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The following is the speech by the Acting Chief Secretary for Administration, Mr Michael Suen, in tabling the Government Minute in response to the Report No. 33B of the Public Accounts Committee in the Legislative Council today (June 21):

Madam President,

Laid on the table today is the Government Minute responding to Report No. 33B of the Public Accounts Committee (PAC) which contained the Committee's deliberations on three outstanding subjects investigated by the Director of Audit in his Value For Money Report No.33. The efforts of the PAC in considering these important subjects in detail and producing a supplemental report are appreciated. This Minute sets out the measures the Government has taken, or is planning to take, on the conclusions and recommendations contained in the Report.

The Honourable Eric Li, Chairman of the PAC, spoke in this Council on 12 April when tabling the Committee's Report No. 33B. He commented at length on each of the three subjects. I would like to respond to them in turn.

The refuse collection service of the Urban Services Department

The Administration is determined to improve the quality and cost-effectiveness of our refuse collection service. Keeping our city clean is a top priority of the Government. The new institutional framework for the delivery of municipal services put in place since 1 January this year is conducive to our achieving this objective. I am pleased to report that the new Food and Environmental Hygiene Department has undertaken a number of measures to improve and strengthen the refuse collection service. These include strengthened supervision of the refuse collection teams through regular and surprise checks, regular reviews on the refuse collection routes taking into account changes in refuse yield and operational conditions to ensure that there is no excessive capacity and use of modern equipment in delivery of services.

Service quality aside, the PAC has rightly expressed concern about the cost-effectiveness of the refuse collection service and the productivity of the in-house refuse collection teams. We have taken fully on board the PAC's recommendation to speed up the contracting out of this service to achieve greater cost efficiency. The Director of Food and Environmental Hygiene has drawn up a programme with the objective to contract out 50% of the refuse collection service by late 2002.

Like the PAC, we realise that we have to carefully manage the impact of a more rapid outsourcing programme on existing civil service staff. Over the last few months, the Administration has deliberated on the question of surplus staff, not only in connection with the contracting out of refuse collection service, but also those relating to other efficiency measures across the Government. On the one hand, the Government is committed to providing public services in a cost-effective manner. On the other, it remains our policy to avoid staff redundancy. To achieve both objectives, we have decided to introduce a Voluntary Retirement Scheme on a one-off basis for staff in grades which are likely to have a surplus. I am glad that Members are in support of this Scheme and the Finance Committee approved funding of $1.1 billion for its implementation earlier this month. The Food and Environmental Hygiene Department will monitor the response of staff in the affected grades to the Voluntary Retirement Scheme in planning the programme for further contracting out of the refuse collection service. The Department will also work closely with the Civil Service Bureau on the redeployment of surplus staff.

The PAC has expressed concern that the consultancy study commissioned by the former Urban Services Department on the cleansing services had not been reported to the former Provisional Urban Council and suggested that better arrangements should be put in place to ensure the publication of the consultancy reports. In addressing the concern of the PAC, the Secretary for the Environment and Food has already pointed out in her reply to the PAC on 15 March this year that the recommendations of the consultancy study, particularly those on the contracting out of refuse collection service, had far reaching staffing and resource implications and therefore had to be reviewed in the light of the reorganisation of municipal services. I am sure the Bureau and the Department will take account of the study's recommendations in the review of cleansing and refuse collection services. As regards the general issue of disclosure of consultancy reports commissioned by the Government, there are already established arrangements for Bureaux and Departments to consult the relevant Panels of the Legislative Council before and after the commissioning of these studies, especially where significant funding or policies are involved.

Management Practices of the Vocational Training Council

Let me now turn to PAC's comments on the management practices of the Vocational Training Council (VTC). The main recommendations of the Committee are that key output and outcome performance indicators for planning and measuring the results of vocational education and training services, as well as clear definition of respective responsibilities of the Government and the VTC, should be included in a framework agreement to be agreed between the Government and the VTC. As Members are already aware, the Administration and the VTC have entered into a Memorandum of Administrative Arrangements (MAA) earlier this month. As the MAA has been submitted to Finance Committee for information earlier this month, I do not intend to go into the details of its provision, save to express our thanks to the PAC for its observations and recommendations, many of which have now been reflected in the MAA.

I am pleased that in noting the MAA with the VTC, the Finance Committee has supported the new funding arrangements which will give the VTC greater flexibility in managing its resources to meet changing demands and greater incentive to achieve productivity savings. These improvements are part of the Administration's efforts to invigorate the subvention system in order to bring out the greatest potential of our Non-Government Organisations in providing services to the community. I look forward to Members' support of our similar endeavours in other sectors.

Water Purchased from Guangdong Province

I now turn to a subject of much concern to the community, and that is water supply. Water is essential for life. Given our very limited local water resources, Hong Kong must obtain a reliable water supply to meet our primary need and sustain its stability and prosperity. With the co-operation from Guangdong, we secured a more reliable water supply from Dongjiang in 1989. In fact, Dongjiang water has played an extremely important role in supporting our lives and sustaining the economic growth of Hong Kong over the past 30 years.

It should be noted that negotiating for a steady and reliable supply of raw water to meet growing population needs is no easy task. Heavy and front-end loaded capital investment in infrastructure is involved and some projections of demand are unavoidable. Seen against these, the 1989 agreement was already the most flexible and pragmatic arrangement achievable at the time. Notwithstanding the fact that the agreement has not provided for the flexibility in the supply quantities or resolution of disputes, we have tried our utmost effort all the time to seek reduction of supply quantities and improvement in raw water quality standard whenever such a need became apparent. For example, in the 1998 loan agreement for financing the closed aqueduct project which upon completion should significantly improve quality of water supplied to Hong Kong, we have successfully obtained a total reduction of 560 million cubic metres in the supply quantities from 1998 to 2004, amounting to a 10% reduction in the fixed annual supply quantities for the period and saving contract payments in the order of $1.8 billion.

Treated water in Hong Kong is in full compliance with the World Health Organisation standards and is always safe for consumption. To achieve a quality supply of Dongjiang water to Hong Kong, there are regular meetings with the Guangdong Authority to monitor the quality of Dongjiang water and formulate improvement measures to maintain the raw water quality. The Guangdong Authority has pledged to elevate the water quality to the 1988 standard of the Environmental Quality Standard for Surface Water upon the commissioning of the closed aqueduct.

The Administration has never had any intention of holding back information to the Legislative Council on the Dongjiang water issues. Nonetheless, we recognise that with increasing concern from the community about the quality of water we consume, there is a need to enhance communication with both the Legislative Council and the public on water quality issues. For this purpose, we have established an Advisory Committee on the Quality of Water Supplies with a wide representation from academics, professionals, local district representatives and green groups. The Committee will render useful advice on how to strengthen the monitoring of water quality and how to enhance transparency through public participation. As an initial step, test results on both raw and treated water will be released to the public on a regular basis.

The two Governments' commitment to protecting Dongjiang for the sustainable development of the Pearl River Delta Region was clearly re-affirmed in the Joint Statement made by the Governor of the Guangdong Province and the Chief Executive in October last year. The Joint Working Group on Sustainable Development and Environmental Protection will ensure that both sides will work closely to tighten pollution control and improve the Dongjiang water quality. It is expected that improvement in the water quality will become more apparent with the commissioning of the closed aqueduct in 2003 and the Guangdong Authority's continued effort to combat the pollution at source in the Guangdong Province.

Once again I wish to express my sincere thanks to the Chairman and Members of the PAC for their valuable work and sound advice. The Administration will continue to work in partnership with the PAC in a positive and constructive spirit.

Thank you.

End/Wednesday, June 21, 2000

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