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Following is the speech by the Chief Secretary for Administration, Mrs Anson Chan, in presenting the Government Minute in response to Report No. 32 of the Public Accounts Committee in the Legislative Council today (Wednesday):

Madam President,

Laid on the table today is the Government Minute responding to Report No. 32 of the Public Accounts Committee (PAC). The Minute sets out the measures the Administration is taking on the conclusions and recommendations contained in the Report.

The Honourable Eric Li, Chairman of the PAC, spoke in this Council on 7 July when tabling the Committee's Report. He highlighted a number of issues which I will deal with momentarily. But first, let me comment on one important aspect.

In its many years of valuable work in ensuring efficiency and economy in the use of public resources, the PAC, and its successive Chairmen, have time and again referred to the constructive co-operation between the Committee and the Administration. As the extensive and regular reporting of the action taken by the Administration in response to PAC's recommendations has clearly demonstrated, the Administration attaches great importance to the Committee's work. We readily accept criticisms and strive for improvement. However, we deserve and expect to be treated fairly. The latest Report and the Chairman's remarks contain certain allegations of corruption and condemnations of our former and current civil service colleagues, which have caused concern. In fairness to the concerned parties, we would ask the PAC to give those concerned the opportunity to defend themselves. I note that the Committee has subsequently explained that it was not their intention to condemn individual officers indiscriminately. I hope the Committee will ensure that such incidents do not recur in future.

The Honourable Eric Li has referred to three significant considerations that featured prominently in PAC's Report No. 32. These are the need to monitor closely public works projects, the need to ensure that government systems and projects follow the best practices of internal controls and corruption prevention and the need to pursue privatisation and outsourcing of government activities in order to achieve better value for money. The Administration is in full agreement with the PAC that these are essential requirements to ensure that all government departments and agencies are discharging their functions in a fair, open, efficient and cost-effective manner.

Public works projects

In seeking approval for funding of public works projects, Mr Li has reminded us of our undertaking to provide Members with all relevant information and to keep Finance Committee informed of significant slippage, cost overruns and other major departure from the funding submissions in respect of major government projects. Let me assure Members that we have not been lax in ensuring compliance. In this respect, the Secretary for the Treasury has recently issued a circular to remind all Bureau Secretaries and Controlling Officers to provide sufficient information in their submissions to Finance Committee, Public Works Subcommittee and Establishment Subcommittee for Members to make informed decisions on the Administration's proposals. Taking account of suggestions made by a few Members in the last session, the circular has also advised that Bureaux should always consult the relevant Legislative Council (LegCo) Panel on proposals involving significant cost or matters of concern to LegCo well ahead of submission to Finance Committee and its Subcommittees. Bureaux are reminded that allowing sufficient time for consultation with the relevant Panel will ensure that any supplementary information sought could be provided in time to assist Members to consider funding submissions.

The Administration fully appreciates the need to assess critically the risks and costs involved in the management of major public works projects such as the Strategic Sewage Disposal Scheme (SSDS) Stage I. The Works Bureau is reviewing its procedures in the light of the Committee's recommendations and will make any changes necessary. I hope Members who had been fully briefed on the technical aspects of the SSDS Stage I would appreciate the difficulties of the tunneling work. I am happy to report that good progress has been made on the remaining tunneling work. The Director of Drainage Services is monitoring the works very closely to ensure early completion without compromising safety. We will report regularly on the progress to the relevant panel of this Council.

As regards the Kwai Chung Viaduct project, the Administration accepts that detailed design should normally be completed before the works are put to tender. We have reminded officers dealing with projects to adhere to the existing guidelines on this requirement. We will also make every effort to resolve early any potential interface problems between different contractors working on the same or related projects.

Internal controls and corruption prevention practices

On the Committee's observations in relation to internal controls and corruption prevention, we are committed to maintaining a high level of integrity in the civil service. Our internal rules and regulations and departmental work procedures are reviewed regularly to avoid potential conflict of interest. In the case of control of obscene and indecent articles by the Television and Entertainment Licensing Authority (TELA), we accept that there is room for improvement in the enforcement of the Control of Obscene and Indecent Articles Ordinance by TELA, but there was certainly no prima facie evidence that insufficient enforcement action by TELA staff was caused by corruption as alleged.

The Administration appreciates the community's concern about public moral and protecting our young people from the harmful effects of obscene and indecent articles. The Government Minute tabled today sets out our measures to strengthen enforcement work. We will be consulting the public on the review of the Control of Obscene and Indecent Articles Ordinance and welcome views on how to improve the regulatory regime. I must, however, stress that enforcement action alone is not sufficient. We need the concerted efforts of the community at large. Publishers can help by taking responsibility for content; vendors by not selling indecent articles to children and young people; schools by strengthening their guidance and support to both students and parents; and parents by being more vigilant in exercising parental guidance.

On the subject of footbridge connections between five commercial buildings in Central District, we will continue to work with the parties concerned to facilitate construction of the footbridges and monitor progress. We are glad to report that the footbridges across Wyndham Street and across Queen's Road Central east of Pedder Street are being constructed. They should be in place by 2001. We are also exploring with MTRC the feasibility of an underground pedestrian walkway which should help improve pedestrian flow in these busy sections in Central.

Privatisation and outsourcing

I welcome the Committee's support for privatisation and outsourcing of Government services, and the advice that we need to act with caution and fairness vis-a-vis staff likely to be affected in exploring options. Whether these initiatives are pursued in the context of major service reorganisation exercises such as Housing Department's estate management and maintenance services or across-the-board under the Enhanced Productivity Programme, we will certainly bear in mind the Committee's advice.

On the management of telecommunications services under the 1998 Technical Services Agreement (TSA), I would like to first reiterate that there is no relationship whatsoever between the TSA and the surrender of the exclusive telecommunications licence of Hong Kong Telecom International Limited, now renamed as Cable and Wireless HKT. The TSA is a service contract between the Government and the Cable and Wireless HKT for the provision of electronics and telecommunications services. It does not represent a monopoly, nor is it an exclusive licence. According to the existing agreement, the Government is free to decide whether new services should be incorporated into the TSA or be procured from other sources.

We have taken prompt action to tackle the issues commented upon by the PAC to improve the cost-effectiveness of the TSA services. Firstly, user departments, particularly the Civil Aviation Department and the Radio and Television Hong Kong, have put in place measures to monitor the use of TSA services, to reduce overtime and to review the use of TSA services for non-telecommunication services. Taking account of the likely effect of these measures and the scope for better economy, we expect to be able to reduce the level of total provision for TSA services by some $50 million next year.

In August 1999, the Administration concluded the review of the administration charge with Cable and Wireless HKT. This has resulted in the rate being reduced from 17.8% to 12% of the total TSA staff cost with effect from 1 January 1998. Such a reduction will bring down the total administration charge for 1998-99 by about $11 million. Similar savings will be achieved annually in the five-year period to which the reduced rate applies. Looking ahead, with the current TSA due to expire in 2006, we have enlisted the help of the Management Services Agency to conduct a study to identify alternative means for providing telecommunications services to existing users under the TSA.

Other issues

The Committee has, in the light of its deliberations on the usefulness of the computerised School Administration and Management System (SAMS) in schools, urged the Government to involve schools in planning the use of information technology in education. In the Government Minute laid on the table today, we have provided a full account of the various measures taken by the Education Department in implementing the five-year IT in education strategy. Members will notice that through assistance and flexibility given to schools, good progress has been made.

Madam President, the Administration is grateful to the Chairman and Members of the Public Accounts Committee for their valuable comments. We will continue to co-operate and respond to the Committee in a positive and constructive spirit.

End/Wednesday, October 13, 1999

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