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Following is a question by the Hon Emily Lau and a reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (19 May):
Question:
The Land (Compulsory Sale for Redevelopment) (Specification of Lower Percentage) Notice came into operation on April 1 this year amid controversies. The Secretary for Development has remarked that "owing to the public image of the real estate sector in Hong Kong, both the Government and I might be doing something like sailing a boat against the currents". On the other hand, local and overseas media have reported over the years that the richest tycoons in the territory are all real estate developers; some members of the public consider that the policies of the Government are tilted in favour of real estate developers, and there might be collusion between Government and the business sector as well as transfer of benefits. In this connection, will the Executive Authorities inform this Council of the following in the past five years:
(a) whether they had studied and analysed the reasons why public policies had given people the impression that they were in the favour of real estate developers, and whether real estate developers had hoarded land and residential flats, controlled the completions and supply of residential flats, forged non-bona fide transactions, disseminated confusing information on the sale of properties and provided sales brochures without detailed information; if they had conducted such a study and analysis, of the details; if not, the reasons for that;
(b) whether they had studied and analysed the reasons for the insufficient supply of land and medium and small-sized residential flats, soaring property prices and the absence of legislation to regulate the sale of new private residential properties, and whether such situations would give rise to the public perception that the authorities' policies were tilted in favour of real estate developers; if they had conducted such study and analysis, of the details; if not, the reasons for that; in addition to the measures already announced, what other measures the Government will adopt to protect the rights and interests of property buyers and allay the impression of collusion between Government and the business sector; and
(c) whether they had analysed, among the 28 functional constituencies of the Legislative Council, the number of functional constituencies, other than the real estate and construction functional constituency, the voters of which had direct or indirect interests associated with real estate developers, and whether this situation had confirmed the comment that public policies were tilted in favour of real estate developers?
Reply:
President,
Before answering the three questions from the Hon Emily Lau, I would like to respond to the concerns set out in the preamble of the question on the so-called "collusion between the Government and the business sector", "transfer of benefits", and the suggestion that "policies of the Government are tilted in favour of property developers".
The Government is committed to maintaining a fair and open business environment where there is free competition among market participants. From policy formulation to implementation, the Government does not side with any individual market participant or consortium. Indeed, the Government will not tolerate any behaviour that could undermine fair competition via bribery or other improper acts that could affect the healthy development of the market.
With a view to combating possible anti-competitive conduct which may occur in any sector, the Government plans to submit to the Legislative Council within this legislative session a cross-sector competition bill that will underline its commitment to ensure a fair and competitive business platform and provide consumers with more variety and better choice. On anti-corruption, the Independent Commission Against Corruption is recognised worldwide for its dedication to combating all types of corruption, bribe-offering or bribe-taking conduct. In addition, the Ombudsman and the Audit Commission are vested with statutory powers to monitor the administrative performance of the Government. The Legislative Council (LegCo) and the media are also strong and powerful agents that actively monitor the operation of the Government and private organisations alike. Beyond this, and critical to the protection of the public interest is the freedom of speech, freedom of the press and freedom of association as enshrined in the Basic Law and which the Government cherishes.
The Government strives to enhance transparency when formulating and implementing policies. As part of the process of policy formulation, relevant Government bureaux and departments will actively consult the public, including collecting views from diverse sectors of the community through various channels and the Legislative Council, with a view to ensuring that the policies and measures that emerge will strike an appropriate balance among the needs and interests of all relevant sectors as far as possible. In addition, they will actively brief the public on new policies and measures upon implementation. Given that the Government is highly transparent and with the related monitoring mechanisms, it is simply not credible that any government department or bureau would disregard rules and procedures to favour the interests of a particular side. I must stress that there is no question of "collusion between the Government and individual property developers or consortia" nor for the "transfer of benefits" to take place.
Let me turn now to the Hon Emily Lau's three questions. These cut across other policy areas. With input from the Development Bureau and the Constitutional and Mainland Affairs Bureau on those parts under their respective purview, my reply to the three questions is as follow:
(a) On whether property developers have hoarded land and residential flats so as to control the completion and supply of residential flats: currently, the Government imposes a building covenant in the lease conditions on land disposed of through public auction, tender or private treaty grant. Developers are required to complete construction within the period specified in the building covenant in accordance with the conditions of the land leases, which may range from four to six years or more. For developers which fail to complete construction within the specified period without valid reasons, the Lands Department may impose sanctions in accordance with the relevant conditions in the land leases. This is an effective mechanism to prevent property developers from hoarding land deliberately and delaying the completion of their developments.
Enhancing the transparency of the supply of first-hand residential flats will help members of the public ascertain the future supply of private residential flats by making reference to published flat supply data. To this end, the Transport and Housing Bureau (THB) since November 2004 released on a quarterly basis on its website data on the number of flats which have commenced construction and those on which construction has been completed in that quarter, and the estimated supply of private residential flats in the following three to four years.
The Government firmly believes that transactions involving private residential properties should be fair and transparent, and will not tolerate any forged non-bona fide transactions, dissemination of confusing information on the sale of properties and disclosure of incomplete property information. We are mindful that for most people, buying a flat is likely to be the biggest expenditure in their lives and any fraud or deception in property sale is totally unacceptable. I can assure members that the Government is determined to ensure that buyers have the necessary information before making purchase decisions.
The Government is firmly committed to ensuring the transparency of the sales and transactions of private residential properties. In the past two years, THB has implemented a number of measures to strengthen regulation of the sale of uncompleted first-hand residential properties, through the Lands Department's Consent Scheme (Consent Scheme) and/or the guidelines of the Real Estate Developers Association of Hong Kong (REDA). These include requiring developers to provide in their websites and sales offices information on the Agreements for Sale and Purchase (ASPs) within five working days after the signing of the respective Preliminary ASPs, etc.
To further enhance the transparency of information and the fairness of transactions, THB is working with REDA to implement the nine further enhancement measures. These include strengthening the regulation on show flats and enhancing the transparency of sales brochures and price lists. We will implement the new measures through the REDA's guidelines and the Consent Scheme. Those REDA's guidelines will come into effect on June 1, whereas Lands Department has included the nine new measures into the approval letters for Consent Scheme projects approved on or after May 14. We will closely monitor the effectiveness of the new measures. Should these prove to be ineffective, we do not rule out the possibility of introducing legislative measures.
(b) The recent increase in property prices is attributable to the "quantitative easing" policy adopted by many economies since the onset of the financial tsunami which has increased global liquidity and has resulted in a huge inflow of "hot money" into our financial system. Interest rates in the USA have also been kept at an historic low level and this has had a knock on effect on interest rates here. In addition to these factors, the relatively low supply of residential flats in the past two years, and the recovery of the economy faster than expected, has led to worries about under-supply among some members of the public.
The current rise in property prices is therefore largely due to an environment with an extremely low interest rate, abundant liquidity and a relatively low supply of flats happening together. I have to say that this is an exceptional situation resulting from the financial tsunami.
It is the policy objective of the Government to ensure the healthy and stable development of the property market. Clear and consistent public policies are key to achieve this. To manage the risk of a property bubble caused by short-term boosting factors, the Financial Secretary announced in the 2010/11 Budget measures on four areas to ensure healthy and stable development of the property market while preventing public policies from causing unnecessary fluctuations in that market. The four areas include increasing supply to tackle the problem at source, introducing tax measures to combat speculative activities, enhancing the transparency of property transactions, and preventing excessive expansion in mortgage lending.
Apart from increasing the overall residential flat supply, the Government is also actively increasing the supply of small and medium sized residential flats. The Government will liaise with the MTRCL and the Urban Renewal Authority to increase the supply of small and medium sized residential flats in the West Rail property development projects and urban renewal projects respectively. The Government is also prepared to sell by open tender a site near the West Rail Long Ping Station in Yuen Long for private residential purpose, and will increase the supply of small and medium sized flats by specifying in the land sale conditions requirements in terms of the minimum number of flats and the range of the size of those units. In addition, the Hong Kong Housing Society is selling its surplus Sandwich Class Housing Scheme flats, and the Hong Kong Housing Authority will put up for sale the remaining surplus Home Ownership Scheme flats in June this year the earliest.
The Government will continue to keep a close watch on the property market, including speculative activities, and will consider re-launching appropriate measures to ensure the healthy and stable development of the market if necessary.
(c) Regarding Part 3 of the question, Article 64 of the Basic Law provides that the HKSAR Government must abide by the law and be accountable to LegCo of the HKSAR: it shall implement laws passed by the LegCo and already in force; it shall present regular policy addresses to the LegCo; it shall answer questions raised by LegCo Members; and it shall obtain approval from the LegCo for taxation and public expenditure. According to the above Basic Law provisions, whilst the executive authorities and the legislature have their respective functions and powers, they should both complement, as well as keep a check and balance on, each other's functions.
In formulating and implementing public policies, the HKSAR Government must take full account of public opinions, instead of the interests of individual sectors, to ensure that the policies are reasonable and consistent with policy objectives. On this basis, the executive authorities have placed importance on the LegCo as an important channel for reflecting opinion of the community, and have been supporting the work of the legislature. The bills and budgets proposed by the HKSAR Government for implementing public policies must be examined and approved by the LegCo before they are implemented.
Ends/Wednesday, May 19, 2010
Issued at HKT 17:13
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