Hong Kong Housing Authority and Housing Department

KK, Ladies and Gentlemen,

Thank you for inviting me to this the sixth CITA seminar in the series on Construction Law and Regulations. This particular seminar is both timely and relevant to the main thrust of my address to you which is on the ethics of our industry.

I use the words 'our industry' quite deliberately. Construction is a partnership. A partnership between developers, professionals, contractors, suppliers, workers, academics and indeed government.

In the fifties and sixties, in the early days of our industrial development, Hong Kong had a reputation for cheap and shoddy goods. We have come a long way since then. We went up-market, steadily improving design and quality. Today both our manufacturing and services sectors are recognised as world class. We have a reputation for quality.

The construction industry has also come a long way. New techniques and new technology have been introduced. Our city's waterfront and sky-line boast many world famous design landmarks. But if we leave these aside, we have to admit that we do not have a reputation for quality construction. Recent events have damaged the reputation of both the industry and its clients.

If we do not admit that problems exist, we will never be able to solve them. So let me list briefly some of the symptoms:

• Clients complain that contractors "skimp on work and materials."

• Home buyers complain of poor workmanship and shoddy finish.

• Reports of corruption are persistently higher than other industries.

• The industry's safety record is appalling.

• Far too few able youngsters are joining the trade.

• Supervisors constantly complain of an absence of work ethic.

• The old "master and apprentice" system has disappeared.

• There is neither trust nor loyalty between employers and employees.

Allow me to compare this situation with elsewhere in the region, taking the example of safety.

A few years ago, a colleague of mine was visiting Japan reviewing their construction safety. As you will be aware accident rates in Japan are very low compared to Hong Kong. He met with the Ministry of Labour, employers federations and workers unions. New safety legislations had been introduced, but the Japanese Labour Department were not planning to increase their staff to police the legislation. In discussions with the Workers Union, my colleague was deliberately provocative. He asked whether the Workers Union were worried whether employers would take advantage of the lack of enforcement by the government. The reply was simple. Government, unions and employers had negotiated for a number of years before arriving at the legislation. All parties had agreed to it. There was no need for enforcement as all would comply with the Law. There was in effect a social contract, a partnership.

The Law is all about the minimum standards of behaviour in society. They are the starting point. Whether it is safety, the environment or the quality of our buildings, Laws represent the baseline. But Law by itself is not enough. Construction is by nature a complex and risky enterprise. Success depends on a partnership which shares the risk. And partnership itself depends on mutual trust. The Housing Authority has a vested interest in building up that trust and improving that partnership.

The Housing Authority will be completing some 300,000 flats over the next five years at a cost of some $130 billion. Twenty percent of Hong Kong¡¦s construction workers work on Housing Authority sites. Recent years have seen immense improvements to quality of our buildings. The Housing Authority has led on technical innovation through large panel formwork and precast facades. It has improved management through the ISO9000 standard both within the Housing Department and by contractors. The Authority has forced contractors to employ trained workers, it has improved site conditions through improved safety, the provision of canteens, toilets and builders lifts. The Authority's tendering policies reward good performers and penalize the poor.

Despite the improvements recent events indicate that it is not enough. The ethics of our industry are slipping. The need for a change in the culture of our construction industry is clear. We cannot lift quality without a conscious effort to restore ethical standards.

Ethics are not hereditary, they are learnt. We absorb our behaviour from those around us, whether it be from our parents, teachers or work colleagues. Ethics emanates from mutual respect for people. Ethics emanate from a pride in what we do. Here you have a critical part to play.

As I noted earlier, you are involved in a complex production process. Each step of that process, each person on the production line is important. A relatively small mistake at any point can have important consequences further up the line, for safety, for efficiency or for final quality.

The role which you play in this complex production process is a key one. It is also not an easy one. Your employer, the contractor, relies on you for the efficient organisation of work, but he also relies on you for his reputation. Workers on site rely on you for effective supervision and guidance. They also rely on you for safety. The client relies on you for delivery on time, but he also relies on you for the quality of the product. Satisfying all of these needs demands both a high ethical standard and pride in your work.

The Housing Authority is determined to improve quality. It is developing a framework for enhancing Public Housing Quality. Extensive consultations are taking place with many sectors of the industry. These consultations are open and frank. They ask two simple questions:

• What are the problem?

• What are the solutions?

Earlier I listed some of the problems. There are two more which have been mentioned by many of those we have consulted. They concern the attitude of the Housing Authority and its staff. The first complaint is that the relationship between us and our consultants and contractors is more like "cops and robbers" than partners. The second is that our procedures are too cumbersome and bureaucratic. Clearly, we must put our own house in order, in cooperation with our partners.

There is no such thing as a quick fix for the current situation. It requires a unified collaboration of all sectors of the industry. It requires honesty, open-mindedness and the ability to 'think outside the box'. Most of all, it requires resolution, the will to change.

With your help, I am confident that we can build a partnership for culture change. The Laws will still be there, the standards will be there, but with a partnership for change compliance will be secured and quality achieved, not because of the Law or the standards but because all are convinced it is right.

End