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The following is the speech (translation) by the Acting Chief Secretary for Administration, Mr Michael Suen, in introducing Government Minute responding to Report No. 51 of the Public Accounts Committee in Legislative Council today (May 20):
President,
Laid on the table today is the Government Minute ("GM") responding to Report No. 51 of the Public Accounts Committee ("PAC").
When presenting Report No. 51 on 18 February, the Chairman of the PAC set out in detail the comments of the PAC on the three chapters from the Director of Audit's ("D of A") Report, viz. Administration of the DesignSmart Initiative, Management of public markets and Reduction and recovery of municipal solid waste. The Administration is grateful for the time and efforts that the PAC has devoted. Details of the Government's response to the conclusions and recommendations in the Report are set out in the GM. Today, I would like to highlight the key measures we have taken in the relevant areas.
Administration of the DesignSmart Initiative
Since the publication of Audit Report No. 51 in November last year, the Administration, the Hong Kong Design Centre ("HKDC") and the Hong Kong Science and Technology Parks Corporation have promptly followed up and implemented the recommendations made in the Report. The follow up actions taken are set out in detail in the GM.
Design is an integral part of our innovative capacity, one that helps our industries move up the value chain and cope with global competition. The importance of design and innovation will only grow as the world faces up to the challenges of the financial crisis. We have to promote the importance of product design in industrial and business processes, and encourage businesses aiming at achieving Original Brand Manufacturing. To this end, we have been supporting the work of HKDC in the promotion of design. We also launched the DesignSmart Initiative in 2004 to provide support and incentives for raising the awareness of design and encouraging investment in design.
The HKDC at just seven years of age is a relatively young and small organisation in comparison with similar institutions around the world. Notwithstanding this, the HKDC has managed to contribute much to the promotion of design both locally and abroad, and greatly helped raise the profile of Hong Kong as a design hub. One of the successful examples is the Business of Design Week. Inaugurated in 2002, the Business of Design Week has become the leading design event in the region and one of the more significant events in the international design calendar. An audit review at this point of HKDC's development is timely as it provides an opportunity to take stock of progress, so that HKDC could improve its administration and management to achieve a higher standard of corporate governance.
In the light of the recommendations made by the D of A and the PAC, HKDC has taken a number of administrative measures to improve its internal control and accounting systems. The Chief Executive Officer of HKDC now reviews all irregularities and non-compliance cases at his regular meetings with the staff. In addition, the HKDC Board has set up an internal audit function, and established an audit committee to ensure operational effectiveness and efficiency, reliability of internal and external reporting, as well as compliance with the applicable laws and corporate governance policies.
Furthermore, the Board of HKDC has decided to adopt a two-tier reporting system for declaration of interests by its directors. A register of Board directors' declaration of interests is maintained and is made available for inspection by public upon request.
We note that the PAC has expressed serious concern on the effectiveness of the role of government officials serving on the HKDC Board. As we have explained during the PAC hearings and in subsequent written replies, the role of the Commissioner for Innovation and Technology ("CIT") is to set clear guidelines and to ensure proper utilisation of the public funds allocated to HKDC. The role played by CIT can be seen in various aspects. For instance, the CIT had been playing an active role in monitoring HKDC's corporate governance, and proactively requested that a study on governance and project administration of HKDC be conducted to ensure that adequate corruption prevention safeguards were in place.
We should, however, recognise that it is not the role of the directors, including the government officials serving on HKDC, to engage in the day-to-day management of HKDC. This executive role should be spearheaded by the Chief Executive Officer of HKDC and his management team, who should carry out the directions and policy guidelines laid down by the Board. As I have explained in the GM, both the HKDC Board and its management team have taken a wide range of measures to address the concerns raised by the D of A and the PAC, and to enhance their capacity in performing their respective roles.
Overall, the Government attaches great importance to sound corporate governance and good management practice of government-funded organisations. The Administration has recently promulgated a circular which sets out the principles of governance framework for government-owned or funded statutory organisations for reference by Directors of Bureaux and Controlling Officers responsible for the management and monitoring of these and similar organisations. Directors of Bureaux and their Controlling Officers will review the governance framework and the checks and balances of the organisations from time to time.
Management of public markets
We welcome the recommendations of the PAC on the improvement of the management of public markets, and have been diligently following up. We fully agree with the need to ensure the effective operation of public markets in meeting the needs of the community and have made continuous efforts over the past years to tackle the problems facing public markets, such as vacancy rates and viability. As planned, the Food and Environmental Hygiene Department ("FEHD") has started to conduct utilisation and patron opinion surveys since March 2009 on all 79 wet markets. The data collated will form the basis of our review on the positioning, functions and appropriate level of Government's subsidisation of public market operation. The Administration plans to present the survey findings to the Panel on Food Safety and Environmental Hygiene of the Legislative Council ("the LegCo Panel") in July 2009.
In view of the difference in mode of operation, FEHD will review the provision of cooked food centres and cooked food markets in the second half of 2009-10 after completing the surveys on wet markets. The Administration will present the findings of this review to the LegCo Panel.
As regards the mechanisms for market rental adjustment, collection of rates payment and recovery of air-conditioning charges from stall tenants, the Food and Health Bureau and FEHD are reviewing the mechanisms in consultation with the relevant bureaux and departments, taking into account other factors including the D of A's observation about rental disparity, possible impact on tenants' operations and the prevailing economic conditions. The Administration plans to report to the LegCo Panel in July 2009.
We note PAC's criticisms on subletting of market stalls. PAC considered that FEHD should arrange for renewal, instead of extension, of tenancies so that there would be an opportunity to verify the status of tenants. In response to the recommendations of the D of A and PAC, FEHD has arranged for renewal of tenancies, requiring tenants to sign new tenancies in person. FEHD has also introduced various measures to step up control. For instance, upon renewal of existing tenancies, all tenants will be required to display Business Registration Certificates registered in their own names, to keep and provide for inspection employment records of registered assistants and other documents to prove their control over their stalls and business. Breach of the subletting condition will lead to immediate termination of the tenancy agreement. Investigations into suspected subletting cases are underway.
FEHD is also following up on other D of A's recommendations. For example, FEHD has launched pilot schemes in selected markets to introduce new types of business or service trades in vacant stalls, thereby reducing vacancy rate and increasing market patronage. The Department has also since February 2009 reduced the upset auction prices of long standing vacant stalls to attract more potential bidders. As at end April 2009, 552 long standing vacant stalls were successfully let out.
In addition, FEHD has drawn up detailed internal guidelines for conducting comprehensive viability studies to assist the planning of new markets. We will ensure that all relevant factors are properly considered and objectively assessed.
FEHD will organise district retreats later this year to gauge public views and explore ideas on market improvement measures and design concepts of new public markets. We will continue to make best endeavours to ensure our public markets find their niches in a competitive retail market, capable of responding to changes in the retail trend and remaining viable in the long run.
Reduction and recovery of municipal solid waste
The Administration has been committed to promoting waste reduction, recovery and recycling in Hong Kong with relevant measures set out in the Policy Framework for the Management of Municipal Solid Waste (2005-2014) ("Policy Framework").
According to previous data, the quantity of municipal solid waste ("MSW") generated is highly dependable on our economic situation and population growth. We will continue to work towards the MSW reduction targets laid down in the Policy Framework, and strive to achieve the MSW recovery rate of 50% by 2014. As the demand for recyclable materials is basically determined by the economic situation, the recovery rate of MSW will also be affected. We will continue to make our best efforts in enhancing MSW recovery, keep in view the need to raise the target and keep the LegCo informed.
As part of our strategy, we aim to create economic incentives for waste reduction, recovery and recycling. The Environment Bureau ("ENB") and the Environmental Protection Department ("EPD") will continue to promote producer responsibility schemes ("PRS") under the legal framework of the Product Eco-Responsibility Ordinance. The EPD plans to launch the first PRS on the plastic shopping bag environmental levy in July 2009. This will be accompanied by stepped up educational and publicity campaigns to raise public awareness about the importance of reducing, recovering and recycling waste.
The Administration concurs with the PAC's view about Hong Kong's over-reliance on landfill disposal, compared to other Asian cities. In this connection, the ENB and EPD are developing advanced treatment facilities to manage our waste in a sustainable manner, including the Integrated Waste Management Facilities with incineration as the core technology, the Organic Waste Treatment Facilities and the Sludge Treatment Facility. These facilities will help divert more waste from landfill disposal.
The Administration appreciates the PAC's recommendation for setting more ambitious targets for MSW recovery and the Source Separation of Waste Programme. Although the outlook of waste recovery in Hong Kong in the coming year is highly uncertain due to the current economic downturn, which affects the global demands for recyclable materials, we will sustain our efforts in enhancing MSW recovery and monitor its effectiveness. We will review the target as appropriate and keep the LegCo informed of any progress.
Finally, I would like to thank the PAC for its constructive comments and recommendations. These comments and recommendations are useful in ensuring value for money in the delivery of public services. The Administration is pleased to accept these criticisms and comments. As always, we stand ready to respond promptly. Thank you.
Ends/Wednesday, May 20, 2009
Issued at HKT 12:52
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