Government fully accepts Public Accounts Committee recommendations

The Government accepts all the recommendations made by the Public Accounts Committee (PAC) on the development of a site at Sai Wan Ho and will actively implement them, the Chief Secretary for Administration, Mr Rafael Hui, said today (May 17).

Speaking on a motion in the Legislative Council (Legco) on "Supporting the conclusion and recommendations made by the Public Accounts Committee on the development of a site at Sai Wan Ho", Mr Hui stated clearly that the Government would accept all the 21 recommendations of the Audit Commission and the PAC. He also reiterated that the Government had all along been supportive to the work of the Audit Commission and the PAC.

He pointed out that it had been a long-standing arrangement for the Audit Commission to conduct value-for-money (VFM) audit on Government services. The PAC had also been playing an important role in ensuring that the Government provides quality public services in an efficient and cost-effective manner. To ensure proper use of public expenditure for purposes specified in the funding allocation, spending of the funds in an appropriate manner, and Government's proper handling of public finances, the PAC had spent a lot of time and efforts over the years in studying VFM reports submitted by the Director of Audit, and putting recommendations and views to the Government.

Stressing that the Government was most grateful to the PAC for its valuable views and constructive comments, Mr Hui said, "The Government highly respects the role of the PAC and takes its views and recommendations seriously. They will be followed up actively."

Regarding the Sai Wan Ho development project, Mr Hui said the Government noted public concerns about the possible uncertainties in the exercise of discretionary powers by the Building Authority (BA). The Government therefore set up the Independent Committee of Inquiry (ICI) to conduct an in-depth inquiry.

"In fact, there were precedent cases in the past that the Government and the Legco conducted separate inquiries into matters of concern to both the Legco, the Government as well as the public," he said.

"The PAC and the ICI appointed by the Government have different functions, focuses and areas of responsibilities. There is no subordinate relationship, no conflict between them, and no question that the Government must choose between the two."

At that time, Mr Hui added, members of the PAC was aware of the action taken by the Government and were generally of the view that the work of the ICI and that of the PAC was of different nature and not contradictory to each another.

"Although the two reports have different focuses, their recommendations to the Government are alike. On improving the approval mechanism of land development projects, the PAC and ICI have made a number of similar recommendations in their reports."

However, in view of some Legco members' concern that the Government set up the ICI to conduct investigation before the PAC had studied the report of the Director of Audit, Mr Hui said the Financial Services and Treasury Bureau would look into the matter with the PAC.

Mr Hui also responded to some Legco members' view that the conclusions of the reports of ICI and PAC "were not in total accord", in particular the issue of discretionary powers exercised by the former BA to exempt the public transport terminus (PTT) from gross floor area (GFA) calculation.

"The ICI thinks the decision of the former BA to exempt the PTT under Buildings (Planning) Regulation 23 (B(P)R23) was wrong, but as the former BA has sought legal advice, examined past cases and consider arguments put forward by relevant parties, ICI considers his decision 'reasonable'," he said.

Noting that the ICI's interpretation of B(P)R23 was of great concern to the Government, Mr Hui pointed out that in view of this, the Government specifically sought advice from the Department of Justice (DoJ) again. The DoJ had also sought the independent advice from external counsels. After considering the legal advice, DoJ was of the view that the interpretation of B(P)R23(3)(b) by the ICI in a narrow sense was not in line with the spirit of that regulation. The DoJ considered that the regulation was applicable to PTTs. In other words, the decision made by the former BA to exercise his discretionary powers under that regulation to exempt the PTT could not be viewed as "without legal basis".

"The PAC Report does not consider that the former BA has acted ultra vires or abused his power. The ICI is also of the view that he should bear no blame. From the legal perspective, we cannot say that the former BA has not acted in accordance with the law or extend beyond the power vested in him by the law in handling the Sai Wan Ho development. He has acted in accordance with the relevant legislation and the established procedures, and made reference to previous cases in discharging his duties as the BA," he added.

Regarding the issue of financial implications, Mr Hui said, "In an open market with a highly sophisticated property development industry in Hong Kong, bidders for the Sai Wan Ho development should have taken all relevant factors into account. The prices offered should have reflected these factors."

In response to the motion debate, the Secretary for Housing, Planning and Lands, Mr Michael Suen noted that the Audit Report stated that the financial implications of excluding the PTT from the GFA calculation could amount to $125 million, which meant the value of the GFA concerned might be expressed in terms of $125 million, and not that the Government had lost $125 million in revenue.

"Certainly, no other parties, except for the individual tenderers, could tell the exact extent to which their bids for the Sai Wan Ho development project were affected by their expectation that the BA would approve the exemption of the PTT from the GFA calculation. As such, we cannot assume that the Government has lost $125 million in revenue because of the exemption," Mr Suen said.

Mr Suen gave an account of the progress and current position on the implementation of various improvement measures by the Government to address the recommendations put forward by the Audit Commission and the PAC.

These measures include:

Pre-tender enquiries

* Lands Department (LandsD) has revised the relevant internal guidelines, clearly stating the circumstances under which the information provided to prospective land sale tenderers in response to their enquiries on uncertainties about the development parameters (such as GFA, carparking requirement, provision of government/institution/community facilities) would be publicised on Government websites and in newspapers.

Development intensity of the site

* To meet the community's aspiration for a quality living environment, the Government is, together with the Town Planning Board, taking the initiative to progressively introduce restrictions on building height and development intensity in the statutory town plans. Before the sale of a site, it is the normal practice of the Planning Department (PlanD) to give advice to the LandsD on the maximum GFA of the proposed development project. To ensure that the district will be provided with sufficient public facilities for the community, the PlanD will also reassess the provision of public facilities in the district before the sale of a site, and inform the relevant departments accordingly.

* It is the LandsD's current practice to incorporate into the lease conditions the site development requirements of the Hong Kong Planning Standards and Guidelines. However, if the site development requirements relate to the provision of government/institution/community (GIC) facilities but the relevant user departments cannot take up the facilities for maintenance and management due to the lack of a development programme or funding approval, after consultation with the user departments concerned, the LandsD will not require provision of such facilities under the lease conditions.

Clear prescription of the requirements for provision of Government accommodation in the land leases

* The Architectural Services Department (ArchSD) has reviewed the procedures for the preparation of the Technical Schedule to be included in the lease conditions. They will be adopted in the future provision of GIC facilities to ensure that the GIC design requirements are properly drawn to scale in the layout drawings for incorporation into the lease conditions of the site. If the ArchSD considers that implementation of the original GIC design parameters to be included in the lease conditions is not feasible, it will notify the LandsD or the relevant Government departments to make changes to and finalise the design parameters.

* If doubts are raised by prospective tenderers on the feasibility of GIC design requirements, the LandsD will refer them to the user departments. The pursuit of any feasible alternative designs is a matter for consideration by the user departments. The LandsD will inform the prospective tenderers of the outcome of such relevant consideration and publish the relevant information before the sale of a site is successfully triggered, so that all prospective tenderers will be aware of the matters affecting the originally proposed GIC design requirements.

* If the lease conditions contain a maximum GFA clause, it is the Land D's current practice to stipulate in the lease conditions whether the Government accommodation required would be GFA accountable in order that prospective tenderers can take this information into account when bidding for a site.

Site classification

* The Buildings Department (BD) has accepted the recommendation of the PAC and it will consult all relevant departments prior to the sale of a site on any factors affecting the site classification. The BD will also seek legal advice on any legal ambiguities about site classification. It has also put in place a mechanism which requires that advice on site classification provided to the LandsD prior to land sale will be subject to the decision of the Building Authority Conference only to ensure the consistency of relevant decisions.

* Amendments have been made to the Building (Planning) Regulation to clarify the definition of "street" for site classification under the law to facilitate a clear classification of site so as to determine, beyond doubt, the development intensity of a site before sale. The amendment regulation came into effect on December 31, 2005.

Granting of GFA exemption

* Where there are any unclear legal issues concerning GFA exemption, the BD will seek legal advice before giving advice to other government departments. In order to clarify whether PTT needs to be included in GFA calculation, the BD has also revised the guidelines issued to the industry to make it clear that PTT has to be included in GFA calculation unless specified otherwise under the relevant statutory outline zoning plans or there is a specific approval granted by the Town Planning Board for such exemption.

* BD has issued internal guidelines on the appointment of such external observers and their declaration of any conflict of interest, and has established procedures and criteria for doing so.

Granting of bonus GFA

* BD will consult and reach a consensus with the relevant government departments before he grants any bonus areas in return for the dedication of areas for public use.

Enhancing communication among Government departments

* The Housing, Planning and Lands Bureau (HPLB), PlanD, LandsD and BD are continuously liaising and working closely together in this aspect. There are established forums to discuss and resolve inter-departmental issues at various stages of the development process. The Bureau has also set up dedicated forums, chaired by the representatives of the Bureau, to enhance coordination among the departments.

Compliance with the guidelines by the BA

* To enhance accountability and transparency when exercising his discretionary powers granted to him under the Buildings Ordinance for processing various applications, the BA has issued Practice Notes on various subjects for reference by the industry. Internal guidelines have also been issued to serve as general guidance for relevant officers.

* Applications will be submitted, depending on complexity, to the committees chaired by the Assistant Directors of the BD or the BA for consideration and approval.

* To further enhance transparency, the BD has published a summary of the matters considered at the Building Committee of the department, and the decisions made, on the department's website.

Regarding the recommendation to stipulate a maximum GFA clause in the lease conditions, Mr Suen said, "In the light of the PAC's views, the HPLB has initiated a review to study whether it is appropriate to include a maximum GFA clause in all the leases of Government land in the future.

As a matter of fact, if the development intensity of a site has been specified in the OZP, the lease should have normally spelt out the maximum GFA.

"If, from the planning point of view, there is no need to restrict the development intensity, laying down the maximum GFA in the lease has both merits and demerits. I have clearly explained about this at the hearing of the PAC. I have also made it clear that a delicate balance has to be struck between enhancing the certainty of lease conditions and obtaining the optimum sale price. The Government will carefully consider the recommendations made by the PAC and consult the Legco, the industry, and the professionals concerned and stakeholders before determining the way forward."

Ends/Wednesday, May 17, 2006
Issued at HKT 21:38

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