific proposals for revitalizing water bodies, of the progress of the revitalization works at present with a list of the names of nullahs and watercourses involved as well as the implementation timetable for the revitalization works?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, the Government is committed to maintaining a hygienic environment in Hong Kong, including keeping rivers clean, as well as protecting and preserving the ecological environment. Relevant government departments (including the Environmental Protection Department (EPD), Agriculture, Fisheries and Conservation Department (AFCD) and Drainage Services Department (DSD)) will look into any pollution incidents in watercourses and take appropriate measures to minimize the impact on the community (including fish culture zones nearby). The departments concerned will also explore feasible options for revitalizing the water bodies of nullahs and watercourses for greening and beautification purposes. My reply to the various parts of the question is as follows:

(1) The Food and Environmental Hygiene Department (FEHD) is responsible for removing floating refuse (including floating dead fish) found in nullahs, rivers, watercourses and natural river beds. Under the established arrangement, the role of the FEHD is mainly to assist the management departments concerned, such as the DSD, in removing refuse floating on nullahs, rivers and watercourses to prevent flooding. Neither the FEHD nor the DSD has maintained records relating to the removal of dead fish in rivers in the past five


years. Nevertheless, according to the information collected by the DSD pertaining to reports of dead fish surfacing in various rivers in November and December last year, the following number of dead fish was found in Shing Mun River, Lam Tsuen River and Kam Tin River respectively: about 23 000 (approximately 2.8 tonnes), 1 000 (approximately 0.2 tonnes) and 4 000 (approximately 2.1 tonnes).

(2) When notified of the presence of dead fish in Shing Mun River, the

EPD had, in accordance with the established practice for handling complaints of suspected pollution, deployed staff to conduct site inspections and collect river water samples. The analytical reports did not show any abnormality in water quality in terms of dissolved oxygen, biochemical oxygen demand, temperature, and pH levels. Nor was any pollution source that might be related to the dead fish incident found. After being notified by the EPD of the dead fish incident in Shing Mun River, the AFCD also deployed staff to take several water samples from Shing Mun River for testing. Test results showed no sign of red tide or toxic algae along the river course at the time the samples were collected. The AFCD also carried out fish pathogen analysis of the five fish samples collected from the river by the EPD in December last year. No parasitic infection was found in the samples. Based on the above test results, it is believed that water quality is not related to the death of the fish. There is also no evidence to show that red tide, toxic algae or parasitic infection is the cause.

(3) At present, the FEHD deploys, through a cleansing contractor, two

workers to remove, on a regular basis, the refuse floating on Shing Mun River. The service is provided once daily from May to September each year and once every two days from October to April. On average, a total of about 260 cleaning operations are carried out at Shing Mun River each year. In response to referrals from the relevant departments and public complaints or enquiries, the FEHD will strengthen the cleaning service where necessary. For example, upon receiving complaints and enquiries about refuse and dead fish floating on Shing Mun River last December, the FEHD had arranged enhanced service with the contractor. A total of 57 cleaning operations were carried out.


3853

(4) In response to the incidents of dead fish being found in various rivers in November and December last year, the relevant departments (including the DSD, FEHD, EPD and AFCD) have been maintaining close collaboration and carrying out suitable follow-up work. Regarding the cleaning work of the rivers, the FEHD has been assisting the DSD in removing dead fish floating on watercourses to avoid affecting the environment and water quality as well as to prevent flooding.

(5) The DSD commenced a consultancy study in December last year on

revitalizing the water bodies in major river channels in Hong Kong. Based on an assessment of the actual circumstances (such as the geographical location, aesthetics and ecological value of a river channel, and the degree of public enjoyment) on the ground and technical feasibility, the study will explore practicable revitalization proposals. The results of the study will serve as a reference for carrying out large-scale drainage improvement works and for planning drainage networks in new development areas. The consultancy study is scheduled for completion by the end of 2017. As the study is still at the initial stage, the DSD is, at the moment, not in a position to provide such information as the timetable for the revitalization works of the rivers concerned.

BILLS First Reading of Bill DEPUTY PRESIDENT (in Cantonese): Bill: First Reading. INLAND REVENUE (AMENDMENT) BILL 2016 CLERK (in Cantonese): Inland Revenue (Amendment) Bill 2016. Bill read the First time and ordered to be set down for Second Reading pursuant to Rule 53(3) of the Rules of Procedure.


Second Reading of Bills DEPUTY PRESIDENT (in Cantonese): Bill: Second Reading. INLAND REVENUE (AMENDMENT) BILL 2016 SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): Deputy President, I move the Second Reading of the Inland Revenue (Amendment) Bill 2016 (the Bill) to amend the Inland Revenue Ordinance, so as to put in place a legal framework for Hong Kong to implement the automatic exchange of financial account information in tax matters (AEOI) arrangement. As an international financial centre and a responsible member of the international community, Hong Kong has always been dedicated to enhancing tax transparency and preventing tax evasion. Hong Kong pledged support for the AEOI standard as promulgated by the Organization for Economic Co-operation and Development (OECD) in September 2014. The commitment was that, subject to the passage of local legislation, AEOI would be implemented on a reciprocal basis with appropriate partners which could meet relevant standards on protection of privacy and confidentiality of information exchanged and ensuring proper use of the data exchanged, with a view to commencing the first information exchanges by the end of 2018. We adopt a pragmatic approach to incorporate into our domestic law the essential requirements of the AEOI standard, and will ensure effective implementation whilst not imposing disproportionate compliance burden on financial institutions. In formulating the legislative proposals, we have taken into account the views and feedback collected during the consultation exercise from April to June 2015. In very brief terms, under the AEOI standard, a financial institution (that is, custodial institution, depository institution, specified insurance company and investment entity) is required to conduct due diligence procedures, so as to identify financial accounts held by tax residents of reportable jurisdictions. The term "tax residents of reportable jurisdictions" refers to tax residents who are liable to tax by reason of residence in the jurisdictions with which Hong Kong has entered into an AEOI arrangement. Financial institutions are required to collect


3855

the personal and financial data of these financial account holders, and furnish such information to the Inland Revenue Department (IRD) annually. Upon receipt of such information, the IRD will exchange it with the tax authorities of AEOI partner jurisdictions on an annual basis. I must emphasize that, as far as members of the general public are concerned, if a person is not a tax resident of any region outside Hong Kong, financial institutions in Hong Kong need not, and shall not, report his information to the IRD. Therefore, the information concerned will not be transmitted to those tax authorities outside Hong Kong. Moreover, we intend to look for suitable partners only from those tax jurisdictions with which Hong Kong has signed comprehensive avoidance of double taxation agreements (CDTAs) or tax information exchange agreements (TIEAs) to negotiate for bilateral AEOI arrangements. The safeguards for exchange of information under the respective CDTAs and TIEAs will be applicable to information exchanged under the AEOI mode, alongside safeguards under the AEOI Standard. The Bill covers mainly the following four aspects: Firstly, prescribing the scope of "reporting financial institution" and "reportable account". The Bill sets out the definitions alongside those provided in the AEOI standard, with adaptations where necessary by including references to the domestic law of Hong Kong. Furthermore, the Bill also provides for "non-reporting financial institutions" and "excluded accounts", which present a low risk of being used for tax evasion, to be exempted from reporting under the AEOI Standard or relevant criteria. Secondly, prescribing the obligations on financial institutions to identify "reportable accounts" and collect information from account holders. To meet the AEOI requirements, the Bill prescribes that financial institutions must establish procedures to identify whether a financial account is a "reportable account"; such procedures must be maintained and applied to identify accounts and collect information of account holders who are tax residents of the specific "reportable jurisdictions" (that is, the "targeted approach"). To provide flexibility for financial institutions in carrying out the due diligence obligations, the Bill also provides that financial institutions may apply the same procedures to identify accounts and collect information of account holders who are tax residents of any other jurisdiction outside Hong Kong (that is, the "wider approach").


Thirdly, prescribing the scope of information to be furnished by financial institutions to the IRD. As far as personal data is concerned, the information to be exchanged includes name, address, jurisdiction of residence, taxpayer identification number, and the date and place of birth. As for financial account data, it includes the account number, account balance or value (year-end), and the gross amount of interest, dividends and sale proceeds of financial assets that different types of accounts may concern. Fourthly, prescribing the enforcement powers for the IRD and sanctions against non-compliance. In order to ensure effective implementation of AEOI in Hong Kong, the Bill provides the IRD with necessary enforcement powers, which include: to require financial institutions to furnish information of reportable accounts in the specified format, to have access to the business premises of financial institutions and inspect their compliance systems and processes, and to require financial institutions to rectify systems and processes if found to be non-complying. Nevertheless, the Bill also proposes various penalty provisions for financial institutions, service providers and account holders. We have made reference to similar penalty provisions in the Inland Revenue Ordinance to ensure that the proposed penalty provisions are proportionate and have effective deterrent effect. As allowed by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum), the ultimate deadline for commencing the first information exchanges is the end of 2018. Consequently, the time frame is very tight for Hong Kong to deliver its commitment and commence AEOI operation by then, which involves four key tasks as follows: Firstly, we must secure the passage of the local legislation by the end of the current legislative year in July 2016. Secondly, we need to identify at least one suitable partner, with a view to concluding the negotiations by the end of 2016. The inclusion of relevant partner to the list of "reportable jurisdictions" is subject to negative vetting by the Legislative Council. Thirdly, once the AEOI agreement is in place, financial institutions have to put in place the due diligence procedures in 2017 in order to identify and collect information of the relevant "reportable accounts".


3857

Fourthly, financial institutions would have to furnish the information to the IRD in 2018 for transmission to the AEOI partner. The Global Forum has established a mechanism to conduct peer reviews on AEOI arrangements for monitoring the progress. Deputy President, in order to strengthen our status as an international financial centre and fulfil our obligation in the international community, Hong Kong must have the AOEI arrangement implemented as scheduled. I hope Members will support the Bill and pass it as soon as possible. The authorities will make the best endeavour to support the Legislative Council in scrutinizing the Bill as well. I so submit. Thank you, Deputy President. DEPUTY PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Inland Revenue (Amendment) Bill 2016 be read the Second time. In accordance with the Rules of Procedure, the debate is now adjourned and the Bill is referred to the House Committee. Resumption of Second Reading Debate on Bill DEPUTY PRESIDENT (in Cantonese): This Council will now continue the Second Reading debate on the Copyright (Amendment) Bill 2014. Does any Member wish to speak? COPYRIGHT (AMENDMENT) BILL 2014 (Mr LEE Cheuk-yan stood up) DEPUTY PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, what is your point?


MR LEE CHEUK-YAN (in Cantonese): I request a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (While the summoning bell was ringing, THE PRESIDENT resumed the Chair) (After the summoning bell had been rung, a number of Members returned to the Chamber) PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, please speak. Resumption of debate on Second Reading which was moved on 18 June 2014 MR LEE CHEUK-YAN (in Cantonese): President, on behalf of the Labour Party, I rise to speak in opposition to the Second Reading of the Copyright (Amendment) Bill 2014 (the Bill), and in support of the three amendments proposed by the pan-democrats to protect netizens' freedom of creation. We oppose the Bill for it tilts in favour of copyright owners. All netizens in Hong Kong and all Hong Kong people who use mobile phones, including many elderly persons, should note that the most terrifying provision of the Bill is the proposed prejudicial communication offence. I dare not say whether the sharing of files through mobile phones will certainly be unlawful, but there is such a chance despite the various exceptions provided in the Bill. We must carefully examine the contents of the Bill to see what acts will be in contravention of the law. The Bill is most terrifying in the sense that acts undertaken by millions of Hong Kong netizens every day may be subject to criminal investigation for no good reason. In other words, a sword of Damocles now hanging over the heads of the public and Internet users may fall at any time, and people may easily break the law inadvertently. Though we have been studying the Bill, I dare not say that I know for certain which daily acts we undertake on the Internet will constitute criminal offences. I have to thank various organizations for preparing information kits


3859

which are not "lazy packs". While I have tried to read some of the information, I fail to gain a thorough understanding. I also have to thank some academics for writing many articles explaining the hazards of enacting the legislation. As I have said just now, the biggest problem is that there is a sword of Damocles hanging over our head, and we may unknowingly and inadvertently break the law. If we are afraid, not knowing whether our acts will contravene the law inadvertently, the ensuing problem will be the smothering of freedom of creation on the Internet, and the suppression of Hong Kong people, in particular the infinite creative space of young people. If the Secretary for Commerce and Economic Development, who is now present, is truly concerned about the economy, he should understand that the Bill may likely render more losses than gains to the overall economy, for the reason that the Bill suppresses our future innovation, a concept which is often mentioned by the Government. In fact, innovation does not necessarily mean technological innovation. The term "innovative technology" is quite misleading. While technology is certainly important, innovation is of paramount importance. The Bill suppresses freedom of creation, and the loss will ultimately outweigh the gain. The Labour Party believes that Hong Kong people should choose the future and cast aside the past, and the future stands for innovation. The Labour Party has reservation about the concept of intellectual property rights as the protection of which very often means the protection of large consortia, and in this case, the protection of conglomerates in the United States. It turns out that the pro-establishment camp is very much pro-America, it colludes with the United States to enact legislation to protect large consortia. The Agreement on Trade-Related Aspects of Intellectual Property Rights, formulated by the World Trade Organization (WTO), actually tilts in favour of consortia. When a WTO conference was held in Hong Kong in 2005, we also protested against such a WTO Agreement, for many of its provisions aim at protecting consortia. The protection of intellectual property rights in certain areas, especially in the area of pharmaceutical products, deals a heavy blow to the well-being of human beings. If certain persons can enjoy a patent right for 20 years, they can charge exorbitant fees on drugs during the period. A patient may have to spend as much as $20,000 a month on drugs and the annual expenditure may amount to hundreds of thousands of dollars. Who can afford such high costs? Worse still, the Drug Formulary of the Hospital Authority does not cover such drugs. As such, in many cases, the so-called intellectual property rights will affect some poor people as well as the well-being of human beings.


Intellectual property rights also affect the spread of knowledge. President, I believe that you must also grow up in an era when pirated books were popular. How could we afford to buy those voluminous books? In those years we all read pirated books at school. It can be said that we were actually breaking the law. A bookstore near the University of Hong Kong used to photocopy books. We have all grown up in this way. Knowledge narrows the gap between the rich and the poor, and enables us to move upward. Similarly, the Internet enables us to be more innovative, create our own works and express ourselves. This is very valuable. The smothering of online innovation for the sake of the so-called intellectual property rights is, in our view, very negative and deals a heavy blow to our future. For this reason, we resolutely oppose the excessive protection of intellectual property rights that tilts in favour of consortia. President, I think more Members should be present in the Chamber. President, a headcount please. 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): Mr LEE Cheuk-yan, please continue with your speech. MR LEE CHEUK-YAN (in Cantonese): President, I would like to declare in advance that I will proceed to make quorums call. Will Members please remain seated. If Members are so supportive of "Internet Article 23", they should sit still. Members should think about it. We have made it clear … (Some Members talked loudly in their seats) PRESIDENT (in Cantonese): Will Members please keep quiet.


3861

MR LEE CHEUK-YAN (in Cantonese): We oppose "Internet Article 23", President. Why? (Some Members still talked loudly in their seats) PRESIDENT (in Cantonese): Will Members please keep quiet. MR LEE CHEUK-YAN (in Cantonese): … "Internet Article 23" affects the well-being of millions of Hong Kong netizens, and as I said just now, people may easily break the law inadvertently. President, a vivid example of how one may break the law inadvertently is the case related to LEUNG Chun-ying. He well exemplifies why the legislation is so scary. Despite the presence of the entire government apparatus, the Chief Executive still surprisingly shared a video clip of the cover version of the song "喜歡你" (Loving You), which constituted a copyright infringement. More ludicrous still, there was a saying that since the Chief Executive was a public figure, the act could be regarded as commenting on current affairs. How absurd! That is why the Bill is so scary. LEUNG Chun-ying is the most vivid example. The Government or the Secretary will probably say later that Mr LEE Cheuk-yan has been instigating fear, for the Bill offers many exceptions. We do not deny that the Bill offers exceptions, but we must pursue the matter from two perspectives. In promoting the Bill, the Government and copyright owners invariably claim that the scope of regulation is narrow while the scope of exception is broad, hoping to convince the dissenters not to be afraid for they will not easily break the law inadvertently. The Government, in promoting the Bill, calls on people to be relieved. However, from the perspective of netizens, the Bill has a broad scope of regulation and a narrow scope of exception, and people are thus frightened. The Bill may easily be manipulated by the Government to suppress freedom of speech on the Internet and initiate criminal prosecution. The concerns of netizens absolutely warrant our support. As Legislative Council Members, we have discerned that problems do arise following the passage of certain bills with ambiguous wording. That is the present case. If the legislation contains ambiguous provisions and equivocal exceptions, problems may easily arise. Once the Bill is passed, all pledges will be reneged on, and the


authorities will initiate prosecution. Before the passage of the Bill, the Government will surely pledge in all sincerity that no problem will arise, but once the Bill is passed, it will be another story, as the law may easily be used as a tool for political suppression. This is the situation I detest to see. For this reason, we have proposed amendments, with the hope of extending the scope of exception to the broadest extent, such that the Government may not easily abuse the law and adopt a narrow definition to prosecute netizens. I would like to give several examples for easy explanation. Actually we learnt from some professors about such example. The first example is related to images captured from movies. The new law requires that sufficient acknowledgement must be made in the relevant work, but it fails to define what is meant by "sufficient". A narrow interpretation is that captured images with logos of the television station and the hyperlink to the underlying work will suffice. But under a broad interpretation, exception may only be granted if information such as the names of producers, directors, screenwriters, cameramen and so on, are included. In the second example, the Government often claims that sharing of a hyperlink is not a problem, but is it really so? According to the Government, such sharing is not a problem under the existing law, but link aggregation or taking active steps in the communication process is a problem. What is meant by "link aggregation" or "taking active steps in the communication process"? No one knows. Another professor told us, if we add the comment "Great, Star Wars is coming" when sharing a hyperlink after watching Star Wars online, this constitutes taking active steps in the communication process and is thus in contravention of the law. Still, no one knows. The third example is related to criminal liability. While the Government claims that the Bill focuses on whether there is any market substitution, it is not so stipulated in the Bill. The Bill provides that the Court has to consider three factors, including all the circumstances of the case, the economic prejudice caused to the copyright owner, and whether the infringing copy amounts to a substitution for the work. A narrow interpretation is that market substitution is vital, but the Bill is not so stipulated. A broad interpretation is that the contravention of any one of the three factors will be a problem. What is the situation? Such information is given to us by the academics. If even they are confused by the provisions of the Bill, who then can have a clear understanding?


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For this reason, the Bill makes people susceptible to breaking the law. I have just talked about the case of LEUNG Chun-ying uploading and sharing a video of his singing the cover version. The lead singer of Eagles passed away recently; their song Hotel California is popular among many people. However, it turns out that there is a song called Buddha California; is that song an infringing work and be subject to prosecution? The latter has the same melody as that of the former, only that the latter has Cantonese lyrics. Is it a copyright infringement? If so, will innovative creation be smothered? Is it all right to turn Hotel California into a song telling the story of the Monkey King, the Monk Tang and Pigsy travelling to the West in search of Buddhist scriptures? No one knows. President, I request a headcount. 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): Mr LEE Cheuk-yan, please continue with your speech. MR LEE CHEUK-YAN (in Cantonese): President, I have just said that there are many pitfalls in the Bill. The Secretary will probably say in a moment that all my remarks are alarmist and people should not be worried. However, the fundamental point is: do all Hong Kong people trust the Government? Do they trust "689"? Members should bear in mind that "689" LEUNG Chun-ying has antagonized people by appointing Arthur LI as Chairman of the Council of the University of Hong Kong. President, today, the primary target of satire on all websites in Hong Kong is certainly LEUNG Chun-ying. How would I know if LEUNG Chun-ying will, after seeing so many satirical works ridiculing him, become angry and prosecute netizens? The Secretary will certainly say that prosecution against netizens will only be initiated following the reporting by copyright owners. However, it is easy for the Government to collude with copyright owners. The problem ultimately lies in whether people trust the


Government. If people hold the view that the Government purposely antagonizes people, and that it is mean and has a liking for inciting conflicts and taking revenge, they will surely be scared, and they can do nothing about it. President, another vivid example is the legislation that contains the offence of "access to computer with criminal or dishonest intent". At the time of passing the legislation, the Government indicated that the law would not involve ordinary people, and it would merely regulate Internet fraudulent acts. However, people later observed that the authorities could invoke the law to smother certain online remarks or appeals. If the Government dislikes the appeal made by a person, once he releases the relevant messages online, the Government will prosecute him on the charge of "access to computer with criminal or dishonest intent", which is outrageously ridiculous. Another example involves protestors being wronged by "black cops" and the Court ordered the release of the protestors arrested. The introduction of a criminal offence in the Bill at the Government's disposal is like providing the Government with a sword, which is very dangerous. For this reason, we believe that the Bill is after all "Internet Article 23". If we do not trust a treacherous and faithless government, we must not allow the Bill to be passed in any event. Thank you, President. MR LEUNG YIU-CHUNG (in Cantonese): President, I seldom watch television (TV) over the past 20-odd years, and it can be said that I distance myself from TV programmes and culture. However, during my recent discussion on the Copyright Ordinance with some friends, a friend told me that although the viewership ratings of TV programmes are getting from bad to worse nowadays, the TV industry still cannot be regarded as dead. In the past, TV viewers might make up 70% or 80% of the public, and now the ratio might be 50% or 60%; yet TV still has its market. The contents of TV dramas, as well as the words of actors, masters of ceremony, programme hosts, and so on are actually still influential and cannot be taken too lightly because they may very often trigger social reactions. Moreover, this friend of mine also mentioned a remark made by a master of ceremony of a TV show last year. He said, "To combat piracy? There isn't any now!" Such remarks are indeed worthy of introspection. President, the remarks are simple enough, yet they in fact reflect the rapid changes brought forth to life by technology in society. In the past, piracy


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affected the proceeds of copyright owners; nowadays, copyright revenues are affected by the prevalence of online downloads and Internet platforms. Therefore, in order to protect their own interests, copyright owners have to push through the Copyright (Amendment) Bill 2014 in the name of protecting intellectual property rights. President, when we talk about protecting intellectual property rights, we expect to protect the creators of intellectual activities, so that they can have their entitled return for their hard work; rather than protecting the interests of the so-called copyright owners. In fact, have copyright owners conducted any intellectual activities for the sake of creation? They merely buy the intellectual property rights or creations of others and use them to make profits. When they fail to make high profits or when their interests are affected, they advocate the protection of intellectual property rights in disguise for their pursuit of "interest" … MR ALBERT CHAN (in Cantonese): President, speaking of interest, will Members please return to this Chamber for the meeting. Thank you. 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): Mr LEUNG Yiu-chung, please continue with your speech. MR LEUNG YIU-CHUNG (in Cantonese): Just now, I mentioned that most people who advocate intellectual property protection are in fact seeking "interest". Some of them even hide their conscience for the sake of interests. President, recently, a famous lyricist LIN Xi has said publicly that he welcomed netizens to modify his lyrics and make secondary creations in respect of his works. Even so, this is not permitted by our law. That is to say, creators


of intellectual activities ― especially the original creators ― do not have the right to have a say at all. The case is like the Chief Executive singing a cover version of the song "喜歡你" (Loving You) by Beyond in a semi-public occasion earlier and uploading the video clip to the social media platform. In the video clip uploaded publicly, the lyrics were modified but the original melody was used as the background music; thus, people queried that the prevailing copyright legislation has been violated. President, some people considered this incident a rather perfect illustration because once the clip was uploaded, some netizens immediately criticized the Chief Executive for breaking the law. If the Chief Executive does break the law, it implies that even the Chief Executive violates the law due to ignorance. Netizens thus opine that if the Bill comes into effect with the current provisions, people will easily break the law inadvertently. Even if they have not broken the law, they would receive complaints, leading to undue alarm. This reflects that there are problems with the contents of the Bill. In fact, regarding the contents of the Bill, I believe many people fail to get a clear picture whether or not it is illegal to modify lyrics. For modification of lyrics not to be regarded as illegal, the judgment has to be based on certain principles, including the purpose of modification, and whether the purpose falls within the six areas of exemption and the four principles, which include, among others, the purpose and nature of modifying lyrics, such as whether the modification is for a non-profit-making purpose or whether it is of a commercial nature; the nature of the work; the amount and substantiality of the portion being used in relation to the copyright work as a whole; as well as the effect of the dealing on the potential market for or value of the copyright work. If the said conditions are met, the act of modifying lyrics shall enjoy civil and criminal exemptions. If the work is not exempted and has reached the level of "prejudicial distribution or communication" and "substituting the original work", then the act concerned may be a criminal offence. President, having said so much, has the Chief Executive violated the law after all? With such kind of unclear norms, it is lucky for the Chief Executive to have a group of high-ranking officials, particularly colleagues from the Intellectual Property Department, who risk being berated and still stoop to flattery; who risk being criticized for twisting the facts and still indulge in sophistry; and who risk being criticized for disregarding the law and still enforce the law in a biased manner. Under such circumstances, the Director of


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Intellectual Property even issued a declaration afterwards, claiming that the Chief Executive, being a public figure, may quote "commenting on current affairs" for an exemption. In other words, the Chief Executive breaks no law. President, no wonder there is an ancient saying that under the governance of an autocratic and unreasonable government, incidents of "allowing officials to burn down houses while forbidding common people to light lamps" occur frequently. How will our Chief Executive and the Government fall behind others in this regard? Moreover, the bureaucratic responses may very often extend the law indefinitely. If the person involved in this incident is a common folk instead of the Chief Executive, he will not be able to claim exception for "commenting on current affairs" by a public figure. What will happen to that folk? Probably, he can only trust to luck. Such a situation is deed distressing. As a matter of fact, Hong Kong is a common law jurisdiction, and there is no stipulation in the common law that one can be exempted from his legal liability for having no knowledge or being ignorant of law. Therefore, in principle, the contents of legislation should be as simple and clear as possible, and it will be best if the law can be easily understood and comprehended by the common people. Regrettably, the drafting of the current Bill is very complicated and difficult to be understood, leaving room for the Government may intervene easily. Netizens thus dub the Bill "Internet Article 23", which means it is a draconian law. We regard the Bill as a draconian law because netizens are of the view that the Bill imposes greater limitations and restrictions on them, and makes them susceptible to committing criminal offences. They are worried that someday the Government will inflict political suppressions under the excuse of criminal investigation on copyright offences; and such worries originate from the fact that people have lost their confidence with the Government today, yet the Government even proposes an amendment of criminalization. What exactly does the Government want to do? President, my stance on the Bill is actually rather simple, and that is, I absolutely cannot accept nor endorse the criminalization of the use of copyright works for non-profit-making purposes. It is because the amendments are totally unjustified and unwarranted.


President, as we all know, it can be said that the existing Copyright Ordinance has its origin from the Copyright, Designs and Patents Act 1988 of the United Kingdom. The SAR Government copied the Act almost word for word. Of course, there are some amendments; yet the most significant characteristic of the British copyright legislation is that it disallows in principle all acts that infringe upon the interests of copyright owners, and a number of restrictive exceptions are provided. However, even for acts excepted, they do not directly constitute a fair use of a copyright work for the defendant still has to explain to the Court on what ground is his act a fair use. Thus, eventually, a judge has to rule, based on the facts of a case, whether it is a fair use. At present, netizens are most concerned about whether certain acts will be caught by the law. President, in fact … MR ALBERT CHAN (in Cantonese): President, as we are now talking about such an important issue, please summon the Secretary back to listen to Mr LEUNG Yiu-chung's speech. Please do a headcount. 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): Mr LEUNG Yiu-chung, please continue. MR LEUNG YIU-CHUNG (in Cantonese): President, just now I talked about the prime concern of netizens, that is, whether certain acts on the Internet are in contravention of the law. Actually, many acts are already regarded as offences before the amendment of the existing legislation. For instance, firstly, regarding the issue of quotation that we mentioned in our discussion the other day, though the use of quotation must be accompanied by a sufficient acknowledgement, the Bill has not expressly stated what is meant by "sufficient", and such act can easily violate the law. Secondly, rewriting lyrics for songs. This is allowed and the


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rewritten lyrics may even be published, or one can sing out the lyrics without using the original melody. But, President, why will people rewrite the lyrics without using the original melody? Hence, this act can also easily break the law. And, thirdly, "doujinshi" and live streaming gameplay are obviously infringing acts, as in the case of piracy in the past. Therefore, these acts can easily break the existing legislation before amendment. Nevertheless, how come no one was prosecuted in the past? The main reason is that civil liability was involved in the past. As far as civil lawsuits are concerned, one must first prove that loss has been incurred before a claim can be made, but in doing so, a lawyer has to be hired and the cost may be higher than the claim awarded. That is why no lawsuit was filed. However, if the current Bill is passed, the acts concerned will become criminalized. If your enemy or some other people want to give you a hard time, all they have to do is to make a phone call, and the Police will take up the remaining work. This is because the Police can ask the telecommunication company for your IP address, and then arrest you at home. You will have to go to great pains to explain to the Judge. These are the situations that netizens worry and care most. President, regarding the widely concerned issue of whether the offence of accessing to computer with criminal or dishonest intent will become a tool for suppressing freedom of speech, I think it is justified for friends of the "Keyboard Frontline" to have such concern. The reason is simple. The main reason for not invoking this offence by the Government at this time is that it cannot do so technically. Once non-profit-making access to computer is also criminalized, the Police may make arrest on their own initiative, without having to wait for complaints from copyright owners. Therefore, these issues have all along been the prime concern of the people. President, lastly, I would like to say that ironically, the Government intends to draw support from the interests of copyright owners to promote innovation, which is one of the purposes of the Bill. Let us take a look at our law reform. All along, the Government has been adopting the British legislation in Hong Kong, not for making reference, but full adoption, without first studying the actual situation of Hong Kong before formulating a tailor-made local legislation. Thus, sometimes the legal provisions do not fit in with the actual situation of Hong Kong. At present, the Government stresses that the Bill will not accept the new ideas put forward by netizens or members of the public. Why? It is


because the United Kingdom has not adopted such a practice, and hence the Government will not act otherwise. In the final analysis, the SAR Government and its officials have not given due consideration for the well-being of people of Hong Kong, and the so-called consultations were merely shows staged in accordance with the procedure. Friends from the "Keyboard Frontline" initiated a joint signature campaign to demand for the introduction of concepts such as UGC, a means to change fundamentally the present regulatory ideas with British characteristics. If the SAR Government really intends to implement the new concepts, it has to conduct many sophisticated studies; consequently, the Government refused to accept them and ignored them totally. President, the SAR Government simply has no innovative spirit, and the government officials are not only unwilling to work, but are extremely indolent. If the SAR Government still maintains such an attitude, it not only fails to catch up with the international trend towards innovation, but also fails to make good consideration for Hong Kong. President, the SAR Government follows the practice of the United Kingdom in respect of criminalization, yet why does our Government not adopt the British practice of having universal suffrage for the parliament? This is the point that I always challenge the Government. President, lastly, I would like to say that the Government has been working very hard recently, hoping to arrange copyright owners to discuss with those Members who oppose the passage of the Bill, so as to facilitate more communication between both sides, thereby making amendments within the scope of the current Bill and eventually solving the problem. However, President, "the one who ties the bell on the tiger should take it off". The problem does not lie with copyright owners or Members who oppose the Bill; instead, it is the problem with the Government, the main character. If the Government fails to do anything, it will be difficult to make a way out for the present deadlock. Therefore, I hold that the Government shall make use of the time to give more thoughts on how to further amend the Bill. I so submit. MR ALBERT CHAN (in Cantonese): President, please do a headcount.


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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): Mr Albert HO, please speak. MR ALBERT HO (in Cantonese): President, as regards the legislative intent of the Copyright (Amendment) Bill 2014 (the Bill), the Government has made it very clear from the outset that Hong Kong needs to update the legislation to keep abreast of the times and the advancement of technology, so as to ensure that the communication right of creators are protected in the light of the present development of the Internet. The Government has repeatedly stated that it will take into account the interests of various parties and strike the right balance when formulating the overall legislative amendments. On the whole, however, we have reasons to believe that this so-called "balance" is tilted in favour of copyright owners without regard to millions of people who use the Internet to various extents and have become netizens. Without reasonable protection of their interests, these people can easily fall into the legal trap of infringing copyright owners' online communication right. This is the biggest dispute in our debate today. President, the structure of copyright is very complicated and it is not easy to obtain the authorization of copyright owners. We have to thank LEUNG Chun-ying for his unintentional (or intentional) uploading of a video clip on the Internet, featuring him singing a karaoke song in a social event, thereby arousing great concern. At that time, like any other people, LEUNG Chun-ying thought that it was no big deal to videotape his singing at a birthday party and posted the clip on the Internet, together with some messages and some popular Christmas gifts of the famous Hello Kitty design. However, only when such acts were questioned by law experts do we realize that the incident would cause such a stir. What followed was the remark made by the Director of Intellectual Property that the incident could be considered an exception for the reason that the Chief Executive was a public figure and posting the video clip could be treated as commenting on a current event. How absurd the remark is. Subsequently, some people tried to remedy the situation and the Secretary told us in today's


question time that they had obtained the permission from the Composers and Authors Society of Hong Kong (CASH) and paid $600 for the licence which would be valid for three months from the day of the performance. Certainly, many people would serve the Chief Executive after his performance. The Secretary also mentioned two points: first, they had yet to identify the copyright owner of the musical recording of the background music and hence were unable to obtain the permission for that part. Second, the authorities assumed that the copyright owner of Hello Kitty would not object to the use of the copyright work as Hello Kitty products were frequently used in the social media for communication to enhance the joyous atmosphere or to convey messages. The authorities thus treated the use of the copyright work casually, and they did not see why the copyright owner concerned would raise objection or seek a copyright fee. What surprised me most was that the Secretary assumed that the copyright owner has given acquiescence. Anyone who has studied law would know that it is not easy to obtain the acquiescence of copyright owners. If this case is brought to court, what is his chance of winning? When the copyright owner has not yet demanded the payment of a copyright fee or has not taken notice of the incident and made no comment for a few months, the Secretary assumed that an acquiescence was given. I advise the Secretary not to rashly give this kind of legal advice lest the public would be misled. In future, many people may ask: how come some people could break the law without having to bear any consequences or to be held responsible, while they could not enjoy the same treatment. Or could you, in seeing that there are unauthorized building works (UBWs) in the housing estate near your residence, also do the same, and can this an acquiescence? When you are sued for your UBWs, you would know that the authorities could enforce the law anytime, and even if they have not done so in the past or they have not charged others with the same offence, that does not mean they will not charge you. If the Government can do so, copyright owners are no exception. Hence, having heard the Secretary's answer today, we realize that there are many questions unanswered. Today, Mr YIU Si-wing asked whether a standardized system could be put in place to deal with the complex copyright regime, so that the public would not have to make efforts to locate the copyright owners concerned to seek their authorizations. Moreover, as CASH has standardized the fees for the music and lyrics, can the fees in other areas be standardized as well? The Secretary said this could be considered. That is bad. People are not familiar with the legislation now formulated by the Government. Although LEUNG Chun-ying got into trouble for what he did, he had a team of people to help him deal with the


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problem arising, trying to find out the person or organization holding the copyright and negotiate the fees to be paid. How can common people have such treatment? Moreover, consideration could also be given as regards whether acquiescent authorization could be assumed. Many people are terribly frightened; activities that could have been conducted in their daily lives and could have enhanced the joyous atmosphere would no longer be undertaken … MR CHAN CHI-CHUEN (in Cantonese): President, I request a headcount. 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): Mr Albert HO, please continue with your speech. MR ALBERT HO (in Cantonese): President, all I have been trying to say is that when the law establishes a new right, that is, the online communication right, and the Government provides the statutory protection for this right and penalizes anyone who infringes this right, the daily lives of millions of people will be affected. People have two options, first, obey the law and respect this right of others. But as I have said, even if we wish to respect this right, it is not easy to locate the relevant copyright owner and make a deal with him to obtain his authorization. The Government has not conducted any prior studies to find a proper solution to standardize the fees and authorization, so as to facilitate people's compliance with this law. This is the first point. Second, should the authorities ensure that the law only penalizes the perpetrators without affecting common people? As in the case of LEUNG Chun-ying, the common folks only post the video clips of their singing on the Internet. Should the law restrict this kind of act and demand those who break this law to pay the copyright fee? Money is not a big concern but the person concerned may receive a lawyer's letter, warning him of a possible injunction. People would be very worried if they are faced with such a situation. We have


to make it clear that if we do not think it is appropriate to take such actions, sufficient exceptions should be provided. Later on, I will talk about whether the exceptions now provided are reasonable and if the new exceptions provided by the Government are sufficient. Not only should the scope of exceptions be reasonable, they should also be clearly defined. We do not wish to see the general public being constantly threatened by copyright groups in the future and having to beg for favour to spare them the copyright fees, an injunction or civil penalty. We do not wish to see that happen. In future, should commercial organizations sue people for copyright infringements, they may not do so purely out of commercial considerations; President, political considerations may also be a factor. Commercial organizations have more reasons to selectively sue certain people to protect their personal interest. For example, they may allow certain people to sing their copyright songs as they please and no actions will be taken; but for certain people, they are not allowed to do so because they are not friends but enemies, political enemies, or people who are not welcomed by the Government. Copyright owners will treat these people ruthlessly and chase them to the end of the world until they have paid the last penny, litigation cost included. We cannot but worry about such cases and many netizens are also afraid that the law will be turned into a political tool. President, at present, the proposals supported or demanded by "Keyboard Frontline", non-governmental organizations, as well as the academia are not unreasonable. Such proposals are not novel. Many advanced countries, including those where copyright is fully protected and the innovation industries thrive, have also adopted such concepts. Why can't Hong Kong follow suit? Regarding the concept of fair dealing put forward by the Government, some new items have been added to the existing legislation, which include the four most controversial items, namely parody, satire, caricature and pastiche. These items aroused heated disputes in 2011. By including them as exceptions, the Government has already made a big compromise. As regards exceptions relating to libraries and museums which are not controversial, no discussion is needed. Well then, are those exceptions adequate? President, let me cite a very simple example of the incident concerning LEUNG Chun-ying singing karaoke. As we can see, this incident will not benefit from the exceptions. In other words, such acts will be regarded as copyright infringement, and people may be caught violating the Copyright


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Ordinance inadvertently. They will not enjoy the exceptions. The application of the fair dealing exception will be decided by several factors, such as the purpose of the user, whether commercial interest is involved and whether profits will be made? This is the first factor. Second, it depends on whether the alleged infringing act is related to a copyright work already communicated to the public, or whether the work is obtained from a public platform or by dishonest means. Third, the percentage the pastiche in the whole piece of work. Some countries stipulate that the pastiche cannot exceed 10%. Fourth, the overall impact on the market. The granting of an exception will be decided after all four factors have been taken into consideration. Some scholars told us at certain meetings that the four factors are often used in the fair use test in the United States. The only difference in the fair use test adopted by the United States is the presence of one more item, open category, which is to be solely decided by the Court according to the situation concerned and whether the relevant act falls within the scope of fairness and openness. We are only demanding for rigid provisions of these parameters as some other items should also be exempted. We hope that the framework will not be stipulated rigidly, so that the Court can make an assessment in the light of the environment as well as the four factors mentioned above. These factors are often adopted under the current legal principles of the United States. Why do we not adopt these factors? Why is it that whenever the idea of fair use is brought up, the authorities would put up the excuse that this will mix up the American and British systems and it will be difficult to implement? I think that both the Government and copyright owners are very stubborn and even arrogant, thinking that their interest can only be fully protected in their way. We have also put forward some other amendments, such as the amendment on user-generated content (UGC), which is another form. The fair use concept that I just mentioned has been adopted by many countries including the United States, Taiwan and Singapore while Canada has adopted the UGC, which targets at certain transformative creations and exemption will be granted as long as the acts are non-profit-making in nature. Why does the Government completely refuse to consider these ideas? Should it be willing to consider these exceptions, we will be able to forge a consensus and pass the Bill. (Mr CHAN Chi-chuen indicated his request for a headcount)


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 KWOK Ka-ki, please speak. DR KWOK KA-KI (in Cantonese): President, as far as the controversies over the Copyright Ordinance are concerned, many ordinary members of the public in Hong Kong might indeed find it difficult to understand the issues involved. But there is a very clear message. Nowadays, no matter where we go ― President, not just young people are concerned about the matter; I once went to Tuen Mun, an old man came over and asked us to filibuster during the scrutiny of the Copyright Ordinance. I was perplexed and wondered why this old man held such a view? He told us that he distrusted the things done by the LEUNG Chun-ying Government. President, this old man has hit the nail on the head. Our present discussion over the Copyright Ordinance is indeed shrouded in distrust of the current-term Government. And we have every reason to doubt this Government. As Members would know, in the course of discussing the amendments to the Copyright Ordinance, netizens or even people not in the IT industry have expressed the view that many laws in Hong Kong are swords of Damocles having over people involved in creation or secondary creation, as well as over those working in different areas of arts and culture, and the Copyright (Amendment) Bill 2014 (the Bill) would be an even sharper sword. In fact, even before the introduction of this Bill by the Government, there is the offence of "access to computer with dishonest intent". Why do I bring up this offence now? It is because in the past many people failed to understand why the offence was like a sword of Damocles. It was only after the Umbrella movement that they realized that the Government or the Police would resort to various means to harass people participating in the Umbrella movement whom they regarded as disobedient or unruly; and as a last resort, they would even prosecute those people for the fabricated charge of "access to computer with dishonest intent". In 2011, there were 34 prosecution cases pertaining to the


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offence, and the number increased to 55 in 2013. Last year after Umbrella movement, the Police have repeatedly charged netizens who had expressed radical views on the Internet with that offence. President, having seen such actions taken by the Government, many Hong Kong people, even those who are not engaged in secondary creation on the Internet or involved in arts and culture, have become gravely concerned. President, lately, a television (TV) broadcaster, known as TVMost, has attracted widespread concern. TVMost recently hosted a so-called awards show. Why do I call it a "so-called" awards show? As we all know, TVMost is not a formal TV broadcaster and is in no position to give out any awards; it merely held an "Awards Distribution Ceremony". Nonetheless there were moments in the show which aroused our feelings. For instance, many awardees and the hosts expressed the view that although TVMost could host the show this year, it remained an uncertainty whether the show could be held next year after the enactment of the "Internet Article 23". Their remarks are prompted by the fact that all the contents of the show are secondary creation. Unlike the lofty LEUNG Chun-ying, they do not have a team of officers to apply for copyright exemptions afterwards. As mentioned in a Member's question today, the situation of copyright infringement concerning LEUNG Chun-ying had been rectified subsequently. A number of creators who attended TVMost's Awards Distribution Ceremony stated that the present Bill would definitely be a sword of Damocles over their heads because the contents of their creation invariably involve satire, notably on LEUNG Chun-ying and various public officials. In the past, we assumed that there were certain public officials serving in the current-term Government whom we could trust, such as Chief Secretary for Administration Carrie LAM, but judging from their aggressive actions lately, it can be said that "A government official with no expectation is always courageous". In future, these officials might even be bold enough to institute prosecutions against any person wantonly. Even if conviction may not be possible, the authorities can still invoke the Ordinance to harass and threaten the persons concerned, subjecting them to the pressure of criminal prosecution, and making them keep their mouth shut. Such a practice is commonly adopted in totalitarian countries such as Mainland China and North Korea. Or, as in the case of Singapore, the authorities may sue the persons concerned by all means, so that they would back off for fear of going bankrupt.


According to the Secretary and some other people, the proposed amendments to the Copyright Ordinance are nothing new, and such requirements have been implemented in the United Kingdom and the United States. Moreover, they said pompously that Hong Kong must implement the provisions of the Bill, or else Hong Kong might be kept under observation by the United States or even put under a list of "Deserving Special Mention" in the Special 301 Report. I ask them to take a good look in the mirror. How is our Government formed? Where do public officials come from? We have an undemocratic government and an undemocratic system. In overseas countries where copyright legislation is implemented, if there are shortcomings in the laws introduced by the Government, voters can always press the Government to make amendments through their votes. Let me give an example. Regarding the offence of "access to computer with dishonest intent" which has long been discussed by the Council, Mr Charles Peter MOK pointed out a long time ago that the offence was outrageously ridiculous for it was almost like a "universal key" for fabricating charges. He also called for its review by the Government and the Security Bureau. In reply, the authorities said that no review would be undertaken. Why should a review be conducted? The offence serves multiple purposes. It is an "imperial sword" just like the legislation on unlawful assembly, and nothing works better to suppress people with dissenting views. President, as people do not trust the Government, we are so worried about these laws. (THE PRESIDENT'S DEPUTY, MR ANDREW LEUNG, took the Chair) If we hastily pass this Bill which is commonly referred to as "Internet Article 23" … MR CHAN CHI-CHUEN (in Cantonese): Deputy President, I request a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber)


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DEPUTY PRESIDENT (in Cantonese): Dr KWOK Ka-ki, please continue with your speech. DR KWOK KA-KI (in Cantonese): As I said a moment ago, when we undertake to review the laws in a certain place, we should take into account the composition of the local government, as well as how it works to protect the basic rights of creators. Regrettably, the SAR Government not only fails to improve the situation, but also misses the golden opportunity to make the governance more democratic. Worse still, as reflected by the acts of LEUNG Chun-ying and his Government, it always exploits its power to the fullest extent. Hence, under the circumstances, there is absolutely no way for the Legislative Council and all citizens or netizens of Hong Kong to accept this extremely dangerous Bill. Actually, great efforts have been made by Members of the pro-democracy camp. Three Members of the pro-democracy camp have proposed various amendments to the Bill respectively. Had the Government wanted to take the matter forward, there were many opportunities indeed. For instance, it could have listened to the views of various parties carefully and incorporated the contents of the proposed amendments into the Bill. But instead, the Government acted in the opposite way. Secretary Gregory SO suggested that we should pass the Bill first and conduct a review later. He did not deny that there were merits in the amendments proposed by the three Members; he just asked the Council to pass the Bill first. Fortunately, there are still people who have made some fair comments. Mr James TIEN, who is not in the Chamber now, hit the nail on the head by asking the Government why it did not seek to pass the amendments to the anti-corruption legislation to cover the Chief Executive first and then conduct a review later. But when it dealt with this Bill, commonly known as "Internet Article 23", why did it ask the Council to pass it first and conduct a review later? Frankly, if we or members of the public trusted the Government, the Bill would not have met with such strong oppositions. If the Government was genuinely elected by "one man, one vote", like the presidential and Legislative Yuan elections just held in Taiwan, why would we react so strongly? As we all know, half of the seats in the Legislative Council are returned by functional constituencies, and they are mostly occupied by the royalist Members. No matter how ridiculous or offending the Government's bill is, it will be forced through eventually. Members with dissenting views are left with no choice but invoke the protection provided under the Rules of Procedures, hoping that the Government can return to the right track.


Deputy President, actually time is still on Secretary Gregory SO's side. The day when these amendments are incorporated into the Bill or when he wholeheartedly allays the concerns of members of the public, netizens and Members over the Bill, it would be the time to pass the Bill in the Legislative Council. Now he just spends all his time urging Members to return to the Chamber for attending the meeting, which is meaningless. Or he is trying to magnify the conflicts among various parties and then shirk his responsibility by blaming the Hong Kong Copyright Alliance, netizens and Members of the pro-democracy camp for failing to forge a consensus. What is the Secretary doing? To put it bluntly, those are the acts of a base person because discerning people would know that the Secretary does not intend to resolve the matter. Instead he is trying to rally people against his opponents such as Members of the pro-democracy camp by creating the impression that copyright owners loathe us. Judging from these acts, it is clear that the Government has no intention to take the matter forward. It just wants to find some excuses and claims that it has already done its part; and it has nothing to do with the Government if all parties fail to reach a consensus. Hence, we find the whole matter highly regrettable. Deputy President, I notice that a quorum is not present in the Chamber. Please do a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (While the summoning bell was ringing, Mr WONG Kwok-hing stood up and talked loudly) DEPUTY PRESIDENT (in Cantonese): Mr WONG Kwok-hing, please sit down and stop talking. (After the summoning bell had been rung, a number of Members returned to the Chamber) DEPUTY PRESIDENT (in Cantonese): Dr KWOK Ka-ki, please continue with your speech.


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DR KWOK KA-KI (in Cantonese): Deputy President, the Government actually had many opportunities to do a better job, but regrettably, the Government relinquished the opportunities. In doing so, it has also taken away the opportunity originally available to the Legislative Council to remove doubts in the course of scrutinizing the Bill. Many copyright owners are worried that if the Bill is not passed, their business growth will suffer. But nowadays, most people in Hong Kong are used to respecting copyright. It would be difficult to find any pirated software in computer malls or software shops today because people are used to the idea of respecting the rights of copyright owners. So it is hardly a justification for passing the Bill which fails to provide adequate protection. Moreover, some copyright owners have taken the view that if the relevant amendments are incorporated into the Bill, they would rather not have the Bill. I do not agree with such a view because seemingly, they are acting on an impulse, and it may not necessarily help in the matter. As we all know, for countries and places around the world where the relevant copyright legislation has been enacted, they are constantly moving towards one direction, that is, extending the scope of exceptions in relation to copyright protection, so that not only copyright owners are protected, people engaging in secondary creation, arts and culture, as well as the creative industries are protected as well. It is absolutely necessary to do so because this is the only way to ensure that future legislation will not be invoked to suppress the arts and culture sector or secondary creation, or the acts of communications through secondary creation on the Internet. The six exceptions proposed by the Government under the Bill absolutely fail to provide adequate protection for netizens and hence, given the lack of efforts on the Government's part, I cannot agree to (The buzzer sounded) … the resumption of Second Reading debate on the Bill. DEPUTY PRESIDENT (in Cantonese): Dr KWOK, your speaking time is up. Please sit down and stop speaking.


DR KWOK KA-KI (in Cantonese): Deputy President, I notice that a quorum is not present in the Chamber. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (After the summoning bell had been rung, a number of Members returned to the Chamber) DEPUTY PRESIDENT (in Cantonese): Mr Alan LEONG, please speak. MR ALAN LEONG (in Cantonese): Deputy President, sometimes I really do not understand what the Secretary and the LEUNG Chun-ying Administration are doing. They would rather have a head-on confrontation with the Legislative Council, particularly Members from the democratic camp, in blindly seeking to bulldoze through the Copyright (Amendment) Bill 2014 (the Bill) than spend time persuading copyright owners, particularly those from the United States, to accept fair use as an extra exception. I really do not understand why the LEUNG Chun-ying Administration always tries to pick quarrels like this. This is indeed perplexing. Deputy President, the Secretary actually has to assume responsibility. As a politically appointed official, he should assess the political situation at all times and tell copyright owners that if they want to have the Bill passed within the current term of the Legislative Council, they should take a step further. The Secretary often says that the Government has already acceded to some of the demands made by the Legislative Council five years ago. Five years ago, could we possibly know or imagine that a Hong Kong resident would disappear without a trace in Chai Wan? Five years ago, could we imagine that the Chief Executive would insist on ceding a plot of land with an area of 200 000 sq ft in West Kowloon to the Mainland public security authorities for them to enforce their laws in Hong Kong? Five years ago, could anyone imagine that Hong Kong's print media and electronic media organizations would fall into the hands of "red capitalists" one after another? It is now January 2016, and at this point in time, the Government is trying to get this Bill passed. A politically appointed official must assess the political situation constantly at all times.


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I really do not understand on what basis those copyright owners from the United States oppose the incorporation of the fair use exception in the Bill. As early as 1976, the United States enacted a copyright law expressly stipulating the fair use doctrine. I believe the Secretary knows without having to be reminded by me that actually, even before 1976, the fair use doctrine was enshrined in the common law of the United States for decades. If the biggest beneficiary of the Bill, in national terms, is the United States, I do not believe that the copyright owners from the United States dare to tell the Secretary to his face that they are not willing to accept fair use as an extra exception in any case. This doctrine has been adopted in their native country for a century, but they now say that they are not willing to accept it in Hong Kong; what do they mean? Nonetheless, the Secretary and the LEUNG Chun-ying Administration have chosen to spend time engaging in a meaningless tug of war with the Legislative Council. Deputy President, we in the Civic Party clearly indicated our objection to the Bill long ago. Our objection is a vote of no confidence in the SAR Government and LEUNG Chun-ying. The Legislative Council can by no means act as a guarantor for the SAR Government and LEUNG Chun-ying to endorse this Bill for him. MR CHAN CHI-CHUEN (in Cantonese): Deputy President, I request a headcount. DEPUTY PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members back to the Chamber. (While the summoning bell was ringing, THE PRESIDENT resumed the Chair) (After the summoning bell had been rung, a number of Members returned to the Chamber) PRESIDENT (in Cantonese): Mr Alan LEONG, please continue with your speech.


MR ALAN LEONG (in Cantonese): President, it is absurd that the LEUNG Chun-ying Administration, which has repeatedly broken faith with the people, actually dares to ask Members from the democratic camp to ― of course he has also approached pro-establishment Members, though they seem to be always in his pocket ― actually dares to ask Members from the democratic camp to act as its guarantor to endorse and pass this "Internet Article 23", and to believe that the SAR Government will study fair use and other exceptions, including provisions on user-generated content and contract override, in the future. I really do not understand why the LEUNG Chun-ying Administration, which has broken faith with the people, can unblushingly and shamelessly make such a request. He is now in a predicament of his own making, and he has no one but himself to blame. President, we are now facing a very anomalous situation. Between an egg and a high wall, Members from the democratic camp will always stand on the side of the egg. In my eyes, freedom of creation and freedom of expression on the Internet probably constitute the most powerful and effective platform against the arrogant, overbearing and self-righteous LEUNG Chun-ying Administration in the present anomalous environment. On this platform, or in this space of freedom of creation and freedom of expression, we will not allow a sword of Damocles to hang over the heads of creators. We are prepared to pay a high price, which may be higher than any price paid by people of other countries in similar situations, to ensure that the road to effective resistance to the LEUNG Chun-ying regime is a thoroughfare free of obstacles, and that people engaging in re-creation will not have a sword of Damocles hanging over their heads. President, the original intent of the Bill is to protect creators and copyright owners, so that creativity can flourish endlessly in Hong Kong. The absence of limitations is essential for creativity, but currently only six exceptions are provided in the Bill, namely parody, satire, pastiche, caricature, quotation, and reporting and commenting on current events. President, just imagine: suppose you were Neo YAU of Mocking Jer, and you were preparing to shoot a video; would you, before undertaking the re-creation project, first consider which of the above six exceptions you would qualify for, such as thinking that the video should be a parody, or that everything should be fine if you intentionally sang four notes of the relevant song off-key? Had that been the case, I believe the video "激戰獅子山" (Battle on Lion Rock) could not have been filmed. To do so is completely unrealistic. President, regarding some really senseless stuff, be it a secondary creation or a tertiary creation, actually even the Director of Intellectual Property and the Secretary cannot say for certain which of these six exceptions would apply.


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I would particularly like to quote what creator Wyman WONG said at a recent music awards ceremony. He said words to the following effect: "In the year that just past, I wrote a song titled '羅生門' (Rashomon). This song is very special in that its character design, choice of words, character relationships, and even certain parts of its melody and lyrics originate from two older songs, '耿耿於懷 ' (It Still Rankles) and '念念不忘 ' (Unforgettable). Strictly speaking, 'Rashomon' is a secondary creation. The world was not so complicated in the past. As the copyrights in the batch of songs including 'It Still Rankles' and 'Unforgettable' belong to me, and the copyrights in their melodies belong to my friends who I believe would not mess with me, I believe that it should be okay for me to alter my lyrics myself so long as I do not sue myself. However, in the event that [the Amendment Bill on] the Copyright Ordinance is passed, even if I do not sue myself, the Government can bypass me and sue me on my behalf." Of course, some pro-establishment Members or the Secretary would say that he was just ignorant and Mr Alan LEONG should point out his fallacy, for he simply had little understanding of the subject and worried too much. I guess they would say so. But then, President, is this the answer? When a person engaging in re-creation has such a worry and fear, he cannot create freely. In that case, there will be roadblocks on the road to resistance to the arrogant and overbearing LEUNG Chun-ying regime, that is, on the thoroughfare mentioned by me just now. This is a cost that we really cannot afford. Such grey areas are unacceptable in the present-day Hong Kong, where conventional media are unable to play a role in resisting the regime. President, besides, we must appreciate that all sorts of "kuso" on the Internet can actually help expose to the community cases in which the Government is being unfair, unrighteous or even misleading the public. If the creators of such works have a sword of Damocles hanging over their heads, we may not be able to see their creations any more. Apart from the video "Battle on Lion Rock" made by Neo YAU of Mocking Jer as mentioned by me just now, I would like to talk about another video which I do not know whether the President has watched. In this video titled "日日去鳩嗚"1 (Let's Go 'Gau Wu' Every Day), a performance by Andy LAU in the 1990s is mimicked. If this "Internet Article 23" was passed, do you think "Wa Dee", the creator of "Let's Go 'Gau Wu' Every Day", would be able to create so freely? He might have to think about

1 "Gau wu" is the Cantonese transliteration of "gou wu" in Putonghua which means shopping.


whether his work would be considered a parody, satire, caricature, quotation or pastiche before starting the creation. Had that been the case, "Let's Go 'Gau Wu' Every Day" would not have existed. Therefore, I genuinely and sincerely hope that the Secretary will now listen to opinions that he previously found disagreeable. Secretary, there is not much time left for the Legislative Council to transact its business. If you really want to have the Bill passed within the current term of the Legislative Council, you should not spend time helping us remind Members to come back for headcounts. Rather, you should give copyright owners proper political analysis and pressurize them into accepting the three exceptions currently proposed by the Bills Committee, or at least take on board one of the exceptions as a starting point. I so submit. MR LEUNG KWOK-HUNG (in Cantonese): President, I think a quorum is not present here. 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): Ir Dr LO Wai-kwok, please speak. IR DR LO WAI-KWOK (in Cantonese): President, I believe the filibuster war staged against the resumption of the Second Reading on the Copyright (Amendment) Bill 2014 (the Bill) was beyond the expectation of government officials and Members who have taken part in the drafting of the Bill at the initial stage. It is saddening that in the community, some discussions on the Bill are neither rational nor objective, and the most obvious example is the Bill, dubbed "Internet Article 23", being turned into a political fight entirely due to personal


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feelings. Other discussions, however, have focused merely on minor details and failed to see the wood for the trees, therefore diverting people's attention from the objective and substance of the Bill. Under the influence of such biased discussions, members of the public are prone to misunderstanding in two respects. Regarding the first misconception, was the introduction of this Bill by the Government an unnecessary move? The answer is obviously in the negative. The existing Copyright Ordinance (CO) has provided for exclusive rights to copyright owners to do certain acts restricted by copyright, which include disseminating works through different modes of transmission. Any person who, without the consent of the copyright owner, does any of the acts restricted by copyright is an infringement of copyright. However, given the rapid advances in information technology, especially the increasing popularity of new network media, new modes of content uses and transmissions have emerged. Against this background, the World Intellectual Property Organization (WIPO) has developed the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty, and many overseas jurisdictions have also updated their copyright regimes so as to enhance copyright protection in the digital environment. As Hong Kong is a member of the World Trade Organization and the WIPO as well as the contracting party of the related copyright treaties, the need for amending the CO correspondingly to provide greater protection for intellectual property rights is therefore beyond doubt. Another misconception is, was the Bill introduced too hastily by the SAR Government, and was it initiated by the LEUNG Chun-ying Government as claimed by the pan-democratic Members? Again, the answer is in the negative. The Government proposed to amend the Ordinance in as early as 2006, and after a few rounds of public consultations, the Copyright (Amendment) Bill 2011 (the 2011 Bill) was tabled at the then Legislative Council in 2011 and a bills committee was formed to scrutinize the 2011 Bill. However, due to various reasons, the 2011 Bill did not resume Second Reading debate and lapsed upon expiry of the previous term of the Legislative Council. Given that the treatment of parody had aroused widespread concern at that time, the current-term Government conducted another public consultation on the subject in July 2013 and a bill was then introduced into the Legislative Council in June 2014. Again, a bills committee was formed under the Legislative Council to scrutinize the bill. The Bills Committee concerned then produced a 68-page report setting out members' major concerns and the Administration's response, and it has


significantly helped the community understand the deliberations of the Bill. From this, we can see that the key elements of the Bill have been discussed by various sectors of the community for a decade, and a series of public consultations have also been conducted. Coupled with the fact that the local copyright regime is apparently lagging behind other jurisdictions, the Government should therefore proceed with the relevant legislative amendments without further delay. President, copyright protection involves various stakeholders, including copyright owners and users as well as related online service providers. While the key elements of the Bill have been discussed for a decade and a series of consultations have been conducted, the relevant provisions have also been revised time and again to meet different needs and to strike a balance in safeguarding the interests of different stakeholders. For example, a new communication right is introduced to enable copyright owners to communicate their works through any mode of electronic transmission, thereby facilitating them in developing their works in the digital environment and promoting the development of digital content. On the other hand, the Bill has expanded the scope of copyright exception. In Division III of Part II of the Ordinance, there are over 60 exceptions specifying a number of permitted acts which may be done in relation to copyright works, such as for the purposes of research, private study, education, criticism, review and reporting current events. Also, by including new section 39A, the Bill has specifically provided that copyright in a copyright work is not infringed by any fair dealing with the work for the purpose of parody, satire, caricature and pastiche, which helps to further safeguard the freedom of expression of copyright users. As the Bill has no intention to affect legitimate online activities, safe harbour provisions have been introduced to limit online service providers' liability for copyright infringement on their service platforms caused by subscribers, provided that they meet certain prescribed conditions, including taking reasonable steps to limit or stop a copyright infringement when being notified. This would undoubtedly help the relevant stakeholders provide a fairer and more transparent operating regime. In addition, the Bill also clarifies the threshold of criminal liability in relation to the existing prejudicial distribution and the proposed prejudicial communication offences, providing that the Court may take into account all circumstances of the cases, highlighting the factor of economic prejudice and giving due regard to whether the infringing copy amounts to a


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substitution for the work. These amendments help to provide greater legal certainty and achieve the policy objective of targeting large-scale copyright piracy. President, there are still divergent views among members of the public on the Bill, for example, it is suggested that Hong Kong should follow the United States and adopt the open-ended fair use approach. However, the legal frameworks of jurisdictions which adopt the fair use approach vary greatly. Hong Kong and many other common law jurisdictions, such as the United Kingdom, Australia and New Zealand, have adopted the exhaustive approach of fair dealing exceptions, which gives clear guidance to both owners and users of copyright work. Moreover, there are suggestions that contract override provisions should be introduced to restrict contractual terms from overriding or limiting the exception. And yet, this might interfere with the freedom of contract which Hong Kong has all along treasured. Worse still, so far only the United Kingdom has incorporated the relevant provisions into its legislation and the resulting change has aroused much controversy. Hence, the United Kingdom Government has undertaken to evaluate the impact within five years. Furthermore, there was suggestion to introduce the user-generated content exception. However, it should be noted that Canada is the only country that has introduced such exception in its legislation, and there is still no widely accepted definition of this concept. We can thus conclude that concerning the above-mentioned issues, there is no consensus at the international level so far, and certain provisions are adopted by only a handful of countries. Thus, the actual effects as well as the positive and negative implications are yet to be seen and evaluated, I therefore opine that people from all walks of life may adopt an open attitude and continue to explore further. But before different stakeholders reach a new consensus, no hasty amendment should be made to the Bill, nor use this as an excuse to delay the present legislative work to update the copyright regime. After all, the Bill reflects the discussions conducted by various stakeholders in the past decade and the consensus reached among them through consultations. If the Bill is passed, we should, subject to the implementation situation, the review of the copyright regime on the international front and new issues arising from technological development, reconsider the need to submit a new legislative proposal to ensure that the CO in Hong Kong does keep abreast of the times.


President, recently, I have heard and received views separately from content creators and copyright owners, who told me in unison that media reports on the Bill are often incomprehensive and even pretty biased, such that members of the public are prone to ignore the key objective of the Bill, that is to help content creators and copyright owners respond to large-scale online infringement. They also reckoned the importance of freedom of expression to creative industries, and that copyright protection is a mechanism to provide greater incentives for creators to create more content. They therefore strongly urged the Legislative Council to pass the Bill, and consider this an important step to protect the interests of the creators in the digital age … MR LEUNG KWOK-HUNG (in Cantonese): President … (Mr LEUNG Kwok-hung stood up) PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, what is your point? MR LEUNG KWOK-HUNG (in Cantonese): One more Member is required to form a quorum. PRESIDENT (in Cantonese): Mr LEUNG Kwok-hung, what did you say? MR LEUNG KWOK-HUNG (in Cantonese): I said one more Member was required to form a quorum. PRESIDENT (in Cantonese): A quorum is now present in the Chamber. Dr LO Wai-kwok, please continue with your speech. IR DR LO WAI-KWOK (in Cantonese): Therefore, they strongly urged the Legislative Council to pass the Bill, and consider this an important step to protect the interests of the creators in the digital age, which is in no way incompatible with the protection afforded to freedom of expression of network users. As a


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saying goes, "With the skin gone, to what can the hair adhere". If we fail to properly protect the copyright of original creation and causes the creative industry to significantly dwindle, would secondary creation flourish? President, the editorial of Ming Pao Daily News on 17 December 2015 strikes a chord with me. The title of the article, "Legislative Council to amend Copyright Ordinance, a return to professionalism and rationalism expected" was concise and to the point. According to the article, (I quote) " … Heated public discussions have blurred the truth and distorted the facts, and at a time when populist is dominant, the scrutiny of the Bill from a professional point of view seems to be all the more essential and valuable as a reference." (End of quote) The article also quoted the remarks made by the Chairwoman of the Hong Kong Bar Association, Winnie TAM, during a media interview, who stated that compared with other countries, the scope of exceptions of the Bill was broader with the inclusion of, for example, satire and commenting on current affairs, therefore the passage of the Bill would provide greater protection for netizens. She also disagreed that some Members would only support the Bill if all the amendments proposed by Members were endorsed. As different amendments are drawn from different sources, it might not be possible to strike a proper balance. The objective of this editorial is, (and I quote) "… hoping that lawmakers and society can consider the case based on the necessity of legislation, follow professional advice and judgment, and try not to let populism drown rationality." (End of quote) I think this is worth pondering calmly by people from all walks of life. President, based on the above considerations, I support the passage of this Bill proposed by the Government and oppose the amendments proposed by the pan-democratic Members. I also oppose the pan-democratic Members to deliberately raise this motion for filibuster's sake. Meanwhile, I hope that the Government will continue to keep a close watch on technological advancements and the rapid development of network technology, track all updates on the copyright protection regime in the international community, and conduct public consultations to build a new consensus on the CO when necessary, with a view to enabling our copyright protection regime to keep abreast of the times, and enabling different stakeholders, including copyright owners and users, to achieve a positive and interactive multi-win situation under an appropriate legal framework.


President, it turns out that the ringing of the summoning bell has become a standing practice in this Chamber and is no longer strange and frightening to anyone. Nonetheless, my heart would skip a beat if no clock is in sight when the bell stops ringing as there is no way I can ascertain if the bell stops ringing because a quorum has been formed or the meeting has been aborted. What is more infuriating is that the pan-democratic Members not only failed to show up at the meetings, they even left the Chamber when the meeting was about to be aborted. For those pan-democratic Members who claim to be returned from the professional constituencies, such behavior is utterly lamentable and must be condemned. President, I so submit. PRESIDENT (in Cantonese): There are now only 35 Members in the Chamber, and I notice that Mr LEUNG Kwok-hung seems to be on tenterhooks. If Members can remain seated, the meeting should be able to proceed until it is suspended at around 8 pm. Ms Emily LAU, please speak. MS EMILY LAU (in Cantonese): President, I speak in objection to the resumption of Second Reading of the Copyright (Amendment) Bill 2014. In addition to Mr LEUNG Kwok-hung who is on tenterhooks, several Members including Mr CHEUNG are on tenterhooks. He wanted to leave the Chamber but "Prefect LAM" asked him to stay. Last time, they had been "waiting for 'Uncle Fat'" and this time, they are waiting for Mr CHEUNG. President, having been a Member for 20 years and having participated in numerous debates, I have never seen such a scene. The Clerk sitting next to you can help you handle a lot of important matters, but the most important task right now is making headcounts. President, is such a farcical or outrageous scene highly unacceptable? I do not know how many Members are on tenterhooks, in fact, many Members have this feeling. How come we have come to this pass? If Members are on tenterhooks sitting in the Chamber, they should not participate in the debate; just leave the Chamber if they do not like to participate. Regarding the predicament of the Council today, Secretary Gregory SO should be held responsible because he introduced the Bill and is in charge of it. It seems that


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the Secretary and Ir Dr LO Wai-kwok, who delivered a speech just now, are engaged in a two-man comic show. He said that a related bill was introduced in 2006 and dozens of meetings were held. As the last attempt was unsuccessful, the Bill is introduced again this time. President, why are there so many disputes? I noticed that the President has made certain comments outside the Legislative Council and he even said that there was no solution. Why can't this problem be resolved? It is because this Council has been torn apart and society has also been torn apart. Ir Dr LO Wai-kwok mentioned that there are divergent views; I believe he has underestimated the situation. Why are people so anxious? It is because many people want to have a free cyber world where we can exchange our views. Now, a lot of media are engaging in self-censorship and we can no longer rely on them. Therefore, we have to rely on … (Mr LEUNG Kwok-hung stood up) MR LEUNG KWOK-HUNG (in Cantonese): President, I think a quorum is not present. PRESIDENT (in Cantonese): A quorum is now present. Mr LEUNG Kwok-hung, please do not rashly interrupt other Members when they are speaking. Ms Emily LAU, please continue with your speech. MR LEUNG KWOK-HUNG (in Cantonese): President, it is the duty of a Member to request a headcount and you will clearly know whether a quorum is present after doing a headcount. PRESIDENT (in Cantonese): I am telling you that a quorum is now present. Please feel relieved and sit down. Ms LAU, please continue with your speech.


MS EMILY LAU (in Cantonese): President, I hope Members now present who will blindly or definitely support this Bill introduced by the authorities would understand, not only young people raised objections; as pointed out by many surveys, people using new technologies online are mostly professionals and senior citizens, and they also raised objections. We do not mean that infringing acts should be allowed, causing copyright owners to suffer business losses. In this connection, the Secretary has not made any efforts and all he has done was making meeting arrangements. The Democratic Party has met with copyright owners a few times and we all agreed that no one supports amending the law to cause commercial loss by copyright owners. Given this consensus, we have to give room for netizens or members of the public engaging in non-profit making secondary creation to express their views and bring creativity into full play. President, regardless of whether the Bill is dubbed "Internet Article 23", I hope you would understand why young people, netizens and people of all ages are terrified. They are worried that if the amendments proposed by the democratic Members are not passed, they may be prosecuted anytime. If they are prosecuted, they do not have money to hire lawyers to defend their interests in court. On the one hand, they disapprove acts of piracy or infringement which affect commercial interests; on the other hand, they are very worried, especially when people have lost trust in the SAR Government, a fact we are all aware of. In the LEE Po incident we have mentioned, five people have gone missing for three months, what has the Government done to defend the interests of Hong Kong people? What has it done to defend the interests of Hong Kong people so that they would not go missing, would not be kidnapped or would not be taken away? I think the Secretary absolutely has the responsibility and capability to invite various parties to hold discussions and seek a compromise. The Secretary has just asked me why I am so friendly to David WONG. Of course, I am friendly to him, President. Why should I be unfriendly to those dedicated and hard-working civil servants? Nevertheless, the Bill is not under the charge of civil servants but under the charge of the Secretary who is an accountability official. Therefore, the Secretary cannot say to me: a meeting has been scheduled with copyright owners, do not attend the Finance Committee meeting but come and meet with copyright owners. This approach is


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inappropriate. The Secretary definitely has the responsibility to negotiate with copyright owners, netizens and Members in order to come up with a compromise proposal that is acceptable to various parties. I have repeatedly suggested the Secretary to do so, but he said that a compromise proposal cannot be reached for sure. President, one of the reasons for making such a remark is that Members who are on tenterhooks would back the Secretary up. Years ago, LAU Kong-wah said that he would not yield an inch and all the proposals would not be accepted. Yet, the consequence may be the destruction of good and bad alike. We do not want to see this happen although the legislation is out-dated and amendments are warranted. The Secretary is so incompetent; after years of discussion and studies over the Bill, the final outcome is a mess. Why are Members present unwilling to accept the amendments which will not constitute infringing acts and can ally the worries of netizens? I personally hope that Members of this Council can work together on the Bill and on other issues, so as to reach a consensus. Facing numerous controversial issues, we have failed to reach a consensus; some Members may think that since there are sufficient supporting votes, there is no need to reach a consensus. I believe a lot of people have pointed out that Members should not think that they can, with sufficient votes in hand, go ahead without considering other people. This is not the way to work things out. We should negotiate, compromise and seek a consensus, but what has happened? Some Members do not want to negotiate with us as they are not willing to give us any "advantages". Yet, by negotiating with us, they will not give us any advantages, they will only give advantages to Hong Kong, because in so doing, they are safeguarding the interests of Hong Kong. As we all know, for a motion to be passed in the Legislative Council, it needs the support of the majority of Members. In a civilized parliamentary assembly, members from different political parties will hold negotiations together and seek a way out, so that they can move forward. President, over the years, Members of this Council have refused to hold negotiations together. Why are they so scared? They have enough supporting votes and other Members will certainly lose during voting. Must they take such actions? Must politics be like that?


The Rules of Procedure have set out some rules; they certainly want to amend the rules. I learnt that the President has asked the Clerk to study how amendments can be made. Is it so easy to make amendments? These rules make Members feel relieved; even if Members have limited powers, these rules can serve as checks and balances against the executive authorities and people who are completely unreasonable. (Dr CHIANG Lai-wan left her seat) PRESIDENT (in Cantonese): Ms Emily LAU, please hold on. Dr CHIANG Lai-wan, the meeting is in progress, please return to your seat. (Dr CHIANG Lai-wan returned to her seat) PRESIDENT (in Cantonese): Ms LAU, please continue with your speech. DR CHIANG LAI-WAN (in Cantonese): I just want to go to the toilet. PRESIDENT (in Cantonese): Dr CHIANG, the toilet is not at the rear of the Chamber, you are going the wrong way. Ms LAU, please continue with your speech. MS EMILY LAU (in Cantonese): Although I have served as a Member for more than 20 years, I have never seen such kind of Member. If Members are unwilling to stay in their seats, they should leave. As Members, we should respect this Council. President, I thank Prof Peter YU from the School of Law of Texas A&M University. He is very familiar with the subject we are discussing ― I do not know if the authorities have met with Prof YU. He had spoken on this subject at universities and had made a presentation to reporters, Legislative Council Members and their assistants. He earnestly wants to help Hong Kong out of the


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predicament and he hopes that the authorities and Members with a vote in hand would understand the dire situation and avoid both sides suffer. Although Prof YU should have returned to the United States now, his wisdom and advice are of good reference value. I really think the situation is very ironic. At this point of time, all of us want the passage of the Bill; the question is how we can make copyright owners accept the passage of the Bill even if they accept in tears. We have met with copyright owners and they told us that they would suffer serious losses. We understand their situation and do not want them to suffer serious losses. We hope that the business sector have thriving business, but we also want them, the Administration and Members on tenterhooks to understand that many people are extremely worried. Nonetheless, these people have kept sneering ordinary members of the public, saying that their imagination runs wild. If the Bill is really passed later, and these people are arrested or prosecuted, who would pity them? Although the democrats are the majority outside this Council, we are in a disadvantaged position in this Council. However, we would still try our best to prevent the passage of the Bill. For this reason, I have repeatedly called upon the Secretary to adjourn or temporarily withdraw the Bill so that he would have more time to negotiate with various stakeholders. In many cases, when we have reached the edge of a cliff, we should either jump down or continue to procrastinate. Since Hong Kong is so out-dated in this connection, we should try to find an option. If the option is accepted by 70% or 80% of the public, it should be adopted. President, I am really infuriated. In fact, the Secretary has some very competent assistants but today's predicament is of his own making, and he has brought a deadlock to the Legislative Council. I think he should really apologize and explain to Hong Kong people why he has handled the Bill for so many years, but people are now accusing each other and this Council has continuously been torn apart. When the authorities have adopted such an attitude, the business community is discontented, this Council has a lot of problems, and workers have also complained about being out of work. How can Hong Kong become auspicious?


President, I hope the Secretary would give a good thought tonight and try to do something for Hong Kong. With these remarks, I oppose the resumption of the Second Reading of the Bill. SUSPENSION OF MEETING PRESIDENT (in Cantonese): I now suspend the meeting until 9 am tomorrow. Suspended accordingly at 7.53 pm.

Documents

OFFICIAL RECORD OF PROCEEDINGS Wednesday, 20 January … · LEGISLATIVE COUNCIL 20 January 2016 3699 OFFICIAL RECORD OF PROCEEDINGS Wednesday, 20 January 2016 The Council met at Eleven