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Following is a speech by the Secretary for Education and Manpower, Mr Joseph W P Wong, in moving a motion under section 6 of the Pneumoconiosis (Compensation) Ordinance (Cap. 360) in the Legislative Council today (May 17):

Madam President,

I move that this Council approve the motion printed on the agenda which seeks to amend the former LegCo's resolution in 1993 by reducing the levy rate imposed by the Pneumoconiosis Compensation Fund Board (PCFB) on the construction and quarrying industries from 0.3 per cent to 0.25 per cent.

In 1980, the Pneumoconiosis Compensation Fund (PCF) was set up by the Government under the Pneumoconiosis (Compensation) Ordinance (PCO). The PCF has since been placed under the management of the PCFB which is charged with the function of making payment of compensation to persons who died of, or were incapacitated by, pneumoconiosis, and their family members.

The principal source of income for the PCF is the levy received from the construction and quarrying industries. All contractors of construction works and quarry operators were required to pay to PCFB a levy calculated at the rate of 0.3 per cent of the value of their construction works (with a total value of $1 million or above) or quarry products. The existing levy rate of 0.3 per cent was set by a resolution of the former LegCo in 1993. At that time, the Government initiated substantial improvement to the Pneumoconiosis Compensation Scheme so that persons suffering from pneumoconiosis could be afforded long term care. To provide the PCF with sufficient income to meet the expenditure on compensation payments, it was necessary to raise the levy rate from 0.02 per cent to 0.3 per cent.

In 1999, the total income of the PCF was more than $330 million, of which over $280 million came from the levy. The total expenditure was over $190 million, 92 per cent of which was used to compensate persons suffering from pneumoconiosis and their family members. As at the end of 1999, the accrued surplus plus the reserve of PCF stood at over $480 million, which was 2.5 times the total expenditure of that year. It follows that the current financial position of the PCF is very healthy. Having reviewed the financial position of the PCF, the PCFB recommended that the levy rate be reduced from 0.3 per cent to 0.25 per cent. The amended levy rate will still generate an annual levy income of around $240 million for the PCF, which will be sufficient to cover the compensation payments and other expenditure every year, as well as to maintain a reasonable level of reserve to cater for long term commitments and contingencies. Any further reduction of the levy rate will, however, affect the balance of the annual income and expenditure of the PCF and hence its long-term financial position.

We are of the view that reduction of the levy rate to 0.25 per cent will not affect the stable financial position of the PCF nor the compensation paid to persons suffering from pneumoconiosis, and their family members. On the contrary, in the current economic climate, the reduction of the levy rate should be welcomed because it will help lower the operating cost of contractors quarry operators. We have informed the Labour Advisory Board of this proposal and members have given their support. I urge the Honourable Members to support the motion and approve the proposal to reduce the levy rate of the PCF to 0.25 per cent.

Thank you President.

End/Wednesday, May 17, 2000

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