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					           Minutes of the 16th Meeting of the HKSAR Second Term of
                         Wong Tai Sin District Council
                             (Summary Translation)


Date:           2.5.2006 (Tuesday)
Time:           2:30 p.m.
Place:          Conference Room, Wong Tai Sin District Office,
                6/F, Lung Cheung Office Block,
                138 Lung Cheung Road,
                Wong Tai Sin, Kowloon.


Chairman:

Mr. WONG Kam-chi

Vice-chairman

Mr. KAN Chi-ho

Wong Tai Sin District Council Members:

Mr. CHAN Lee-shing
Ms. CHAN Man-ki, Maggie
Mr. CHAN On-tai
Mr. CHAN Wai-kwan, Andie
Mr. CHAN Yim-kwong, Joe
Mr. CHENG Tak-kin, Michael, JP
Mr. CHOW Ching-lam
Mr. CHUI Pak-tai
Mr. FUNG Kwong-chung, JP
Mr. HO Yin-fai
Mr. HUI Kam-shing
Ms. KWOK Sau-ying
Mr. LAI Wing-ho, Joe
Mr. LAM Man-fai, JP
Dr. LAU Chi-wang, James, JP
Mr. LAU Kar-wah
Ms. LEE Ming-pui, Mavis
Mr. LEE Tat-yan
Dr. LI Sze-bay, Albert, BBS, JP
Mr. MOK Ying-fan

olo/Dc[M16]_2                            1
Mr. NG Yiu-man
Mr. SHI Lop-tak
Mr. SO Sik-kin
Hon. TAM Heung-man
Ms. TAM Yuet-ping, Celia
Mr. TO Kwan-hang, Andrew
Mr. WONG Kwok-tung
Mr. WONG Yat-yuk
Mr. WU Chi-wai

In attendance:

Mr. TAM Wing-pong, JP Deputy Director (Strategy)      HD                 ) Re:
                                                                         ) Item
Mr. CHAN Ka-shun,        Asst Director (Strategy      HD                 ) III(i)
Carlson                  Planning)                                       )

Miss. LEUNG Man-shan AO                               HD                 )
Neve                                                                     )

Mr. HO Chi-ping,         Secy for Home Affairs        HAB                ) Re:
Patrick, JP                                                              ) Item
                                                                         ) III(ii)
Mrs. LAM CHENG           Permanent Secy for Home      HAB
Yuet-ngor, Carrie, JP    Affairs

Mrs. TAN KAM            Dir of Home Affairs           HAD
Mi-wah, Pamela, JP
Mr. LAI Yee-tak, Joseph Dep Secy for Constitutional   CAB
                        Affairs

Mr. CHEUNG               Asst Director                LCSD
Kwok-kee, Paul
Mr. K.P. YAM             Ch Libn (TP& Kln)            LCSD

Mr. CHAN Kim-lap         Sr Engr/ Project Mgt (1)     WSD                    Re:
                                                                             Item
                                                                             III(iii)
Mr. TSUI kwok-on, Dick Engr/Project Mgt (1)           WSD

Mr. B.W. CHEUNG          Chief Engr                   Maunsell-Metcalf
                                                      & Eddy Joint
                                                      Venture

olo/Dc[M16]_2                      2
Mr. T.S. MOK               Traffic Engr                 Maunsell-Metcalf
                                                        & Eddy Joint
                                                        Venture

Mr. M.C.CHOW               Engr                         Maunsell-Metcalf
                                                        & Eddy Joint
                                                        Venture
Mrs. TAM CHEUNG            ICAC Regional                ICAC               Re:
Kwei-ying, Dorothy         Offr/Kowloon East/ Saikung                      Item
                                                                           III(iv)
Ms. LAM Shuk-yee,          Sr ICAC Officer/Kowloon      ICAC
Anna                       East/ Saikung

Mrs. Teresa WONG, JP       DO (WTS)                     WTSDO
Mr. Ian SEABOURNE          Dist Commander (WTS)         HKPF
Mr. LEE Cert-quinn         Ch Mgr/M (Kln E)             HD
Mr. LEE Wing-wai           DSWO (WTS/SK)                SWD
Mr. Daniel SO              DEHS (WTS)                   FEHD
Mr. WONG Kin-chung         DLM (WTS)                    LCSD

Mr. LAU Kin-kwok           STO (Kln/WTS)                TD
Mr. WONG Chung-sang,       Chief Engineer/Kln           CEDD
Talis
Mr. Bryan HA               ADO (WTS)                    WTSDO
Mr. Patrick CHUNG          SEO (DM)                     WTSDO
Miss. Shirley WU           Atg SLO (BM)                 WTSDO
Mr. HUI Wai-shing          SLO (DL)                     WTSDO
Ms. LEUNG Oi-wah,          Designate SEO (DC)           WTSDO
Teresa
Mr. Nathan YAM             EOI (DC)                     WTSDO


Secretary:

Miss LEE Fuk-oi             SEO (DC)                           WTSDO


I        Opening Remarks

      The Chairman welcomed everyone to the 16th meeting of the Wong
Tai Sin District Council (WTSDC), especially Ms. LEUNG Oi-wah,
Teresa, the designate Secretary for WTSDC and Miss Shirley WU, Atg

olo/Dc[M16]_2                         3
SLO (BM) who attended DC meeting for the first time.

2. The Chairman informed the attending Members that Miss F.O.LEE,
the Secretary for WTSDC would be transferred to the Home Affairs
Department (HAD). Mr. MA Kit-chi, the former SLO (BM), was
temporarily transferred to HAD. Members expressed gratitude to Miss
F.O.LEE and Mr. MA Kit-chi for their past contribution to Wong Tai Sin
and put this on record.

3.     The Chairman informed the Members that the representatives of the
policy bureaux and departments for agenda item (iii)-“Consultation
Document on Review on the Role, Functions and Composition of District
Councils” would arrive at 4:30pm. Upon the completion of the
discussion of “Consultation Paper on Review of Domestic Rent Policy”, he
would discuss the agenda items that followed first.


II       Confirmation of the Minutes of the 15th Meeting of WTSDC on
         14.3.2006

4.    The minutes of the 15th meeting of WTSDC held on 14.3.2006 were
confirmed without amendment.


III      Matters Arising from the 15th Meeting of the Second Term of
         WTSDC
         (WTSDC Paper 33/2006)

5.       Members noted the paper.


IV       Consultation Paper on Review of Domestic Rent Policy
         (WTSDC Paper 34/2006)

6.    The Chairman introduced the representatives of the Housing
Department (HD) who attended the meeting for this agenda item, they
were:

          Mr. TAM Wing-pong, JP           Deputy Director (Strategy), HD

          Mr. CHAN Ka-shun, Carlson       Assistant Director     (Strategy
                                          Planning), HD


olo/Dc[M16]_2                         4
          Miss.    LEUNG      Man-shan,    Administrative Officer, HD
          Neve

7.     Mr. TAM Wing-pong, JP introduced the background of the
consultation. Mr. CHAN Ka-shun, Carlson introduced the paper with
audio visual aid. Mr. TAM Wing-pong, JP stressed that the Housing
Authority (HA) had no established standpoint. The problem that HA was
facing was there was a way to increase rent but no way to cut rent. As
such, HD hoped to listen to the views of the public at large. The review
itself was not aimed at paving the way for rent increase.

8.    The Chairman informed the Members that the Secretariat had
received the submissions of Mr. LAU Kar-wah and Residents Association
of Choi Hung Estate (see annexes A and B). Other submissions on table
included:

          (1)     Joint submission of Mr. LEE Tat-yan, Mr. SO Sik-kin and
                  Mr. CHAN Wai-kwan, Andie (see annex C);

          (2)     Joint submission of Mr. MOK Ying-fan and Mr. HUI
                  kam-shing (annex D);

          (3)     Joint submission of Mr. KAN Chi-ho and other six
                  Members (annex E);

          (4)     Submissions handed in to the Chairman before the meeting
                  by “Defend the Rights of Housing for Basic Level Joint
                  Association” (annex F) and Residents Association of Choi
                  Hung Estate (same as annex B).

On the other hand, the Secretariat had received the motion put forward by
Mr. TO Kwan-hang, Andrew (see annex G on table). The Chairman
would address to it after making the speech.

9.     Ms. Chan Man-ki, Maggie spoke on behalf of the six signatories,
represented by Mr. KAN Chi-ho. The main points of the paper were as
follows:
—Requesting HD to “reduce rent before reviewing it”
—Objecting to differential rents
—Objecting to setting rents by a fixed rent-to-income ratio
—The proposed mechanism for upward and downward adjustment of rents
   lacked the details of implementation


olo/Dc[M16]_2                          5
10.      Mr. FUNG kwong-chung, JP raised the following views:

          (a)   There were too many complicated suggestions which the
                public found them difficult to understand. Even if
                residents raised no objection, HA would use it as an excuse
                for rent increase, and this was unfair.

          (b)   Setting rent based on the floor level, direction and other
                related factors and in line with that of the private buildings
                would cause disintegration.

(Mr. CHAN On-tai joined the meeting at 3:17pm.)

11. Mr. LAU Kar-wah spoke on behalf of Residents Association of Choi
Hung Estate. The main points were as follows:
—Requesting HD to “reduce rent before reviewing it and extend the
  consultation period for half a year.”
—Objecting to differential rents

He said that since the implementation of the policy of well-off tenants,
only the elderly and the households of Comprehensive Social Security
Assistance (CSSA) remained living in Choi Hung Estate.            Their
consuming power was low and the estate had been aging. He opined that
the implementation of differential rents would disintegrate tenants and
CSSA households were despised. He blamed HA for bypassing the
Legislative Council (LegCo) for rent increase, which was absurd. In a
meeting held by the Residents Association of Choi Hung Estate on April
12,2006, it was endorsed that “rent be reduced before rent review and
consultation period be extended for half a year.” He hoped that the
Government would listen to the views of the residents.

12.     Mr. LEE Tat-yan spoke on behalf of the three Members jointly
signing the paper. It was mainly related to supporting 10% reduction in
rent prior to the review. Mr. LEE Tat-yan raised the following views:

          (a)   The consultation paper was too complicated, residents
                found it difficult to understand, as such, they proposed
                extending the consultation period.

          (b)   The proposal of differential rents was only one item in the
                consultation paper, while it had become the focus. Indeed,
                the policy of differential rents had been implemented for a

olo/Dc[M16]_2                           6
                long time. However, HD must give an informed choice to
                residents to avoid causing disturbance and upsetting social
                harmony.

          (c)   The mechanism of 10% of median household income had
                its existential value, which ensured that rents could be
                maintained at a reasonable level.

          (d)   A mechanism for upward and downward adjustment of
                rents should be introduced.

          (e)   They requested that rent for newly completed units be
                lowered to alleviate the pressure exerted on HA by the
                public asking for rent reduction.

          (f)   More smaller flats should be built to meet the needs of
                applicants on waiting list. This could avoid allocating
                over-sized flats that would raise the median rent of public
                housing estates.

13. Mr. HUI Kam-shing also elaborated on the submission by Mr. MOK
Ying-fan and him. He added that the consultation paper lacked a clear
objective, it was too informative and technically-inclined. The general
public, especially residents of public housing, found it difficult to join the
discussion. Though it was not a failure, it could not be said as an ideal
consultation paper. HD should lower the rent before reviewing the
mechanism of rent. An important topic raised during the discussion of
domestic rent would be rent setting for newly completed public housing.
Nevertheless it was not mentioned in the paper. Any adjustment should
be made on the established basis. If the rent was already set at a high
price, the adjustment would become meaningless.

14.     Mr. NG Yiu-man opined that a good option should be a win-win
one. As such, HD should also step into the shoes of the users, not just for
the sake of HD. He supported differential rents, the policy under which
the well-off tenants paid more and the spirit of free choice. HD should
pay attention to the implementation details, or else people would raise
objection to it.

15.      Mr. HO Yin-fai had the following views:

          (a)   He had attended a consultative meeting held for this
                consultation paper by HD, people were all opposed to the

olo/Dc[M16]_2                          7
                proposals. Would HD shelve these proposals under these
                circumstances?

          (b)   If people shifted between cheap (poorer quality) and
                expensive (better quality) flats depending on their financial
                capabilities, the administrative cost of HD would run
                relatively high.

          (c)   Differential rents would run counter to the wishes of grass
                roots and bring into social disintegration.

16.      Mr. WU Chi-wai raised the following views:

          (a)   If the proposed rent mechanism involved legislative
                amendment which was not in compliance with the original
                intention of HD on one hand, and if the Government would
                face the challenges posed by the public housing tenants for
                not amending the legislation on the other hand, what would
                HD do?

          (b)   What impact would be caused to HA if the existing
                “Housing Ordinance” was not amended while HD carried
                out the mechanism for both upward and downward
                adjustment of rents?

          (c)   Would it be impossible to exclude CSSA households,
                well-off tenants and exclusive rents for implementing the
                mechanism for upward and downward adjustment of rents?

          (d)   Public housing was a product of planned economy, would it
                bring forth greater problem with the introduction of the
                market-oriented differential rents?

17.      Mr. TAM Wing-pong, JP made the following responses:

          (a)   If there was a need to introduce the mechanism for upward
                and downward adjustment of rents by means of legislative
                amendment, HA and HD would make the amendment in
                accordance with the legislative requirement. However the
                provision relating to the 10% of median household income
                could not be deleted simply in the legislative amendment,
                another set of more feasible and reasonable mechanism
                should be devised for setting domestic rent. Therefore HD

olo/Dc[M16]_2                          8
                issued the consultation paper for soliciting the views of the
                public.    A mechanism acceptable to all would be
                developed first before enacting the legislation.

          (b)   HD lacked a mechanism for downward adjustment of rents.
                There were both the pros and cons for adopting the
                consumer price index or the household income as the
                indicators. The request for “rent reduction prior to
                review” seemed to be putting the incidental before the
                fundamental. HD had to develop the mechanism first
                before calculating the payable rents. Using 10% of the
                median household income as the benchmark would
                adversely affect the financial status of HA. As such HA
                had to work out a reasonable and lawful mechanism
                acceptable to residents. HD hoped that the mechanism
                could be applicable to most of the public housing residents
                and Waiting List applicants. The poor people could
                receive CSSA or the rent assistance scheme of HA.
                Actually the “Rent Assistance Scheme” meant to be stated
                in the review had been implemented early this year. HD
                understood the views of Members, but hoped that they
                could give their views relating to the choice between setting
                rents based on income or consumer price.

          (c)   As regards differential rents, HD would consult the District
                Councils (DCs), hold district consultative meetings, carry
                out opinion polls through independent consultants and
                listen to the views of the public through the network of the
                Home Affairs Department (HAD).             He stressed that
                domestic rent policy would be carried out based on the
                affordability of public housing tenants.

          (d)   HA would not shelve the proposal owing to diversified
                views or maintain the status quo. The domestic rent
                review would continue for seeking a commonly accepted
                mechanism.    HD would consolidate the submissions
                handed in by Members and then submit them to HA and the
                LegCo. Public views would be taken into consideration
                by HA and LegCo Members to decide whether legislative
                amendment should be made.

          (e)   An Executive Summary was attached to the Consultation
                Paper, which highlighted the main points. If people still

olo/Dc[M16]_2                          9
                had difficulty in understanding it, HD staff would be
                delighted to attend any residents meetings to give
                explanation. Members could refer their views to the
                Secretariat of DC or HAD.

18. Mr. LAI Wing-ho, Joe objected to item (a) as stated above. He
opined that HA could solve the problem in the past first before considering
the future situation. He considered the explanation of Mr. TAM
Wing-pong, JP as unreasonable and not fulfilling the wishes of the public.

19.      Mr. LAU Kar-wah added the following two points:

          (a)   Mr. Donald Tsang, being the Financial Secretary in the
                past, once said that he hoped to maintain a stabilised
                property market. Therefore he proposed a cessation of the
                sale of Home Ownership Scheme Flats and a decrease in the
                number of public housing flats to be built. As a result, HA
                had lost an important source of revenue.

          (b)   He objected to the views of Mr. NG Yiu-man. He
                remarked that the public housing flats were allocated by
                HD, not chosen by residents themselves. As such, the rent
                setting mechanism adopted in the private property market
                should not be introduced to the public housing system.
                The view held by HD was impractical.

20. Mr. NG Yiu-man responded by quoting an example in which those
public housing tenants paying the market price lived in poorer quality flats,
while CSSA households lived in better quality flats with rents paid by the
Government. He said that people knew how to judge.

21. Mr. TO Kwan-hang, Andrew briefed Members on the key points in
his motion paper (see annex G) and put forward the following motion:

       “Reduce rent before consultation and extend the consultation period
for six months”

22. The motion was seconded by 11 Members, including Mr. WU
Chi-wai; Ms. TAM Yuet-ping, Celia; Mr. CHAN Lee-shing; Mr. CHUI
Pak-tai; Mr. HUI Kam-shing; Mr. MOK Ying-fan; Ms. KWOK Sau-ying;
Mr. LAU Kar-wah; Mr. WONG Kwok-tung; Mr. WONG Yat-yuk and the
Hon TAM Heung-man.


olo/Dc[M16]_2                         10
23. The Chairman asked the Members to speak relating to the motion
and enquired Members if they objected to the motion or had other points to
make. No Members raised any objection or made other views.

24. The Chairman asked the Members to vote in relation to the motion,
the result of which was as follows:

           Affirmative vote: 25

25.    As the motion had been passed by the majority of 31 DC Members,
the Chairman announced that the motion was adopted.

26.    The Chairman requested HD to consider the views of WTSDC and
thanked Mr. TAM Wing-pong, JP; Mr. CHAN Ka-shun, Carlson and Miss
LEUNG Man-shan, Neve for attending the meeting.

(Mr. TAM Wing-pong, JP; Mr. CHAN Ka-shun, Carlson and Miss
LEUNG Man-shan, Neve left the meeting at this juncture.)
(Dr. LI Sze-bay, Albert, BBS, JP joined the meeting at 3:53pm.)


VI.        Replacement and Rehabilitation of Water Mains, Stage 2 of the
           Water Supplies Department
           (WTSDC Paper 35/2006)

27.     The Chairman          welcomed     and   introduced   the   following
representatives:

            Mr. CHAN Kim-lap             Senior Engineer/ Project
                                         Management (1), WSD

            Mr. TSUI Kwok-on, Dick       Engineer/ Project Management (2),
                                         WSD

            Mr. B.W. CHEUNG              Chief Engineer,
                                         Maunsell-Metcalf& Eddy Joint
                                         Venture

            Mr. T.S. MOK                 Transport Engineer,
                                         Maunsell-Metcalf& Eddy Joint
                                         Venture

            Mr. M.C.CHOW                 Engineer,

olo/Dc[M16]_2                        11
                                      Maunsell-Metcalf &Eddy
                                      Joint Venture

28.     Mr. CHAN Kim-lap introduced the background relating to the
Replacement and Rehabilitation of Water Mains, Stage 2 of the Water
Supplies Department (WSD). He also asked all Members to give their
comments and support the water works project. Mr. B. W. CHEUNG
introduced the paper.

29.     Mr. LAI Wing-ho, Joe suggested WSD to submit the traffic impact
assessment report to the Traffic and Transport Committee (T&TC) for
discussion, the details would be followed up by the Working Group on
Government and Public Utilities Works Projects”.

30.      Mr. LEE Tat-yan supported the project, but suggested that WSD
carried out site investigation with Members prior to road closure.

31.     Dr. LAU Chi-wang, James, JP also supported the project, but
hoped that WSD would adopt trenchless excavation as far as possible
when carrying out the project to minimise the impact caused by excavation.
He suggested that WSD maintained adequate flexibility when drafting the
tender provision relating to the coverage of trenchless excavation.

32.     Mr. MOK Ying-fan said that WSD‟s representatives remarked that
they would minimise the nuisances and impact caused by the project „as far
as possible‟, and so he also hoped that the department would also supervise
the implementation of project by the contractors „as far as possible‟, ensure
that the contractors paid the workers on time „as far as possible‟ and
avoided causing nuisances and affecting the traffic „as far as possible‟.

33.       Mr. FUNG Kwong-chung, JP supported the few main points
raised by the few Members and hoped that WSD would strengthen the
supervision on the contractors and consult the respective area committees
prior to the commencement of projects.

34.     Mr. WONG Yat-yuk said that he supported the said project and
hoped that WSD would make suitable traffic arrangement during
construction.

35.     Mr. SHI Lop-tak supported the consultation paper but was
concerned about the noise nuisances caused by the works.

36.         Mr. CHAN Lee-shing also supported the consultation paper.

olo/Dc[M16]_2                        12
However he pointed out that major trunk roads were covered in a number
of construction sites and he asked WSD to pay particular attention to it.
He also agreed that the Working Group on Government and Public Works
Projects supervised the works progress.

37.     Mr. CHAN Wai-kwan, Andie also requested WSD to expedite the
works progress and avoid causing nuisances to residents.

38.      Mr. CHAN Kim-lap and Mr. B.W. CHEUNG responded that they
would regularly give an advanced notification to DC about the road
sections involved in the projects for the coming year during construction,
and explain them to the area committees. An enquiry hotline for the
residents would be set up during construction and the resident engineer
would be responsible for answering the enquiries. WSD would adopt
trenchless excavation as practically as possible but this was not feasible
because of technical constraints. As the impact of the suspension of
water supply on residents had to be taken into consideration during
construction and some water pipes connection works had to be carried out
at nights.

39.     The Chairman concluded that DC supported the works but
requested WSD to minimise the impact of works caused to residents.

40.     Mr. WU Chi-wai added that he saw from the map that the scope of
works included the busy Choi Hung Road on which trenchless excavation
would not be carried out. He was worried that there would be traffic
congestion and chaos during construction.

41.    The Chairman requested WSD to pay attention to the matter and
thanked Mr. CHAN Kim-lap; Mr. TSUI Kwok-on, Dick; Mr.
B.W.CHEUNG; Mr. T.S.MOK and Mr. M.C.CHOW for attending the
meeting.

(There was a 15-minute break at this juncture. Mr. TO Kwan-hang,
Andrew; the Hon TAM Heung-man; Mr. CHAN Kim-lap; Mr. TSUI
Kwok-on, Dick; Mr. B.W.CHEUNG; Mr. T.S.MOK and Mr. M.C.CHOW
left the meeting at this juncture.)


V.         Consultation Paper on Review of the Role, Functions and
           Composition of District Councils

42.        The   Chairman   welcomed     and   introduced   the   following

olo/Dc[M16]_2                       13
           Government representatives:

            Mr. HO Chi Ping,       Secretary for Home Affairs
            Patrick, JP

            Mrs. LAM CHENG Permanent Secretary for Home Affairs
            Yuet-ngor, Carrie,
            JP

            Mrs. TAN KAM       Director of Home Affairs
            Mi-wah, Pamela, JP

            Mr. LAI Yee-tak,       Deputy Secretary for Constitutional
            Jospeh                 Affairs

            Mr. CHEUNG             Assistant Director, LCSD
            Kwok-kee, Paul

            Mr. K.P. YAM           Chief Librarian (TP& Kln), LCSD

43.    Mr. HO Chi-ping, Patrick, JP briefed Members on the background
of the consultation and the rationale behind the proposals. Mrs LAM
CHENG Yuet-ngor, Carrie, JP introduced the paper with audio visual aid.

44.     The paper of Mr. KAN Chi-ho; Mr. HO Yin-fai; Ms. CHAN
Man-ki, Maggie; Mr. CHENG Tak-kin, Michael, JP; Mr. LAM Man-fai, JP;
and Mr. LAI Wing-ho, Joe was at annex H. Mr. LAI Wing-ho, Joe spoke
on behalf of them. They generally agreed to the proposals as stated in the
consultation paper, but put forward the following views:

            (a)   Although District Facilities Management Committee
                  (DFMC) was empowered with the practical management
                  authority, it was restricted to leisure and cultural facilities
                  while the aspect of environment, traffic and housing was
                  not touched on, it was not up to the expectation of the
                  public.

            (b)   They worried that the Steering Committee on District
                  Administration (SCDA) could not reconcile with the
                  different views of departments and DCs. SCDA had to
                  develop the performance pledges.

            (c)   It was not mentioned in the consultation document that

olo/Dc[M16]_2                            14
                  DCs could participate in cross-district affairs. SCDA
                  should consult the views of DCs before making any
                  decision relating to cross-district affairs.

            (d)   DCs were allowed to make their own decision on
                  district-based projects costing below $15 million.
                  However as the annual allocation was only $300 million,
                  it was dubious whether this could meet the expenses for
                  various projects in various districts.       Since the
                  dissolution of the former Urban Council, a number of
                  uncompleted works projects had been accumulated.

            (e)   DCs were neither empowered with actual decision making
                  authority, nor were they given the power to formulate
                  personnel policy. They were worried that the policies
                  conducive to residents could not be effectively
                  implemented.

            (f)   It would be a good idea that the Chief Executive hosted
                  the Annual District Administration Summit, but it was
                  still not good enough. They suggested the Government
                  to require all departments concerned to consult DCs
                  before implementing capital works.

45.     The submission of Dr. LI Sze-bay, Albert, BBS, JP and Ms. LEE
Ming-pui, Mavis was attached at annex G. Dr. LI Sze-bay, Albert, BBS,
JP spoke on behalf of Ms. LEE. They generally supported the
suggestions in the consultation document, but raised two concerns:

            (a)   Members should know clearly their roles and
                  responsibilities in DFMC, and hoped that the Government
                  would provide suitable training and practicing
                  opportunities.

            (b)   It would be appropriate to set up a mechanism to handle
                  the complaints against DFMC lodged by the public.

46.      Mr. FUNG Kwong-chung, JP thanked the Secretary for Home
Affairs and the Permanent Secretary for Home Affairs for coming to the
meeting to listen to Members‟ views. He supported the recommendations
stated in the consultation document and considered that the review was on
the right track. However he pointed out that there were some points to be
improved. He raised the following four points:

olo/Dc[M16]_2                         15
            (a)   In terms of district facilities management, how to solve
                  the interfacing problem arising from the different scopes
                  of responsibilities the Government departments had to
                  shoulder should be taken into consideration.

            (b)   The leisure and cultural services were uniform. If DCs
                  participated in the administration, the opening hours of all
                  facilities would become irregular and people would
                  become confused.          On the other hand, as the
                  administration of the opening hours of the leisure and
                  cultural facilities involved staff establishment, but staff
                  establishment and transfer were not listed as the suggested
                  roles of DCs.

            (c)   SCDA provided guidelines to DFMC, would their roles be
                  overlapping?

            (d)   As DC Members managed and used the district facilities
                  at the same time, a system should be set up to avoid the
                  occurrence of conflict of interests and the allegation of
                  transfer of benefits.

            (e)   They supported the proposed honorarium and allowances
                  for DC Members as the existing reimbursement
                  procedures for the accountable allowances were
                  complicated and trivial.

47.      Mr. CHAN On-tai supported the recommendations stated in the
consultation paper and pointed out that the transparency should be
enhanced. He remarked that water leakage was commonly found in some
aged buildings which urgently required improvements. He hoped that the
Government would support Members‟ role in this work by providing
assistance to them.

48.      Mr. LAM Man-fai, JP thanked the Secretary for Home Affairs, the
Permanent Secretary for Home Affairs and the Director of Home Affairs
for coming to WTSDC. He supported the recommendations of the
consultation document but considered that they were put forward a bit too
late. He hoped that the Government could quicken the pace and put the
recommendations into practice as early as 2007, not only implementing the
pilot scheme in 2007. He opined that only the leisure and cultural
facilities were touched on in the consultation document, whereas

olo/Dc[M16]_2                          16
environmental and health affairs were excluded. In accordance with the
Basic Law, one of the functions of district organizations included the
management of environmental hygiene. As Urban Council no longer
existed, DCs had become the only district organizations and so they should
be authorized to manage the leisure and cultural as well as environmental
hygiene affairs. On the other hand, the leisure and cultural facilities
managed by DCs were the district facilities, while the management of the
central facilities was still not delegated to DCs. He suggested setting up
cross-district ad hoc committee to manage the central facilities.

49.    Ms. CHAN Man-ki, Maggie considered that the most important
thing was that DCs could effectively monitor the work of the Government.
According to the recommendations in the consultation document, DCs
would be given greater allocation and could decide its use. Nevertheless,
as the staff establishment was not touched on, it would be far from
adequate to enhance the role of DCs.

50.     Mr. HUI Kam-shing considered that the review was limited in
enhancing the role of DCs and it was released in a great haste. He shared
the view of Mr. LAM Man-fai in relation to the delegation of the
management of environmental and hygiene facilities to DCs. He opined
that there had been no substantial changes in the roles and functions of
DCs over the past 20 years.

51.     Mr. NG Yiu-man considered that in terms of the time frame when
the review was released and its contents, he had the following two
enquiries:

                (a)   Which criteria HAB would use to choose the DCs for
                      participating in the pilot scheme in 2007 if the number
                      of applying DCs was greater than the anticipated ones?

                (b)   Was $15 million the cost ceiling for the works carried
                      out each year? Was cross-district cooperation allowed?


He also pointed out that the provision of the allowances for setting up and
closing Members‟ ward offices was a good suggestion, yet the ratio was
inappropriate and required adjustment. Based on his experience, setting
up ward office was more costly than that of closing the office.

52.  Mr. MOK Ying-fan said that he joined DC in 1985 and had been
DC Member for 20 years. DC had all along been playing the conciliatory

olo/Dc[M16]_2                            17
role without the actual authority.

53.      Mr. WONG kwok-tung said that he found no substantial
enhancement of the roles and functions of DCs. At present, DCs had no
authority in formulating policies, and the roles between DCs and the Food
and Environmental Hygiene Department had not been redefined in the
consultation document. On the other hand, the roles and responsibilities
of the former Urban Council and Urban Services Department had been
clearly defined in that the latter put the decision of the former into practice.
In short, he considered that the review itself was perfunctory.

54.        Mr. LEE Tat-yan raised the following views:

          (a)     The review had been conducted a bit too late, however it
                  would be better than none. He hoped that this was a
                  beginning, not an end.

          (b)     The paper suggested providing more manpower to support
                  the work of DCs.    However less than two new Members
                  would be added.

          (c)     Only a small number of DC Members were appointed to
                  join a number of advisory committees. He hoped that
                  more DC Members could join.

          (d)     He hoped that the proposals could be put into practice as
                  early as 2007.

55.     Mr. WU Chi-wai said that the functions of DCs were greatly
different from that of the former Urban Council. According to page 6 of
the consultation paper, DCs were basically consultative in nature and the
suggested functions of the future DCs would be much the same as those at
present. He suggested conducting a trial run for the proposals in Chapter
2 to 7 first and then carried out review. In short, he was disappointed
with the consultation paper. He said that if the review was responding to
public„s appeal for enhancing the roles and functions of DCs, he found it
absolutely impossible to accept.

56.      Mr. WONG Yat-yuk said that owing to the varied responsibilities
of the Government departments, Members found it difficult to implement
district-based work.

57.        Mr. CHUI Pak-tai said that there was no substantial change to the

olo/Dc[M16]_2                          18
functions of DCs after the dissolution of the Urban Council. He hoped
that the review would bring forth substantial effectiveness. He had the
following views towards the consultation document:

            (a)   It was suggested in the document that Appointed
                  Members would be maintained. He showed objection to
                  it. He was not against the Appointed Members but the
                  system itself. Appointed Members were not elected and
                  so they were not widely recognized. Appointment
                  system undermined the credibility of DCs and so had a
                  negative impact on the society. Nevertheless, the review
                  was still positive on the existential value of the
                  appointment system and he was disappointed with it.

            (b)   The society still needed to provide more chances to train
                  the political talents, but the recommendations in the
                  review still narrowed the functions of DCs.

            (c)   It had been suggested that five larger constituencies would
                  be demarcated in the territory. However it was not
                  mentioned in the document and the review lost its
                  effectiveness.

58.       Mr. HO Yin-fai supported the recommendations of the review in
principle. However according to the suggestions in the document, DCs
still played the consultative roles and were not given the de facto authority.
Members found it hard to implement projects beneficial to the livelihood
of the public. Members could only air the grievances among themselves.
He suggested that the Government set up a committee within the
consultative structure to decide which projects were beneficial to the
people and were worthy of implementation.

59. Mr. HO Chi-ping, Patrick, JP thanked the Members for their
enthusiastic speeches and focused discussion. He firstly clarified some
information:

            (a)   The projects of the former Urban Council were still in
                  progress and each of these projects cost more than $15
                  million, and so they had to be submitted to the Legislative
                  Council for applying fund allocation. District minor
                  works mentioned in the consultation document would be
                  allocated not more than $15 million each, instead of an
                  annual allocation of not more than $15 million.

olo/Dc[M16]_2                          19
                  Cross-district cooperation was possible.

            (b)   The Government had approximately 400 advisory
                  committees with about 3000 members. About one third
                  of the DC Members acted as the members of the
                  territory-wide advisory committees.

            (c)   The review of the functions of DC marked a step forward
                  for enhancing its functions, not the last step. This was
                  conducted to respond to the appeals of various parties
                  over the past years.

            (d)   Although DCs held no decision making power, they were
                  in control of the financial resources. Departments
                  concerned implemented the decision. If departments
                  concerned neither acted in accordance with the wishes of
                  DCs, nor fully responded to the appeals of DCs, the
                  related matters could be handled by the SCDA comprising
                  the Secretaries and Permanent Secretaries.          The
                  cross-departmental problems could be solved by SCDA.
                  The idea was that 14 department heads would be the
                  standing members in SCDA, and other department heads
                  would be present should actual needs arise. SCDA was
                  responsible for conciliating the works of all policy
                  bureaux. Problems unsolved would be referred to the
                  Policy Committee. District Officers (DO) of 18 districts
                  would know the implementation details and could help
                  conciliate the works of District Management Committee
                  (DMC). They hoped that district-based work could be
                  strengthened through this mechanism. DCs had much
                  room to manoeuvre in the management of district
                  facilities. $300 million each for both the hardware and
                  software work would be allocated to DCs that in turn
                  could play an important pivotal role.

            (e)   DCs could work as partners with the district organizations
                  in district affairs to implement projects beneficial to the
                  districts and which could highlight their characteristics.


60.    Mrs. LAM CHENG yuet-ngor, Carrie, JP, the Permanent Secretary
for Home Affairs added the following points:


olo/Dc[M16]_2                          20
            (a)   SCDA was set up to enhance the power of DCs and DOs,
                  and gave them systematic support. SCDA mainly dealt
                  with cross-district and cross-departmental affairs and
                  formulated feasible options.       DFMC would be
                  responsible for implementing them and so their functions
                  would not overlap.

            (b)   Some Members worried that district facilities were not
                  uniform, but indeed there was no need to unify district
                  facilities. Otherwise, the district facilities would lack
                  their characteristics and could not satisfy the needs of the
                  residents.

            (c)   There were justifications as to why some facilities would
                  not be included as the scope of management of DCs.
                  This had no implication that the Government made their
                  own policies behind closed doors.

            (d)   As far as manpower was concerned, the proposed addition
                  of 26 posts was just an early estimation. This was made
                  based on the assumption that 5 DCs intended to join the
                  pilot scheme. Posts would be created in HAD and the
                  Leisure and Cultural Services Department (LCSD).

            (e)   As regards the criteria for choosing the DCs to join the
                  pilot scheme, gradual steps should be taken in response to
                  the comments made by the Members in the focus group
                  discussion held earlier on that not every DC would
                  compete for the participation in the pilot scheme.
                  Nevertheless, after consulting three DCs, the results were
                  different from what they heard earlier on. HAB would
                  consider the matter again.

61.         Mr. LEE Tat-yan put forward the following motion:

            As regards the “Consultation Document on the Review on the
            Role, Functions and Composition of District Councils” issued by
            the Government, WTSDC agreed to the direction of review and
            supported various proposals in principle. Yet they hoped that the
            Government would listen to the views of the public and made
            improvements to the various proposals and details stated in the
            consultation document.


olo/Dc[M16]_2                          21
62.         Mr. SO Sik-kin seconded the motion.

63.     The Chairman enquired the Members about whether they intended
to make a speech or amendment relating to the motion.

64.     Mr. SO Sik-kin was glad to learn that the Secretary would
continue to review the functions of DC in future and he hoped that forward
steps would be taken.       He hoped that Members would support the
motion.

65.      Mr. SHI Lop-tak said that he was appointed as the DC Member in
2004. He was a merchant and had contributed more than he got. He
said that appointment system was a good way to attract people from the
business sector to participate in community affairs.

66.      Ms. CHAN Man-ki, Maggie supported the motion. She pointed
out that although the proposals in the consultation document were not
perfect, it signified one step forward. If the review was rejected simply
because it was not perfect, the chance of making one step forward would
be destroyed. She asked the opposing Members to reconsider it.

67.      Mr. WU Chi-wai said that Chapter 2 to 6 of the document covered
the technical topics. He opined that the document had not dealt with the
composition of DC and matters relating to election. He totally supported
the direction of the review, but he did not hope that the timetable for the
next review and items to be reviewed would be left undecided. He made
the amendment to the motion put forward by Mr. LEE Tat-yan as follows:

           Adding the statement „A pilot scheme should be conducted for the
           proposals stated in Chapter 2 to 6 of the consultation document.
           Review would be made after the implementation of the pilot
           scheme.‟ after the statement „In relation to the “Consultation
           Document on the Role, Functions and Composition of District
           Councils” issued by the Government.‟

      a.        How to enhance the district management role of DC
      b.        The composition of DC
      c.        Matters relating to the election of DC

            Deleting the statement „WTSDC agreed to the direction of the
            review and supported various proposals in principle. Yet they
            hoped that the Government would listen to the views of the public
            and made improvements to the various proposals and details stated

olo/Dc[M16]_2                           22
            in the consultation document.‟

68.    The motion was seconded by Mr. CHUI Pak-tai and Mr. CHAN
Lee-shing.

(Mr. CHENG Tak-kin, Michael, JP left the meeting at 6:15pm.)

69.      Mr. KAN Chi-ho pointed out that the motion of Mr. LEE Tat-yan
supported the proposals stated in the paper “in principle” and stressed that
the motion included asking the Government to listen to the views of the
public comprehensively and improve the details. He supported the
original proposal.

70.      As Members made no further amendments, the Chairman invited
Members to vote for the amendment motion first. The voting result was
as follows:

            Affirmative vote: 9
            Negative vote: 15

71.     The Chairman announced that the amendment motion was rejected
according to the voting result.

72.      The Chairman requested Members to vote for the original motion
of Mr. LEE Tat-yan. Before voting, Mr. CHENG Tak-kin, Michael, JP
had left the meeting but had entrusted Mr. CHOW Ching-lam in writing to
vote on his behalf. The letter of attorney was accepted. The voting
result was as follows:

            Affirmative vote: 16

73.     As the motion had been passed by the majority of the 31 DC
Members, the Chairman announced that the original motion of Mr. LEE
Tat-yan was adopted.

74.     The Chairman requested the Bureau to consider the views of
WTSDC and thanked Mr. HO Chi-ping, Patrick, JP; Mrs. LAM CHENG
Yuet-ngor, Carrie, JP; Mrs. TAN KAM Mi-wah, Pamela, JP; Mr. LAI
Yee-tak, Joseph; Mr. CHEUNG Kwok-kee, Paul and Mr. K.P.YAM for
attending the meeting.

(Dr. LI Sze-bay, Albert, BBS, JP; Ms. CHAN Man-ki, Maggie; Mr. HO
Chi-ping, Patrick, JP; Mrs. LAM CHENG Yuet-ngor, Carrie, JP; Mrs.

olo/Dc[M16]_2                          23
TAN KAM Mi-wah, Pamela, JP; Mr. LAI Yee-tak, Joseph; Mr. CHEUNG
Kwok-kee, Paul and Mr. K.P. YAM left the meeting at this juncture.)


VII         Presentation of Work Plan 2006/07 of ICAC Regional Office
            (Kowloon East/Sai Kung)
            (WTSDC Paper 36/2006)

75.   The Chairman welcomed and introduced the representatives of
ICAC Regional Office (Kowloon East/ Sai Kung):

            Mrs. TAM CHEUNG           ICAC Regional Officer/Kowloon
            Kwei-ying, Dorothy        East and Sai Kung

            Ms. LAM Shuk-yee, Anna Senior ICAC Officer/Kowloon East
                                   and Sai Kung

76.    Mrs. TAM CHEUNG Kwei-ying, Dorothy introduced the paper
with audio visual aid.

77.      Mr. FUNG Kwong-chung, JP supported the ICAC work plan
2006/2007. He suggested that ICAC could invite the local organizations
to jointly hold the community education activities to promote the culture of
integrity. On the other hand, he also recommended strengthening the
anti-corruption education for primary 5 to six students.

78.      Mr. HO Yin-fai also supported the ICAC work plan 2006/2007.
He pointed out that there was a rising trend in the corruption in which the
civil servants were involved. ICAC should work out the measures to
tackle the deterioration of the situation.

79.      Mrs. TAM CHEUNG Kwei-ying, Dorothy thanked Members for
putting forward a number of useful recommendations to which serious
considerations would be given. As regards anti-corruption activities,
ICAC Regional Office (Kln East and Sai Kung) would discuss the details
with the district offices and the relevant committees under DC later.
Corruption among civil servants was not deteriorating. There was a
declining trend of the corruption cases in which the civil servants were
involved over the past two years. There were 1286 cases in 2004 (34.3%)
and 1161 cases in 2005 (31.5%). ICAC would still pay attention to the
matter and would encourage the Government departments to formulate
their own integrity plan.


olo/Dc[M16]_2                        24
80.    The Chairman concluded that DC supported the ICAC work plan
2006/2007.

81.  The Chairman thanked Mrs. TAM CHEUNG Kwei-ying and Ms.
LAM Shuk-yee, Anna for attending the meeting.

(Mr. NG Yiu-man; Mrs. TAM CHEUNG Kwei-ying, Dorothy and Ms.
LAM Shuk-yee, Anna left the meeting at this juncture.)


VIII.      Wong Tai Sin District Festival 2006
           (WTSDC Paper 37/2006)

82.        The Secretary introduced the paper.

83.    Members endorsed that Wong Tai Sin District Festival be held in
2006 and the election for the Chairman of the Organising Committee be
held immediately. The details of the election were as follows:

            WTSDC Member to be              SHI Lop-tak
            nominated as the
            Chairman of the
            Organising Committee:

            Nominated by:                   HO Yin-fai

            Seconded by:                    SO Sik-kin, WU Chi-wai

84.    As there were no further nominations, the Chairman announced
that Mr. SHI Lop-tak be elected as the Chairman of the Organising
Committee of Wong Tai Sin District Festival 2006.


IX.         The Healthy City in Wong Tai Sin
            (WTSDC Paper 38/2006)

85.         The Secretary introduced the paper.

86.     Members endorsed that the Healthy City in Wong Tai Sin be held
in 2006 and the election of the Chairman of the Organising Committee be
held immediately:


olo/Dc[M16]_2                          25
            WTSDC Member to be              FUNG Kwong-chung, JP
            nominated as the
            Chairman of the
            Organising Committee:

            Nominated by:                   SO Sik-kin

            Seconded by:                    LAI Wing-ho, Joe, HO Yin-fai,
                                            SHI Lop-tak

87.     As there were no further nominations, the Chairman announced
that Mr. FUNG Kwong-chung be elected as the Chairman of the
Organising Committee of the Healthy City in Wong Tai Sin 2006.

(Ms. TAM Yuet-ping, Celia left the meeting at this juncture.)

X.          Progress Reports

(i)         Progress Report of the 15th Meeting of the Community Building
           and Social Services Committee held on 21.3.2006
           (WTSDC Paper 39/2006)

88.        Members noted the paper.

(ii)       Progress Report of the 15th Meeting of the Leisure and Cultural
           Committee held on 28.3.2006
           (WTSDC Paper 40/2006)

89.        Members noted the paper.

(iii)      Progress Report of the 15th Meeting of the Traffic and Transport
           Committee held on 4.4.2006
           (WTSDC Paper 41/2006)

90.        Members noted the paper.

(iv)       Progress Report of the 15th Meeting of the Finance, General and
           Economic Affairs Committee held on 20.4.2006
           (WTSDC Paper 42/2006)


olo/Dc[M16]_2                          26
91.        Members noted the paper.

(v)        Progress Report of the 15th Meeting of the Housing Committee
           held on 18.4.2006
           (WTSDC Paper 43/2006)

92.        Members noted the paper.

(vi)       Progress Report of the 14th Meeting of the Food and
           Environmental Hygiene Committee held on 7.3.2006
           (WTSDC Paper 44/2006)

93.        Members noted the paper.

(vii)      Progress Report of the 2nd Meeting of the Working Group on
           Government and Public Utilities Works Projects held on 17.3.2006
           (WTSDC Paper 45/2006)

94.        Members noted the paper.


(viii)     Progress Report of the Meeting of the Wong Tai Sin District
           Management Committee held on 21.4.2006
           (WTSDC Paper 46/2005)

95.      Members noted the paper.


X          Date of Next Meeting

96.    The 17th meeting of WTSDC would be held on 27.6.2006 (Tuesday)
at 2:30pm.

97.        There being no other business, the meeting adjourned at 7:00pm.


Wong Tai Sin District Council Secretariat Ref: WTSDC 15/5/5/53 Pt 14
May 2006



olo/Dc[M16]_2                          27
    Note: Should there be any discrepancies between the Chinese and
    English versions, the Chinese version shall prevail. This English
    summary translation is for reference only.




olo/Dc[M16]_2                       28
                                                            Annex A
                                [Minutes of WTSDC Meeting on 2.5.2006]

                       Office of LAU Kar-wah
Address: G/F, 162, Kam Hong Street, Choi Hung Estate
Telephone: 2321 7783
Fax: 2380 7508

Mr. WU Chi-wai,
Chairman of Housing Committee,
Wong Tai Sin District Council
                                                             8th April, 2006
Mr. WU,
                “Standpoint towards the Domestic Rent Policy”

      The public housing estate-Choi Hung Estate was built in 1963. At
that time, traffic arrangement was poor. The Former Housing Authority
(FHA) made an agreement with the residents that a 10% increase in rent
would be conducted for every three years.   However, there had been an
increase in rent for more than 28%. Residents of the lower class had no
choice but to accept it.

      The Housing Authority (HA) then carried out the “Housing Subsidy
Policy”. As a result, families were broken up, and the aging parents were
left uncared for. Shop owners in the aging estates found it hard to do
business. The elderly people were forced to apply for Comprehensive
Social Security Assistance (CSSA).

     The aging estates are created by HA. The implementation of “a
system of differential rents” will further disintegrate the residents and the
CSSA recipients are given unequal treatment. HA has not observed the
judgement made by the court about the rent policy and has rejected the
reduction or waiving of rent. HA has bypassed the resolution passed in
the Legislative Council about “median rent-to-income ratio of 10%” and
set an absurd policy that there will only be upward adjustment of rent.

     Therefore, I want to raise the following points : (1) I strongly object to

olo/Dc[M16]_2                          29
the system of differential rents, (2) I strongly ask for reduction of rent
before consultation, (3) I strongly demand the extension of the consultation
period for half a year.




                                                         Yours faithfully,
                                                              (signed)
                                                         LAU Kar-wah,
                                                          DC Member




olo/Dc[M16]_2                        30
                                                             Annex B
                                [Minutes of WTSDC Meeting on 2.5.2006]

                 Residents Association of Choi Hung Estate
Address: G/F, 162, Kam Hong Street, Choi Hung Estate
Telephone: 2321 7783
Fax: 2380 7508

To: Mr. WONG Kam-chi, Chairman of WTSDC and all Members
                                                 25th April, 2006

                “Standpoint towards the Domestic Rent Policy”

      The public housing estate-Choi Hung Estate was built in 1963. At
that time, traffic arrangement was poor. The Former Housing Authority
(FHA) made an agreement with the residents that a 10% increase in rent
would be conducted for every three years.   However, there had been an
increase in rent for more than 28%. Residents of the lower class had no
choice but to accept it.

     Choi Hung Estate has a bright history. The Estate has been
continuously awarded the Champion for ten years in the fund raising
campaign of the Tung Wah Group of Hospitals. It has been named the
philanthropic estate in Hong Kong. Since the Housing Authority (HA)
then carried out the “Housing Subsidy Policy”. families have been
broken up, and the aging parents have been left uncared for. Shop
owners in the aging estates find it hard to do business. The elderly people
are forced to apply for Comprehensive Social Security Assistance (CSSA).

     The aging estates are created by HA. The implementation of “a
system of differential rents” will further disintegrate the residents and the
CSSA recipients are given unequal treatment. HA has not observed the
judgement made by the court about the rent policy and has rejected the
reduction or waiving of rent. HA has bypassed the resolution passed in
the Legislative Council about “median rent-to-income ratio of 10%” and
set an absurd policy that there will only be upward adjustment of rent.

     Therefore, in the meeting held by the residents of Choi Hung Estate on

olo/Dc[M16]_2                         31
12th April, we raised the following views: (1) we strongly objected to the
system of differential rents, (2) we strongly asked for reduction of rent
before consultation, (3) we strongly demanded the extension of the
consultation period for half a year.


                                                 Yours faithfully,
                                                  (Chop affixed)
                              Residents Association of Choi Hung Estate




olo/Dc[M16]_2                        32
                                                            Annex C
                               [Minutes of WTSDC Meeting on 2.5.2006]

East Kowloon District Residents‟ Committee
Headquarters: 4/F,32-34, Choi Hung Road, Kln, Hong Kong
Office: 2/F, 16-18, Choi Hung Road, Kln, Hong Kong
Tel: 23502445 Website: www.eastkowloon.org.hk
Fax: 23234445 Email: info@eastkowloon.org.hk


Our ref: 060502/LR/49/DB/03
Your ref:



Mr. WONG Kam-chi, Chairman of WTSDC and all Members

Response to “Consultation Paper on Review of Domestic Rent
Policy”

     We support the “Consultation Paper on Review of Domestic Rent
Policy” finally published by the Housing Authority (HA). However we
must point out that HA should reduce rent for 10% as a whole based on the
aggregate of the inflation over the past few years and then carry out the
review. Without these measures in place, it cannot show that HA has the
sincerity in reviewing domestic rent and responding to the reasonable
expectations of the public housing tenants.

    We have the following views relating to the contents of
“Consultation Paper on Review of Domestic Rent Policy”:

1.  How to Evaluate the Affordability of Public Housing Tenants and
     Median Rent-to-Income Ratio (MRIR)
      Although the Court of Final Appeal decided that in accordance with
16 (1A) of the “Housing Ordinance”, the 10% Median Rent-to-Income
Ratio was not considered as the statutory definition of “affordability”, it
was only because it was not clearly written in the Ordinance. One must
bear in mind that the term could be dated back to the 80‟s. We and a
number of organizations have carried out a large-scale opinion poll in the
several tens of new and old housing estates, the result showed that people

olo/Dc[M16]_2                          33
considered the reasonable level of domestic rent as 10% of the median
household income.
      Although HA has fixed the rent of the new housing estates from 15%
to 18.5% of the median household income, they have asserted that it will
not go beyond 10%. It can be seen that the public takes this as the
benchmark for judging whether the rent level is reasonable.
Unfortunately, HA is of the view that the income of the households will
keep on increasing after they have moved in, and so they intend to set a
higher rent level. They also consider that there is no problem in
increasing rent to a great extent consecutively. The former Legislative
Council had amended the related Ordinance restricting the MRIR, the level
of rent increase had been maintained below 10% of MRIR. However
because of the bubbling economy, the freeze in rent cannot help maintain
the MRIR, leading to the conflict between officials and residents, judicial
review as well as social unrest.

    We are of the view that:
    1. Using MRIR to evaluate the rent level has still been a simple and
        reasonable method, and no households will be excluded in this
        case. This calculation method can ensure that half of households
        are not required to hand in rents beyond their affordability and the
        other half can be eligible for Comprehensive Social Security
        Assistance (CSSA) and rent assistance, so that they can hand in
        substantial rents within their affordability.
    2. In reality, it is still meaningful to use the 10% MRIR as the
        benchmark to evaluate whether the rent is fixed at a reasonable
        level.
    3. A mechanism for upward and downward adjustment of rent should
        be introduced for domestic rent to ensure that it is maintained at a
        reasonable level.
    4. HA should implement downward adjustment of MRIR for the
        newly built public housing to alleviate the pressure imposed by
        rent reduction.
    5. The design of the newly-built public housing should fit in with the
        trend of the public housing households, for example, with larger
        number of small families, more smaller flats for small families
        should be built to avoid raising MRIR owing to the allocation of
        larger flats to small families.



olo/Dc[M16]_2                        34
2.   Non-differential and Differential Rent
     The title as stated in the “Consultation Paper on Review of Domestic
Rent Policy” is misleading. Differential rents have already been charged
with reference to different districts, estates facilities and date of renting.
Rents are only not fixed according to the floors and directions.
      We opine that there are no adequate public housing estates for people
to choose whatever floors and directions they prefer. Therefore, it is not
reasonable to differentiate rent on this basis. We agree that some
unpopular flats having been vacant for a long time can be rented on
discount to minimize the vacancy of public housing flats.

3. Are the Rents All-inclusive of or Not?
     Paragraph 9.2 of the “Consultation Paper on Review of Domestic Rent
Policy” states that “Prior to 1980, rents for public housing estates were
exclusive of rates”. However it must be pointed out that HA had stated
clearly in writing that the increase of rent would be carried out once per
two years, the extent was 10% of the rent (inclusive of rates). It can be
said that HA always takes into account the affordability of tenants in
paying the expenditure of housing, as a result, since 1980, HA has charged
rents inclusive of rates, management fees and maintenance fees from all
public housing units.
     For a number of years, HA has adopted MRIR as the indicator for
measuring the affordability of tenants, while rent used for calculating
MRIR includes the rates, management fees and maintenance fees. If net
rents are used to calculate MRIR, even if MRIR is lowered, people will
query whether this is an excuse for rent increase.
     We opine that the rent inclusive system and the existing calculation
method of MRIR should be kept. However the tenancy agreement should
also state the amount of rates, management fees and maintenance fees to
increase the transparency.


4. Should Tenancy Agreement be a Fixed-term One?
     The purpose behind the construction of public housing is to let tenants
live and work in peace and contentment, and can accumulate wealth for
themselves and the society. If the tenancy agreement is altered to a fixed
term one, it will lose its original meaning. Indeed, we cannot guarantee
that tenants are capable to afford the rent of private housing or purchase
their own flats, not to mention the variation in dates in which they sign the

olo/Dc[M16]_2                         35
tenancy agreement. It will bring in a series of administrative pressure and
expenditure relating to renewal of tenancy agreement, adjustment in rents,
assessment of the level of rents, and loss will outweigh the gain at last.
     HA has set in place a mechanism for terminating the tenancy
agreement of tenants who contravene it, and there is also a set of policies,
including “Housing Subsidy Policy”, “Rational Allocation of Public
Housing Resources”, re-letting the flats after the death of the head of the
households, “Marking Scheme for Tenancy Agreement” and so on. In
this case, HA can decide whether they will renew the contract with the
households and review the mechanism from time to time without having to
set any fixed term tenancy.
     Therefore, we think that we should continue using the existing
tenancy.

5.    Rent Fixing and Review Cycles
     We consider that HA should immediately reduce rent by 10% based
on the aggregate of the inflation over the past few years to meet the
reasonable expectation of public housing tenants, and all public housing
rent will be reviewed once for every three years to decide whether rent will
be reduced or increased. As for the rent of the newly-built public
housing, we agree that two rent reviews will be carried out each year.

                                                 WTSDC Members
                                                 LEE Tat-yan,
                                                 SO Sik-kin
                                               CHAN Wai-kwan, Andie
                                                 2-5-2006

  In response to the “Consultation Paper on Review of Domestic Rent
  Policy”




olo/Dc[M16]_2                        36
                                                             Annex D
                                [Minutes of WTSDC Meeting on 2.5.2006]

Comments on “Consultation Paper on Review of Domestic Rent
Review”

(1) General
    The purpose behind the construction of public housing is to provide
    inexpensive accommodation and related facilities to the needy persons.
    It not only stabilizes the society, but also helps tenants save the
    required money for education and improve their living standard, as a
    result, they can leave the poverty web. Therefore, public housing has
    played an important role in social welfare and facilitated resources
    reallocation.

      In view of the welfare role of public housing and its function in
      resources reallocation, the economic capability of households is the
      main consideration when the level of rent is fixed. If too many other
      factors are taken into consideration when setting the level of rent, the
      original function of public housing will be deviated, causing social
      instability. Therefore, the introduction of market-oriented concept
      for implementing domestic rent policy will diminish the original
      functions of public housing. The Housing Authority (HA) should
      give prudent consideration to the social consequences arising from it
      and the impact caused to social stability.

      HA puts everything in the consultation paper, including the suitable
      and unsuitable methods, policies implemented or not implemented, as
      a result, the paper lacks the focus. The public finds it difficult to get
      hold of the picture and discuss it. On the other hand, there is also a
      lack of clear objective stated in the consultation document, for
      example, the revised Housing Ordinance in 1998 is criticized on one
      hand, while a lot of technical amendment has been made to the
      Ordinance on the other hand. This has given the impression to
      people that the Government intends to bypass the legislative
      restrictions and adopts the administrative method to make the
      amendment. This only shows that HA does not take legislation into
      account and only paves the way for rent increase, which has weakened

olo/Dc[M16]_2                          37
      the trust of people in the sincerity and credibility of HA. The
      effectiveness of the consultation paper is also dubious. Indeed, if
      HA wants to discuss if the rent level meets the affordability of
      households, they have to review the criteria for setting the rents for the
      newly-built housing apart from reviewing the rent adjustment
      mechanism. Nevertheless, the related policies are not mentioned in
      the consultation document and so the public only doubts that HA just
      carries out the review for administrative sake.


(2) Mechanism can be Fixed after Rent Reduction

       Since 2000, the median rent-to-income ratio (MRIR) of public
       housing tenants has all along exceeded the statutory requirement of
       10%, and has risen to 14.6% in 2005. Although the Final Court of
       Appeal has decided that HA will not contravene the legislation
       even if it does not reduce the rent, figures show that the salary of
       public housing tenants has drastically dropped but no rent reduction
       has been initiated by HA. Mr. Michael Suen Ming-yeung once
       said that he would consider implementing rent waiving measures
       regardless of the result of the lawsuit before the Final Court of
       Appeal made the decision relating to the lawsuit of rent, but he had
       not fulfilled his promises finally. As such, the public has lost
       confidence in HA and the Government officials dealing with
       housing policies. Therefore, HA must cut the rent first to show to
       the public by action that the consultation paper not aims at paving
       the way for rent increase. It is only with these measures in hand
       can the public‟s confidence in HA be restored.

       On the other hand, based on the salary of tenants and consumer
        price index, HA should also reduce rent. It is because the rent of
        public housing is fixed at the level of 96/97, and the median
        household income of public housing tenants has dropped from
        $13,000 at 1997 to $10,500 at 2005, their household income has
        dropped nearly for 20%; while consumer price index (A) also has
        dropped from 103.2 at 1997 to 93.7 at 2005, recording nearly 10%
        decrease; if HA fixes the rent according to the affordability of
        tenants and uses consumer index as the benchmark, then a 10 %
        decrease in rent should be exercised; if the household income is

olo/Dc[M16]_2                          38
          used as the benchmark, then 20% decrease in rent should be
          exercised.

(3) Household Income should be used as the Benchmark when Rent
    Adjustment Mechanism is Introduced

     If HA first reduces the rent to pacify the public and restore public‟s
      confidence, Hong Kong Association for Democracy and People‟s
      Livelihood agrees in principle to adjust the rent based on the
      affordability of tenants. However, we object to adopting the
      consumer price index as the indicator for measuring the
      affordability of tenants. It is because the rise and fall of the
      income of public housing tenants will vary from that of the
      consumer price index in terms of time and extent. For example,
      the consumer price index (A) has dropped for approximately 10%
      from 97 to 2005, while the median household income of public
      housing tenants has dropped for about 20%. Therefore, to
      accurately assess the affordability of public housing tenants,
      reference should be drawn to the level of household income for rent
      adjustment.

(4) Enacting Legislation before Implementation

     To ensure that HA cannot bypass the Legislative Council through
      administrative means, the rent adjustment mechanism made by HA
      after rent deduction must be debated in the Legislative Council
      before legislation is enacted.
     To ensure that the level of domestic rent is within the affordability
      of tenants, the criteria for formulating the rent level for new
      buildings must be reviewed apart from developing the reasonable
      rent adjustment mechanism, so that the domestic rent review can be
      more comprehensive.
     Before developing reasonable criteria for setting new rent and rent
      adjustment, objection is raised as to the definition of rent and the
      amended calculation method of median rent.

(5) Objection to the Policy of “Differential Rent”

          It is recommended that public housing flats at lower level with

olo/Dc[M16]_2                           39
           poorer view and environment should charge cheaper rent, but more
           expensive on the contrary. This seem to be reasonable on the
           surface, indeed it differentiates people into “rich and poor”,
           weakening the confidence of the disadvantaged. This is not
           conducive to establishing a harmonious and consolidated
           community. As a result, the society has to bear a higher cost.
          We accept that six districts with different rents be further divided,
           so that flats in the more remote districts can be charged cheaper
           rents to show compassion for tenants who have to pay higher
           traffic expenses.

(6) Other Opinions

    Objecting to Implementing Fixed Term Tenancy: According to
     the existing housing subsidy policy, the public housing tenants have
     to declare their income on a regular basis. The Housing
     Department can charge extra rent based on the declaration
     information submitted by tenants and scrutinize the assets of tenants
     handing in double rent. If the assets of tenants exceed the upper
     limit, HA can take back the flats and so it is unnecessary to
     introduce “fixed term tenancy”. As such, “fixed term tenancy” will
     only be a disturbing measure and aggravate the psychological
     pressure of public housing tenants.
    Maintaining the Triennial Review Cycle: In accordance with the
     “Housing Ordinance”, HA carries out rent review once for every
     three years; as such we support maintaining a triennial review cycle,
     which helps enhancing the stability of rent level.
    Extending the Consultation Period for Six Months: A lot of
     technical suggestions have been made in the consultation paper and
     the general public has difficulty in fully understanding them within a
     short time. On the other hand, domestic rent review is an important
     policy that affects more than
     600 000 households and nearly 2 million people, and it has played
     an important role in stabilizing Hong Kong society as a whole.
     Therefore, HA should extend the consultation period from three
     months to six months so that public housing tenants can have
     sufficient time to understand the contents and build up the consensus.
     It is under these circumstances that a reasonable domestic rent
     policy can be made.

olo/Dc[M16]_2                           40
    While reviewing domestic rent, HA should also review whether
     the use and management of resources can enhance the efficiency
     to ensure that rents handed in by public housing tenants can be
     suitably and effectively used.


                                                WTSDC Members
                                                 MOK Ying-fan
                                                 HUI Kam-shing

                                                  2 May 2006




olo/Dc[M16]_2                     41
                                                                  Annex E
                                     [Minutes of WTSDC Meeting on 2.5.2006]

File reference: D/WTS/DC/20060502/2
To: Chairman of WTSDC and all Members


                   Responding to “Review of Domestic Rent Policy”

      Owing to the economic downturn of the past few years, the salary of
the public has drastically reduced, the rent of the public housing has been
frozen without downward adjustment. DAB has always strived for the
reduction in rent, but the Government has not responded to the appeals of
the public. Although there has been a slight improvement in the social
economy, the domestic rent is far beyond the affordability of residents.
As a result, we consider that the Housing Department (HD) must reduce
rent first before carrying out the review.

     In relation to the concept of “differential rents”, using a fixed
rent-to-income ratio for rent setting, and the way to measure the
affordability of tenants stated in the paper, we have the following views:

     1.         We are of the view that it is hard for people to support the
                concept of “differential rents”. It is because this method of rent
                setting would result in high administrative costs and low
                cost-effectiveness. Moreover, after the implementation of the
                new policy, many problems would arise, for example, the
                affordability of the applicants has not been counted as one of the
                considerations of public housing allocation. As a result, the rent
                of the allotted housing far exceeds the affordability of applicants.
                When HD sets the rent for each unit, it would inevitably lead to a
                lot of controversies and cause confusion.

     2.         We incline not to support the fixed rent-to-income ration for rent
                setting. As there are constant changes in the salary, it means
                that the 600 thousand public housing tenants must declare to HD
                regularly. As resources involved and nuisance caused to the
                public are not easy to estimate, HD will also find it hard to verify

olo/Dc[M16]_2                               42
                the salary of the people on a self-employed basis or doing odd
                jobs. Moreover, with the implementation of the suggested
                policy, “increase in salary” will lead to increase in rent, which
                will cause the dissatisfaction of the public.

     3.         The method of measuring the affordability of the tenants when
                setting and adjusting the rent is one of the focus points of the
                consultation paper this time. We share the view that the
                affordability of the tenants must be taken into consideration when
                setting the rent. All along, HD has adopted “median
                rent-to-income ratio (MRIR)” as the indicator for measuring the
                affordability of the tenants because this ensures that the level of
                domestic rent can meet the affordability of the tenants. This
                method has its advantage. However for the past few years, HD
                has not taken into consideration the downturn of the economy
                and lowered the rent. On the other hand, in relation to the
                upward and downward rent adjustment put forward by HD, we
                only see the rationale behind it. The residents are still kept in
                the dark as to the actual operation and formula of upward and
                downward rent adjustment. We hope that HD could put forward
                some more valid proposals to the public for their discussion.

   We also welcome the thorough review carried out by HD relating to
domestic rent review. However the interests of the residents must be
considered and their appeals must be listened to. The policy of “Rent
Reduction before Rent Review” must be carried out. Meanwhile, the
residents‟ views can be collected through public consultation and the
various proposals can be amended to take care of the needs of residents.


                                                 DAB Wong Tai Sin Branch
                                                 WTSDC Members
                                                 KAN Chi-ho, HO Yin-fai
                                              LAM Man-fai, LAI Wing-ho,Joe
                                                 CHAN Man-ki, Maggie,
                                                CHENG Tak-kin, Michael
                                                    2.5.2006




olo/Dc[M16]_2                               43
                                                              Annex F
                                  [Minutes of WTSDC Meeting on 2.5.2006]

To: Mr. WONG Kam-chi, WTSDC Chairman and all Members
Fr: Defend the Rights of Housing for Basic Level Joint Association
Date: 2 May 2006

Stance of Defend the Rights of Housing for Basic Level Joint
Association on the “Consultation Paper on Review of Domestic Rent
Policy” :

Propping up the Property Market Devastates HA’s Financial Situation
Too Many Suggestions Lead to Rent Increase in Disguise
The Policy of Differential Rents Disintegrates Tenants
Upward and Downward Adjustment of Rents is Dubious with the
Implementation of Domestic Rent Review

The stance of “Defend the Rights of Housing for Basic Level Joint
Association (hereinafter called “the Association”)” on the “Consultation
Document of Review of Domestic Rent Policy”(hereinafter called the
“Consultation Document” ) is:
“Rent Reduction before Consultation and the Extension of Consultation
Period for Six Months”; and we have drafted the ten principles as follows:

(1)       Background of the Domestic Rent Review: We are of the view
        that the domestic rent review of the Housing Authority (HA) this
        time is the product of the adjustment in housing policy adopted by
        the Government to salvage the property market after the Asian
        Financial Turmoil.        As the cessation in constructing and selling
        the Home Ownership Scheme (HOS) Flats and public housing estates
        has led to the loss in the revenue of HA, thoroughly devastated the
        development strategy of the “Long Term Housing Strategy”
        developed in 1987, and changed the long-held policy objective of
        using public housing estates as “social housing”.

(2)       Rent Increase is the Crux:       The crux of domestic rent review
        lies not in proposing a rent structure that is affordable, more rational
        and flexible, provides more choice to tenants, and helps promote the
        long-term sustainability as stated in the “Consultation Paper”, but as

olo/Dc[M16]_2                           44
        stated in paragraph 4.7 of the paper, an important consequence of the
        legal restriction imposed by the “Housing Ordinance” is that HA is
        prohibited from increasing rents once the MRIR exceeds 10%. The
        verdict of the Court of Final Appeal has put HA and the tenants of
        public housing estates in a dilemma. When MRIR exceeds the
        statutory standard, there will neither be rent reduction nor rent
        increase. We consider that how HA can get rid of the control
        imposed by the “Housing Ordinance” on future rent increase is the
        crux of the matter.

(3)     Abolition of Ordinance for Rent Increase: “Consultation
        Document” puts forward many data pinpointing that the problem of
        affordability is non-existent among the “CSSA tenants” and
        “Well-off tenants”. The purpose behind it is to convince the public
        to accept ruling out the relevant persons and making a downward
        adjustment of the median ratio. At the same time, the paper also
        recommends excluding rates and management fees and artificially
        lowering the upper limit of 14.6% above the median ratio to 7.6%
        and achieves the objective in “conducting immediate rent increase
        without amending the ordinance”.       We consider that this is the
        strategy of HA in bypassing the Legislative Council by adopting
        “numeric strategy” in solving “political problems”. This may run
        counter to the “Housing Ordinance”

(4)    Smoke Screens behind the Policy: The Association considers that
       the “Consultation Document” has introduced a controversial policy
       of “differential rents” that has no use in increasing the rent revenue.
       The consultation only aims at distracting people‟s mind.        The
       proposal will arouse controversy and disintegrate public housing
       tenants. This is also advantageous for the Government to divert
       people‟ s attention from “ Affordable Rents are Safeguarded by
       Legislation”, and public housing will thus become market-oriented.
       Therefore, no matter whether it is the proposed improvement for the
       calculation method of MRIR, the indicator for the upward or
       downward adjustment of rents, the improvement of Rent Assistance
       Scheme or the system of differential rents are all smoke screens
       which lead people astray. Therefore, the Association urges the
       community to set the focus and priority in response to the
       “Consultation Document”.

olo/Dc[M16]_2                          45
(5)     Legislative Protection is the Basic Principle: The spirit of
        domestic rent policy as stated in the “Housing Ordinance” is to
        ensure that the setting of domestic rent would meet the
        “affordability” of tenants by means of “legislative protection” and
        “fixing the upper limit of rent increase”. We stress that any
        alteration in domestic rent policy would not contradict the basic
        principle.

(6)    Differential Rents Creates Discrimination: What worries people
       is that the proposals stated in the paper, such as differential rents are
       calculated according to “comparable estate values” , well-off tenants
       can choose the best units, the affordability is calculated by using
       “consumer price index” and so on. All these measures aim at
       “making public housing the commodity” and “causing social
       discrimination”, creating social gap and running counter to the spirit
       of fairness and consistency in public housing policy.

(7)    No Downward Rent Adjustment: „Defend the Rights of Housing
       for Basic Level Joint Association‟ (The Association) considers that
       the wide coverage on the rent adjustment mechanism aims at
       offsetting the upper limit of rent setting through legislative protection
       as stated in the “Housing Ordinance”. Indeed, the existing
       “Housing Ordinance” only restricts the authority of HA in rent
       increase. HA is totally entitled to decide whether rent would be
       reduced. Rent freeze is an excuse to delay the reduction in rent.
       As such, we consider that HA will introduce new mechanism through
       which factors other than „median salary‟ would be put forward. It is
       because “Housing Ordinance” prohibits their authority in rent
       increase and so they want to pass off the sham as the genuine and
       produce public opinion advantageous to the amendment of law by the
       Government for future amendment in the “Housing Ordinance”.
       There is a wide gap between the rich and the poor in Hong Kong
       nowadays, and there is the onset of inflation. In view of the
       mechanism of upward and downward rent adjustment as put forward
       by HA, the chance of downward adjustment is slim.

(8)      Poor Households have become the Scapegoats: We consider
        that the continuous increase in CSSA tenants originates from the

olo/Dc[M16]_2                           46
        structural imbalance of the economic development in Hong Kong.
        “Consultation Paper” tries to convince the public with a lot of data by
        pointing out that the CSSA households and households receiving rent
        assistance have no problem in affordability, and persuade the public
        to accept the existing calculation method of rent by deleting the
        related persons and adjusting the existing MRIR downward.
        However, when attention is drawn to the figures recently published
        by HA in recent days, among the existing 640 000 public housing
        households, nearly 40% of them (133 000 households) are receiving
        CSSA or are eligible to receive rent assistance (114 000 households).
        It can be seen that the poverty of public housing households has
        become so serious. We opine that the emergence of a large number
        of CSSA households or households receiving rent assistance arise
        from the imbalance in the social structural development. As there is
        a lack of retirement protection, therefore there are a large number of
        elders receiving CSSA. As for some people in temporary financial
        difficulties, they only temporarily receive CSSA. If HA attends to
        trifles to the neglect of essentials, and is mistaken into thinking that
        deleting the CSSA households can solve the crisis in rent structure,
        they are just using “numeric strategy” to solve “political problems”,
        which is not only a serious social discrimination, but also runs
        counter to the “Housing Ordinance”.

(9)     Predicament caused by the Erroneous Policy of HA: If the
        emergence of CSSA households arises from the structural imbalance
        of the economic development in Hong Kong, the imbalance of “rent
        structure” and “household structure” is caused by 20 years of wrong
        policy carried out by HA. When the Association met Mr. K.H.LAU,
        the deputy director of Housing Department in October last year, they
        had pointed out that since the implementation of the policy of
        well-off tenants in 1987, a large number of “elderly household” and
        “small family” was produced; a large number of households finally
        “buy their own home” (As indicated in the annual report, more than
        400 000 public housing tenants have bought their own homes since
        the sale of the Home Ownership Scheme flats and the public housing
        flats afterwards and the introduction of Home Purchase Loan
        Scheme.). This can be said that the household with financial means
        have left the public housing flats, leading to the „imbalance of
        household structure‟ and „poverty of public housing households‟.

olo/Dc[M16]_2                           47
        On the other hand, since the end of 80‟s, HA had planned for the sale
        of public housing, which was the important factor leading to the
        construction of new harmony-type flats and the relaxation of the
        allocation ratio in living area in the new flats. These measures have
        led to the soaring increase in rent by more than double (from $31.6
        per sq metre in 1991 to $70 in recent days) in ten years. The rent of
        public housing estates nowadays has exceeded the affordability of the
        tenants. Indeed, this is the legacy of “the policy of well-off tenants”
        implemented by HA for many years and the long-term erroneous
        policy for the preparation of “sale of public housing”.

(10). Who Makes Up the Budget Deficit?: As said in Chapter 2 of the
      “Consultation Paper”, there will be a deficit of $ 800 millions in the
      coming four years. It is because HA is subject to the legislation and
      is required to ensure the allocation of housing to the applicants on the
      waiting lists on one hand, and the maintenance of fiscal balance on
      the other hand. Owing to the increase in revenue drawn from the
      rents of the newly built estates of the Housing Department, as well as
      the drop in the management cost of outsourcing projects, it has
      recorded a surplus of $450 millions last year from the rented public
      housing. On the other hand, since HA sold shopping centres and
      carparks last year, they have reaped $30 billions immediately.
      Regardless of other development funds, a cash flow of over 50
      billions has been recorded. As such, we query the rationale behind
      HA for asserting that there will be $ 800 millions in deficit. Is it the
      man-made fiscal deficit for „rent increase‟?




olo/Dc[M16]_2                          48
                                                             Annex G
                                [Minutes of WTSDC Meeting on 2.5.2006]

To: Mr. WONG Kam-chi, WTSDC Chairman and all Members

We put forward the following motion relating to the “Consultation Paper
on Review of Domestic Rent Policy” (hereinafter called the Consultation
Paper) of the Housing Authority:

Rent Reduction before Consultation and the Extension of Consultation
Period for Six Months

Background of the Domestic Rent Review: We are of the view that the
domestic rent review of the Housing Authority (HA) this time is the
product of the adjustment in housing policy adopted by the Government to
salvage the property market after the Asian Financial Turmoil.        As the
cessation in constructing and selling the Home Ownership Scheme (HOS)
Flats and public housing estates has led to the loss in the revenue of HA,
thoroughly devastated the development strategy of the “Long Term
Housing Strategy” developed in 1987, and changed the long-held policy
objective of using public housing estates as “social housing”.

(1)    Rent Increase is the Crux:     The crux of domestic rent review lies
       not in proposing a rent structure that is affordable, more rational and
       flexible, provides more choice to tenants, and helps promote the
       long-term sustainability as stated in the “Consultation Paper”, but as
       stated in paragraph 4.7 of the paper, an important consequence of the
       legal restriction imposed by the “Housing Ordinance” is that HA is
       prohibited from increasing rents once the MRIR exceeds 10%. The
       verdict of the Court of Final Appeal has put HA and the tenants of
       public housing estates in a dilemma. When MRIR exceeds the
       statutory standard, there will neither be rent reduction nor rent
       increase. We consider that how HA can get rid of the control
       imposed by the “Housing Ordinance” on future rent increase is the
       crux of the matter.

(2)     Abolition of Ordinance for Rent Increase: “Consultation
        Document” puts forward many data pinpointing that the problem of
        affordability is non-existent among the “CSSA tenants” and

olo/Dc[M16]_2                          49
        “Well-off tenants”. The purpose behind it is to convince the public
        to accept ruling out the relevant persons and making a downward
        adjustment of the median ratio. At the same time, the paper also
        recommends excluding rates and management fees and artificially
        lowering the upper limit of 14.6% above the median ratio to 7.6%
        and achieves the objective in “conducting immediate rent increase
        without amending the ordinance”.       We consider that this is the
        strategy of HA in bypassing the Legislative Council by adopting
        “numeric strategy” in solving “political problems”. This may run
        counter to the “Housing Ordinance”

(3)     Legislative Protection is the Basic Principle: The spirit of domestic
        rent policy as stated in the “Housing Ordinance” is to ensure that the
        setting of domestic rent would meet the “affordability” of tenants by
        means of “legislative protection” and “fixing the upper limit of rent
        increase”. We stress that any alteration in domestic rent policy
        would not contradict the basic principle.

(4)    Differential Rents Creates Discrimination: What worries people is
       that the proposals stated in the paper, such as differential rents are
       calculated according to “comparable estate values” , well-off tenants
       can choose the best units, the affordability is calculated by using
       “consumer price index” and so on. All these measures aim at
       “making public housing the commodity” and “causing social
       discrimination”, creating social gap and running counter to the spirit
       of fairness and consistency in public housing policy.

(5)    No Downward Rent Adjustment: „Defend the Rights of Housing for
       Basic Level Joint Association‟ (The Association) considers that the
       wide coverage on the rent adjustment mechanism aims at offsetting
       the upper limit of rent setting through legislative protection as stated
       in the “Housing Ordinance”. Indeed, the existing “Housing
       Ordinance” only restricts the authority of HA in rent increase. HA
       is totally entitled to decide whether rent would be reduced. Rent
       freeze is an excuse to delay the reduction in rent. As such, we
       consider that HA will introduce new mechanism through which
       factors other than „median salary‟ would be put forward. It is
       because “Housing Ordinance” prohibits their authority in rent
       increase and so they want to pass off the sham as the genuine and

olo/Dc[M16]_2                          50
        produce public opinion advantageous to the amendment of law by the
        Government for future amendment in the “Housing Ordinance”.
        There is a wide gap between the rich and the poor in Hong Kong
        nowadays, and there is the onset of inflation. In view of the
        mechanism of upward and downward rent adjustment as put forward
        by HA, the chance of downward adjustment is slim.

(6)    Poor Households have become the Scapegoats: We consider that
       the continuous increase in CSSA tenants originates from the
       structural imbalance of the economic development in Hong Kong.
       “Consultation Paper” tries to convince the public with a lot of data by
       pointing out that the CSSA households and households receiving rent
       assistance have no problem in affordability, and persuade the public
       to accept the existing calculation method of rent by deleting the
       related persons and adjusting the existing MRIR downward.
       However, when attention is drawn to the figures recently published
       by HA in recent days, among the existing 640 000 public housing
       households, nearly 40% of them (133 000 households) are receiving
       CSSA or are eligible to receive rent assistance (114 000 households).
       It can be seen that the poverty of public housing households has
       become so serious. We opine that the emergence of a large number
       of CSSA households or households receiving rent assistance arise
       from the imbalance in the social structural development. As there is
       a lack of retirement protection, therefore there are a large number of
       elders receiving CSSA. As for some people in temporary financial
       difficulties, they only temporarily receive CSSA. If HA attends to
       trifles to the neglect of essentials, and is mistaken into thinking that
       deleting the CSSA households can solve the crisis in rent structure,
       they are just using “numeric strategy” to solve “political problems”,
       which is not only a serious social discrimination, but also runs
       counter to the “Housing Ordinance”.

(7)     Predicament caused by the Erroneous Policy of HA: If the
        emergence of CSSA households arises from the structural imbalance
        of the economic development in Hong Kong, the imbalance of “rent
        structure” and “household structure” is caused by 20 years of wrong
        policy carried out by HA. When the Association met Mr. K.H.LAU,
        the deputy director of Housing Department in October last year, they
        had pointed out that since the implementation of the policy of

olo/Dc[M16]_2                          51
        well-off tenants in 1987, a large number of “elderly household” and
        “small family” was produced; a large number of households finally
        “buy their own home” (As indicated in the annual report, more than
        400 000 public housing tenants have bought their own homes since
        the sale of the Home Ownership Scheme flats and the public housing
        flats afterwards and the introduction of Home Purchase Loan
        Scheme.). This can be said that the household with financial means
        have left the public housing flats, leading to the „imbalance of
        household structure‟ and „poverty of public housing households‟.
        On the other hand, since the end of 80‟s, HA had planned for the sale
        of public housing, which was the important factor leading to the
        construction of new harmony-type flats and the relaxation of the
        allocation ratio in living area in the new flats. These measures have
        led to the soaring increase in rent by more than double (from $31.6
        per sq metre in 1991 to $70 in recent days) in ten years. The rent of
        public housing estates nowadays has exceeded the affordability of the
        tenants. Indeed, this is the legacy of “the policy of well-off tenants”
        implemented by HA for many years and the long-term erroneous
        policy for the preparation of “sale of public housing”.

(8)     Who makes up the budget deficit?: As said in Chapter 2 of the
        “Consultation Paper”, there will be a deficit of $ 800 millions in the
        coming four years. It is because HA is subject to the legislation and
        is required to ensure the allocation of housing to the applicants on the
        waiting lists on one hand, and the maintenance of fiscal balance on
        the other hand. Owing to the increase in revenue drawn from the
        rents of the newly built estates of the Housing Department, as well as
        the drop in the management cost of outsourcing projects, it has
        recorded a surplus of $450 millions last year from the rented public
        housing. On the other hand, since HA sold shopping centres and
        carparks last year, they have reaped $30 billions immediately.
        Regardless of other development funds, a cash flow of over 50
        billions has been recorded. As such, we query the rationale behind
        HA for asserting that there will be $ 800 millions in deficit. Is it the
        man-made fiscal deficit for „rent increase‟?

May we put forward the motion again so that the public housing tenants
can be given fairer treatment.



olo/Dc[M16]_2                           52
Motioned by: TO Kwan-hang, Andrew
Seconded by: WU Chi-wai; TAM Yuet-ping, Celia; CHAN Lee-shing;
CHUI Pak-tai; HUI Kam-shing; MOK Ying-fan; KWOK Sau-ying; LAU
Kar-wah; WONG Kwok-tung; WONG Yat-yuk; the Hon TAM Heung-man

24 April 2006




olo/Dc[M16]_2                 53
                                                           Annex H
                               [Minutes of WTSDC Meeting on 2.5.2006]

File: D/WTS/DC/20060502/1
To: Chairman of WTSDC and all Members


Initial Response of DAB towards “Consultation Document on Review
         on the Role, Functions and Composition of District Councils”

       In view of the “Consultation Document on the Review on the Role,
Functions and Composition of District Councils” recently published by the
Government, we fully support the proposed enhancement of the role of the
District Councils (DCs) in district management. Indeed, it has been the
aspirations of the public that DCs will monitor the services of Government
departments on their behalf apart from being the advisory bodies at the
district level. Since 2001, we have been pledging for the review of the
role and functions of DCs, enhancing their roles and functions, a better
allocation of social resources and monitoring the operation of Government
departments with a view to enhancing the qualities of the community
services for the provision of better services.  We consider that the
various proposals as stated in the document are on the right track as they
aim at improving the administration and enhancing the effectiveness of
district management. However, the Government must carry out in-depth
study and comprehensive consultation for the smooth operation of the
proposals and properly echoing the appeals of the public.

       The District Facilities Management Committee (DFMC) proposed to
be set up under DCs as suggested in the consultation document will be
responsible for the management of cultural and recreational facilities,
including district libraries, sitting-out areas, swimming pools and
community halls under the jurisdiction of the Home Affairs Department
(HAD). We are of the view that the delegation of management authority
to DCs will enhance the qualities of the community facilities. However,
the Government only suggested that the managing authority of DCs in the
cultural and recreational facilities would be enhanced, while in the area of
major public concern, like environment, transport, housing and so on, DCs
could only play a limited role.      This is greatly different from the
expectations of the public.

olo/Dc[M16]_2                        54
       On the other hand, the Steering Committee on District
Administration (SCDA) as proposed in the document will serve as the
platform for different departments to exchange views on different issues
and handle policy decisions on cross-district facilities. One of the
functions of this newly established SCDA is to respond to the complaints
lodged by DCs against the Government departments for the deficiency in
the construction and management of district facilities. We worry if the
said structure can conciliate the different views raised by the departments
and DCs. If there is a communication breakdown, it will lead to the delay
in the implementation of policies beneficial to the public. As such, the
Government should set the performance pledges of SCDA relating to the
handling of complaints lodged by DCs, so that SCDA can urge the
concerned departments to actively respond to the views of DCs.

      On the other hand, the Government said that SCDA would be
responsible for handling the interdepartmental issues. However, the
consultation document has not touched on the role of DCs in cross-district
issues. This is not beneficial to the district work of DCs, nor is it in line
with the spirit of enhancing district partnership as proposed in the
document. SCDA should listen to the views of DCs in making any
cross-district policies.

       As shown in the consultation document, the upper limit for the
expenditure of each works project suggested or endorsed by DCs would be
$15 million or below. We consider that the said proposal can facilitate
each district to make use of the said sum to carry out works according to its
characteristics and needs. We welcome this proposal that echoes the
views of DAB. Nevertheless, the block vote under the Capital Works
amounts to only $300 million annually. As such, we worry if the sum
could cover the costs for the construction of the related facilities in each
district and meet the works requirement. Since the dissolution of the
Urban Council, there has been an accumulation of a number of urgent
works projects. The block vote of $300 million is insufficient to solve
the urgent need of the public for district facilities.

      As stated in the consultation document, only the authority to grant
financial provision will be given to DCs. Under the circumstances where
DCs have no authority to make decision on personnel matters or have no

olo/Dc[M16]_2                         55
authentic decision making power, the departments concerned cannot be in
a better position to implement recommendations of DCs when there is no
clear division of authority and responsibilities. If DC Members are only
authorized to discuss and formulate district affairs and policies, but not
given the management authority, DC Members will be unable to remedy
the bureaucratic culture. The public will be the victims when the district
policies beneficial to them cannot be implemented effectively.

        In relation to enhancing the communication between the
Government and DCs, it is stated in the consultation document that the
Chief Executive will chair the Annual District Administration Summit
each year. We consider that this can help enhance the communication,
but not sufficiently. We consider that the Government should actively
consult the views of DCs when consultation on capital works is held.
Moreover, the procedures for consulting DCs should be systematized.

       We are of the view that carrying out the review on the functions of
DCs for enhancing the role of DC in district management should aim at
protecting public‟s interest effectively, better allocation of social resources,
monitoring Government departments effectively and fulfilling the
expectations of the public towards the functions of DCs. As such, DAB
will listen to the opinions of the public at district level relating to the said
issues and other contents in the consultation document during consultation
period. Opinions will be collected and studied in great depth. Proposals
will be submitted to the SAR Government afterwards so that the district
administration reform can better suit the interests of the public.


                                                     DAB (WTS Branch)
                                                     KAN Chi-ho,
                                                     HO Yin-fai
                                                  CHAN Man-ki, Maggie,
                                                 CHENG Tak-kin, Michael,
                                                     LAM Man-fai,
                                                    LAI Wing-ho, Joe
                                                    2.5.2006




olo/Dc[M16]_2                         56
                                                          Annex I
                              [Minutes of WTSDC Meeting on 2.5.2006]

Consultation Document on the Review on the Role, Functions and
Composition of District Councils

      We believe that this document fulfills the recommendations made by
the Chief Executive in his 2005-06 Address that “The Government will
allow each District Council to assume responsibility for the management
of some district facilities”.
      We generally accept the related arrangement stated in the document
that the supervision power of DC Members in the facilities will be
enhanced. We hope that the Government will implement the first phase
of the pilot scheme in 2007 and share with other DC Members about the
result.

      On the other hand, we want to raise the two points as follows:
(1) The Establishment of District Facilities Management Committee
      The scope of duties of the District Facilities Management
Committee (DFMC), the related legislation, Members and the Government
representatives attending DFMC should be clearly defined.

        Members must understand their duties, the daily operation of the
facilities, the use of resources and the aspirations of the people.

      As such, the Government should provide suitable training and
opportunities of field work.

(2)    Handling the Complaint
        When Members who have always played the role of critics in district
facilities management become supervisors, to whom the complaint of
residents could be addressed? Therefore, we hope that the authority
concerned could set the mechanism and formulate the detailed guidelines.
                                                    WTSDC Members
                                                    LI Sze-bay, Albert
                                                 LEE Ming-pui, Mavis
                                                      1.5.2006




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