**************************************************
Following is the speech (translation) by the Chief Secretary for Administration, Mr Henry Tang, introducing the Government Minute in response to Report No. 48 of the Public Accounts Committee in the Legislative Council today (October 17):
Madam President,
Laid on the table today is the Government Minute (GM) responding to Report No. 48 of the Public Accounts Committee (PAC).
When presenting PAC Report No. 48 on July 11, the Chairman of the PAC set out in detail the comments of the PAC on three selected chapters from Director of Audit's Reports, viz. the administration of short term tenancies (STTs), the administration of the Hong Kong Applied Science and Technology Research Institute Company Limited (ASTRI) and the management of government fresh food wholesale markets. The Administration is grateful for the effort and time that the PAC has devoted. Today, I would like to highlight the key measures taken in the relevant areas. Details of the Government's response to the conclusions and recommendations in the Report are set out in the Minute.
Administration of STTs
Land is one of our most valuable resources. It has always been our policy to optimise the use of this scarce resource. Where there is a vacant Government site which has not been designated for specific use or is not required for development in the near future, the possibility for tendering it through STT for temporary use is explored. The STT system has been practised for many years, and the system has proven to be effective. On one hand, we can derive some leasing revenue from these tenancies, and on the other hand the vacant sites can be put into various temporary uses. Although the Lands Department (Lands D) is relieved from managing those vacant Government sites by way of STTs, in return Lands D has to take up the extensive task of administering the STTs which have now totalled over 4000 in different parts of Hong Kong.
Lands D has over the years developed its policies and practices for administering STTs. New issues arise as the number of STTs grows and the complexity of STTs intensifies. The Audit and PAC Reports came as a timely reminder for Lands D to review its policies and practices. Lands D has risen to the challenge and has critically re-examined many aspects of STT administration, in response to the observations and comments made by the Audit and PAC.
The observations and recommendations made by the Audit focus on three main areas in the STT system, namely administration of rent arrears, monitoring tenants' performance and enforcement of tenancy conditions. Lands D has accepted all the Audit recommendations, and this has been noted by PAC. I would like to take this opportunity to highlight some major improvement measures.
To tackle the rent arrears problem, Lands D has updated its relevant departmental accounting circulars and guidelines to advise its staff to comply with the Standing Accounting Instruction 1020. All the District Lands Offices (DLOs) have been given clear instructions to tackle the related issues, such as time limit on writing off unrecoverable rent, approval authorities to make counter offer of settlement proposal in the course of court proceedings, procedures for refunding deposits, and calculation of mesne profit.
Lands D has also taken positive measures to reduce the risk of the tenants defaulting on rent payments, particularly in the car-park STTs which account for a large portion of STTs let. The Department increases the rental deposit for STT tenders for car-parks or related uses from three-month's to six-month's rents while at the same time reducing the fixed terms of new car-park STTs from three years to one year. We are pleased to note that the situation of rent arrears has now been much improved.
In addition, Lands D will conduct financial vetting of the tenants of major car-park STTs. Tenants will be asked to submit their company accounts to Lands D for vetting in order to ascertain their ability to tender for new STTs. Lands D is also carefully exploring with the relevant Government departments the possibility of sharing tenants' information in order to enhance the communication in detecting those problematic tenants.
Lands D has been working hard in enhancing the monitoring of STT tenants' performance. The Department has formulated a set of guidelines to ensure that warning letters and notices of termination are issued within a specific time limit, while recurring breaches are tackled with special procedures. In view of the competing demands on its limited staff resources, Lands D is exploring outsourcing part of the patrol and enforcement work on tenancy conditions.
With resolve and co-operation of its staff, Lands D has recently completed a full survey on all the STTs in different parts of Hong Kong. The Department will take a pragmatic approach in dealing with the breaches. DLOs will first focus on clamping down and dealing with the major breaches first, and then work on the minor ones. To ensure all breaches cases are handled properly, DLOs are required to submit progress reports to the Headquarters of Lands D on a quarterly basis.
PAC has stressed the need to ensure that the Lands D staff will diligently comply with all the guidelines and instructions on STT administration work. The Government fully agrees with this observation. Lands D has set up a Management Services Team to conduct random checks so as to identify non-compliances. The Director of Lands has also set up a committee to oversee administration of STTs on a regular basis.
Administration of the ASTRI
Since the publication of Audit Report No. 48 in March, the ASTRI Board of Directors has promptly and assiduously followed up and implemented the recommendations made in the Report. Before I go into details the follow-up actions taken by ASTRI, I have to emphasise that innovation and technology are key drivers of the knowledge-based society of the 21st century. In this very competitive 21st century, we have to remain pluralistic to ensure sustainable development of our economy. In addition, in order to enhance Hong Kong's competitiveness, we have to be independently innovative. I would like to take this opportunity to reaffirm Government's commitment to supporting ASTRI in developing world class applied research and development technologies to enhance Hong Kong's technological competitiveness. In this regard, ASTRI will continue to act as a key focal point for industry-university collaboration, playing an important and strategic role in assisting Hong Kong to become a competitive and knowledge-based technology-intensive economy. We should also give a fair recognition to the positive efforts put in by ASTRI since its inception.
In implementing the Audit recommendations, ASTRI has reviewed the structure of the administration departments and come up with a number of streamlining proposals, which have been endorsed by the Board. The management will continue to examine the proposal of further streamlining of the organisation with the aim of further enhancing administrative efficiency. The recommendations of the review will be submitted to the Board for endorsement shortly.
On the implementation of a computerised and integrated human resources (HR) and project management information system, ASTRI management has completed evaluation of a number of solutions, and is examining the cost effectiveness of such a system, with a view to deciding the way forward within this financial year. Meanwhile, ASTRI management has strengthened internal management to ensure that the relevant staff cost is accurately reflected in the costs of each project pending the installation of the more efficient, integrated system. Otherwise, ASTRI has implemented all the recommendations of the Audit Report. These are detailed in the Government Minute.
The PAC has expressed serious concern on corporate governance issues revealed through the value-for-money audit and the PAC hearing on ASTRI. Whilst accepting that room exists for improving the management of ASTRI, it is plain from the PAC deliberations that the ASTRI Board had made serious and conspicuous efforts to set up a system of good corporate governance for ASTRI. The adoption of a Corporate Governance Manual and the setting up of an Audit Committee in 2003, and the review of ASTRI's HR practices in 2004 are but a few examples quoted during the PAC hearings.
The PAC has also expressed serious concern on the effectiveness of the role of the two government officials serving on the ASTRI Board. As we have explained during the PAC hearings, the two official representatives are there essentially to ensure that public funds are properly disbursed and that ASTRI operates in line with the major direction of government policy. As members of the Board, the two officials have also assisted ASTRI in setting up systems in corporate governance system, including the Audit Committee, and have offered guidance on strategic moves for the institution, such as changing its operation strategy from a spin-off model to a licensing mode to support the technology upgrading of our foundation industries. Their contribution should not be neglected. Besides, we also do not accept that officials serving on ASTRI as Board members are expected to assume the role of the Management. They should not, as the role of the Board is distinct from that of the Management.
Notwithstanding this, in response to the PAC's recommendation, the Administration is conducting a limited review on the role of government officials serving as directors in companies and statutory corporations. We will inform PAC of the progress.
Management of government fresh food wholesale markets
We have taken active steps in respect of the comments regarding the government fresh food wholesale markets. The Government Property Agency has confirmed that no government user is interested in using the four piers at the Western Wholesale Food Market. We are assessing their commercial viability with a view to disposing of them through commercial leasing.
Other improvements and follow up work recommended by the PAC and the Audit Commission, such as improving the utilisation of market facilities, exploring the possibility of leasing out space for commercial advertising, are detailed in the GM.
On reprovisioning outdated wholesale markets, the Government considers the Cheung Sha Wan Wholesale Market Phase 2 (CSW Phase 2) project being closely related to the reprovisioning of the Yau Ma Tei Fruit Market (YMTFM). In this connection, the Government has embarked on discussion with fruit traders at the YMTFM and other interested parties regarding the Government's initial thinking of relocating the YMTFM to part of the CSW Phase 2 site.
We note the PAC's request for a timetable for the relocation of the YMTFM. In view of the sentiments of fruit traders, the Government will continue to liaise with them with a view to working out a package of measures under the prevailing policy to address their concerns on the new market in Cheung Sha Wan and to encourage voluntary relocation of business to the new site. A comprehensive plan on how to take forward the relocation exercise and a definite timetable will then be drawn up. We will continue to keep relevant parties and organisations abreast of the developments.
Finally, I would like to thank the PAC for its comments and recommendations. These comments and recommendations are very useful in ensuring value for money in the delivery of public services. The Administration is pleased to accept constructive criticisms and comments. As always, we stand ready to respond promptly. Thank you.
Ends/Wednesday, October 17, 2007
Issued at HKT 17:59
NNNN
