************************************************************
Following is a question by the Dr Hon Lam Tai-fai and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (May 21):
On April 15 this year, the MTR Corporation Limited (MTRCL) announced the newly revised works schedule of the project to construct the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL), a project with an estimated expenditure of $66.8 billion, stating that the commissioning date had to be postponed from 2015 to 2017. MTRCL explained that the causes for the delay of the XRL project included the inclement weather and difficult geological conditions. It has been reported that the West Kowloon Cultural District (WKCD) project, which is adjacent to the West Kowloon Terminus of XRL, has also been affected and the construction works of some of the facilities will be delayed. The Board of Directors of MTRCL announced on April 29 that an Independent Board Committee would be set up to review the managerial approach of the XRL project comprehensively. Yet, some members of the public have criticised that as all members of the Independent Board Committee are independent non-executive directors of MTRCL, the investigation is "an investigation conducted by peers" that lacks independence. On May 2, the Government announced that a three-person independent expert panel would be set up to conduct a comprehensive examination of the delay of the project, but the Chairperson-designate resigned from the panel for alleged conflict of interests a few hours after his appointment was announced by the Government. In this connection, will the Government inform this Council:
(1) whether it has assessed the respective numbers of days of delay in the XRL project caused by the inclement weather and difficult geological conditions;
(2) whether it has assessed if the Government needs to apply to the Finance Committee of this Council for supplementary provisions for the XRL project; if the assessment outcome is in the affirmative, when it will submit the application and the amount involved; if the assessment outcome is in the negative, the reasons for that;
(3) given that documents submitted by MTRCL to this Council have revealed that on November 21, 2013, senior officials of the Transport and Housing Bureau (THB) had a telephone conversation and a meeting with the senior management of MTRCL, and at that meeting MTRCL told THB that commissioning XRL under an "extended" Minimum Operating Requirement (MOR) concept in 2015 was still possible (the information) but THB explicitly questioned this "extended" MOR and did not agree to it, (i) why the Government did not announce the information immediately, (ii) of the person who decided not to announce the information, (iii) whether it was mentioned in the telephone call and meeting that the XRL project had a cost overrun (if it was, of the details), and (iv) why the Secretary for Transport and Housing (the Secretary) did not attend that meeting;
(4) whether it has assessed if there was dereliction of duty on the part of the Secretary in the delay of the XRL project, and how the Secretary should discharge his political responsibility under the Political Appointment System;
(5) whether it has assessed if members of the public accepted the explanations and apologies made by the Secretary for his handling of the delay of the XRL project; if it has assessed, of the outcome; if not, the reasons for that;
(6) whether it has assessed the impacts of the delay in the XRL project, including (i) if it has given rise to discontent among members of the public towards the Government; (ii) if members of the public have lost their confidence in MTRCL and the Government; (iii) the economic losses caused to Hong Kong; and (iv) the impacts on the progress of the WKCD project; if it has assessed, of the outcome; if not, the reasons for that;
(7) whether it will demand MTRCL to dismiss its Chief Executive Officer and other senior staff members who have been found derelict in their duties, instead of letting them depart upon expiry of their contracts; if it will, when it will make such a demand; if not, the reasons for that;
(8) whether it has proposed any remedial plan to MTRCL to deal with the delay in the XRL project, so as to mitigate the adverse impacts of the delay; if it has, of the details; if not, the reasons for that;
(9) whether it has discussed with the mainland authorities the delay of the XRL project, so as to avoid affecting the connection of the boundary control points of both sides and causing other problems; whether it has assessed the impact of the delay on the economies of Hong Kong and the Mainland as well as the integration between the two places; if it has assessed, of the outcome; if not, the reasons for that;
(10) whether it will demand MTRCL to reorganise the Independent Board Committee to enhance its independence; if it will, of the details; if not, the reasons for that;
(11) when it made the decision to appoint the Independent Expert Panel; whether it has explained to the panel members their specific scope of work prior to their appointments; if it has, of the details; if not, the reasons for that; and
(12) when the Independent Expert Panel is expected to complete its investigation; whether it will publicise the investigation report in full; if it will, of the time of publication; if not, the reasons for that?
Reply:
President,
My consolidated reply to the twelve parts of Dr Hon Lam Tai-fai's question is as follows -
With regard to parts (1), (2), (6)(iii), (6)(iv), (8) and (9), the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) is an important transport infrastructure in Hong Kong and the Government is highly concerned with its delay. The Government will spare no effort in following up with the MTR Corporation Limited (MTRCL) to catch up with works progress and contain construction costs. In the light of the latest development, the Government has requested the MTRCL to strive to minimise the delay and contain any additional costs within the approved project estimate. We are requesting more information from the MTRCL to explain the causes of the serious delay (e.g. whether there was any delay which might have been caused by inclement weather and difficult geological conditions) and the detailed delay recovery plans. Upon receipt of all the relevant information from the MTRCL, we will critically review whether the new completion date recommended by MTRCL is realistic and achievable; and report to the Legislative Council (LegCo) and the public as early as possible. At present, we do not have a concrete estimate on the commissioning date of the XRL. We have yet to assess any economic loss which might have been caused by the delay.
With regard to the West Kowloon Cultural District (WKCD), the Government needs time to assess in detail the possible impact of the delay of the XRL on the WKCD and will continue to maintain close liaison with the WKCD Authority. As for the liaison with the Mainland, the Highways Department (HyD) has been discussing, through a liaison group, with the relevant Mainland units regarding the works progress of the XRL and coordination of cross-boundary works arrangements. We will continue to liaise closely with our Mainland counterparts under the existing mechanism, including examining any possible impact on the Mainland control points arising from the delay.
On part (3) of the question, in connection with the meeting between the Government and MTRCL on November 21, 2013, we have provided a document (LC Paper No. CB(1)1422/13-14(04)) which sets out the key points of the meeting, including issues raised under part (3) of the question. A copy of the above-mentioned document is attached at Annex A for reference. The Government has also provided a full account of the issues at the meeting of the LegCo Subcommittee of Matters Relating to Railways (RSC) on May 5 and May 19.
In gist, having deliberated at length with the MTRCL at the meeting on November 21, 2013 and based on the agreement at the meeting, the Government stated at the LegCo RSC meeting on November 22, 2013 that "the major works of the XRL could be completed within 2015. Thereafter, testing and trial runs would be conducted. Normally, this would take six to nine months". This was a true assessment based on the jujudgementnd considerations at the time. During the period after that, HyD had been requesting MTRCL to provide more details about their delay recovery measures in order to ascertain whether the target commissioning date should be revised. Dr Hon Lam enquired whether it was mentioned in the telephone call and meeting on November 21, 2013 that the XRL project had a cost overrun. As we have stated in the relevant paper, the Government was aware that the project had encountered delay in different contracts and MTRCL had taken measures to recover delay; at the same time, the Government had all along reminded MTRCL that any delay recovery measures should not cause any cost-overrun for the XRL project. On that day (November 21, 2013), I did not join the meeting as my work schedule was already full. Therefore, I directed the Permanent Secretary for Transport and Housing (Transport) to chair an urgent meeting with the senior level of MTRCL to clarify the situation. Please see Annex B for the representatives from the Transport and Housing Bureau (THB) and HyD.
On parts (4) and (5) of Dr Hon Lam's question, as I mentioned at the LegCo RSC meeting on May 5 and during several occasions thereafter, looking back, one might ask if the THB and HyD had placed too much trust in MTRCL. I agree that the jujudgementt the time and the way we subsequently handled the matter were less than satisfactory. We could have made public and informed the LegCo about the different views of the Government and MTRCL. I take responsibility for this. I have solemnly apologised to the LegCo and the public and I am prepared to accept criticism. As I stated at the LegCo RSC meeting on May 19, as the Secretary, I have all along respected and trusted professional jujudgementn handling matters relating to the XRL. All the reports I submitted to LegCo were based on the professional reports and assessments of the HyD. There has never been a question of overriding professionalism with politics. If the Independent Expert Panel (IEP) appointed by the Chief Executive finds in its review that I, as the Secretary for Transport and Housing, should take responsibility in the Government's monitoring system of the XRL and during the monitoring process, I would immediately resign.
On part (6)(i) and (6)(ii) of Dr Hon Lam's question, through various channels including letters and emails from the public, media reports and questions from LegCo members, we understand clearly the public's grave concern with and criticism about the delay of the XRL works. The most imminent task for the Government is to follow up with MTRCL on the construction progress, and closely monitor and ensure that MTRCL will minimise the delay and contain the costs within the approved budget. As regards the responsibilities of the MTRCL under the Entrustment Agreement, we will be consulting the Department of Justice to ensure that the taxpayers' interests are safeguarded under the relevant law. Furthermore, upon completion of the report by the IEP, should there be any human factors involved, we will surely ascertain the relevant liabilities separately.
On parts (7) and (10) of the question, the Government will learn the lessons from this incident and step up regulation on the MTRCL regarding the construction works and other aspects. The Government will adopt a series of measures to strengthen the MTRCL Board, including the nomination of new Board members. The committee of independent non-executive directors set up by the MTRCL is conducting a thorough review of the Corporation's project management regime in relation to the XRL. It plans to complete its preliminary report by July. If the report finds that any of the MTRCL staff have failed to exercise due diligence in discharging their duties and should take any responsibilities, the MTRCL Board will follow up the matter in a fair manner.
On parts (11) and (12) of the question, the Acting Chief Executive announced on May 16 that the Government has appointed Honourable Mr. Justice Hartmann as Chairman of the IEP, and the two other members, Mr. Peter Hansford and Professor Andrew J. Whittle, who are both overseas experts in the engineering field. The IEP is expected to commence work in June this year for completion before the end of November this year. The IEP will submit the Report to the Chief Executive and the report will be made public. The Terms of Reference of the Panel is at Annex C. The IEP will identify any systemic and any other problems involved in project implementation and supervision. As mentioned above, should there be any human factors involved, the Government or the MTRCL will separately ascertain the relevant liabilities and follow up.
Ends/Wednesday, May 21, 2014
Issued at HKT 14:36
NNNN
