Following is an English translation of the speech by the Director of Housing, Mr Stanley Ying, at the Hong Kong Housing Authority regular open meeting on 7 July 2016:
Chairman and Members,
First of all, I would like to thank Members for sharing your thoughts at the earlier Annual Special Open meeting. I would also like to take this opportunity to thank Members on behalf of the Housing Department (HD) for regularly giving us your valuable comments and advice on housing policies and operational matters, which have helped us on the smooth operation of the Hong Kong Housing Authority (HA) and HD.
Members’ speeches touched upon various efforts of the Government and HA on housing. Most of these topics were also examined in the Government’s Long Term Housing Strategy (LTHS). I would therefore like to use the framework of the LTHS as the starting point to respond to Members’ comments.
As you are aware, the current-term Government is determined to resolve the housing problem. To this end, it set up the Long Term Housing Strategy Steering Committee (LTHS Steering Committee) in September 2012. The LTHS Steering Committee held a total of 11 meetings, issued a consultation document in September 2013 for a three-month public consultation, and submitted its report to the Government in February 2014. At the same time, the Legislative Council (LegCo) Panel on Housing also set up a Subcommittee on Long Term Housing Strategy in December 2012. The Subcommittee concluded its work and issued a report in July 2014.
Taking into account the recommendations of the LTHS Steering Committee, opinions collected from different sectors during the public consultation, and views of the LegCo Subcommittee on Long Term Housing Strategy, the Government promulgated the LTHS at the end of 2014. This is the first long-term strategic document on housing since 1998.
Housing Supply
While the LTHS covers a broad range of topics, there are two fundamental principles: supply-led and flexibility. As set out in the LTHS, the Government will update the ten-year housing demand projection annually and present a rolling ten-year supply target, taking into account the projected demand. In the Annual Progress Report published in December 2015, the Government set 460 000 units as the supply target for the ten-year period from 2016-17 to 2025-26, among which 280 000 units are public housing, comprising 200 000 public rental housing (PRH) units and 80 000 subsidised sale flats (SSFs).
Some people see this as a challenging target. Indeed, compared with other cosmopolitan cities facing similar housing problem, our target is more ambitious. For instance, New York launched its housing plan “Housing New York” two years ago, stating that 200 000 units of “affordable housing” would be built over the next decade, among which new construction units would only account for 40%, while existing units to be preserved would account for the remaining 60%. Relatively speaking, Hong Kong’s target of producing 280 000 public housing units in ten years is indeed very ambitious.
We have been implementing the LTHS for more than a year now since the end of 2014, and have only achieved partial results so far. Based on the estimates as at March 2016, in the five-year period from 2015-16 to 2019-20 HA and the Hong Kong Housing Society (HKHS) would complete about 97 100 units, comprising approximately 76 700 PRH units and 20 400 SSFs. This estimate for public housing completion for the five-year period starting from 2015-16 is higher than those over the preceding three five-year periods. Our efforts in the past period are already bearing fruits.
While the supply of public housing is on the rise, we are still some way off the latest supply target. In the LTHS Annual Progress Report 2015, we explained that should all identified sites be delivered on time for housing construction, about 255 000 public housing units could be built in the next ten years. It still falls short of the ten-year production target of 280 000 for the same period.
We will continue to update the ten-year housing demand projection and publish the ten-year supply target on an annual basis. We will also report the progress of land provision to facilitate the public to monitor our work more effectively.
Supply : Building Public Housing
We should not be surprised by the current gap between the planned housing production and the supply target for the next ten years. The imbalance between housing supply and demand that has been accumulating over the years cannot be resolved in the short term. We will not, however, be discouraged by the gap between our current plan and the ten-year target. On the contrary, we will, with greater determination, identify land and turn every site into public housing step by step.
Both determination and resources are vital to achieving the target as early as possible. I have no doubt about the determination of our HD colleagues and those of other Government departments. HA Members have been our close partners. I am sure you will agree with me that HD staff have spared no efforts in constructing and managing public housing.
That said, determination alone is not enough; we need resources, mainly financial, manpower and land resources. On manpower, the 2016-17 Budget of the Government provides additional manpower for HD, including 188 new civil service posts, to cope with the additional workload arising from the new public housing production target as well as other tasks. Coupled with the posts created in the previous four financial years, the past five years have seen an increase of 964 posts in the Department’s establishment, including 19 directorate posts. We will make the most out of these civil service posts and additional contract staff employed under HA’s policy. We will also continue to seek additional staff for our future work.
As for funding, the Government has made it clear that it will make sure HA will have sufficient funding to achieve the housing production target. Last year the Government added about $45 billion for further injection into the Housing Reserve. Together with the initial injection and interest accrued, the Housing Reserve has reached a total of $74 billion.
Hence, we can say that we have made suitable arrangements for manpower and funding. The most critical bottleneck is land. We need more land and must optimise the use of every piece of land to enable us to build more flats where circumstances permit.
To make the best use of every piece of land, we adopt all viable strategies. First of all, we optimise the development potential of every construction site. Subject to the Buildings Ordinance, planning restrictions and conditions of land grant, we will build as much domestic gross floor area as practicable within the shortest possible construction time.
Secondly, in accordance with the guideline laid down by the Strategic Planning Committee, we would as a top priority make use of the construction sites for residential development. We then do our best to try include non-domestic facilities. The provision of non-domestic facilities is premised on the principle that this would not reduce the number of domestic flats, lengthen the construction time or result in major financial commitment. We will fully utilise the potential of every site in accordance with this guideline and present to the Building Committee our analysis on non-domestic facilities in each case.
Thirdly, we accept every piece of land allocated to us, whether large and small, in pursuit of our goal to build more public housing. The Anderson Road PRH development project is an example of a big site. HD designs the estates with a site-specific design approach to maximise site development potential in accordance with the development parameters. Twenty-two domestic blocks are constructed to provide a total of 17 917 PRH units. Despite the challenges posed by unforeseeable ground conditions and delays in infrastructural works in the course of construction, we expect intake to be on schedule and to begin in mid-2016 to 2018 in phases. These 18 000 PRH units in urban area arrive most timely for 18 000 PRH applicants, especially for those who hope to live in the urban area.
We certainly hope there are more large sites like the Anderson Road development. But since land resources are limited, we will not let go of small sites. For example, the Sau Ming Road development provides only 322 units. We give it our best all the same. We endeavour to increase PRH production and enhance community facilities at the same time. We will redevelop its community hall, provide a small library and a study room and build a pedestrian footbridge to facilitate pedestrian access to the new community hall and to coordinate with the comprehensive pedestrian walkway system undertaken by the Government.
Despite our best efforts, due to reasons beyond our control, some projects are behind schedule. We are very transparent about this and have reported to the public the progress of public housing construction through various channels. In November last year, we briefed Members of the LegCo Panel on Housing on HA’s Public Housing Construction Programme for the period from 2015-16 to 2019-20. We set out on that occasion the total completion of public housing by HA and HKHS in the five-year period from 2015-16 to 2019-20 and the projects to be completed in each of these years. At another meeting of the LegCo Panel on Housing in February this year, Secretary for Transport and Housing pointed out that the progress of a number of projects in 2015-16, including Anderson Road Site D and Sha Tin Area 52 Phases 3 and 4 had been affected by labour shortage in the construction industry. The completion of around 7 600 units had to be postponed from 2015-16 to 2016-17. At HA’s Subsidised Housing Committee meeting last month, we reported that four new estates with a total of around 11 000 units would be completed later than originally expected. A recent case is the PRH development project at Tsing Hung Road in Tsing Yi. The project completion is now delayed outside the five-year time frame as the Town Planning Board (TPB) needs more time to deliberate on the rezoning proposal and Planning Department has obtained agreement from the TPB for a six-month extension for submission of the Outline Zoning Plan to the Chief Executive-in-Council for approval.
Are there any other ways to accelerate the provision of public housing? Some commentators suggest redeveloping aged PRH estates as a way to increase supply. This is not new. In fact, the proposal has been analysed in detail in the LTHS. The conclusion is that while redevelopment of PRH estates may increase PRH supply over the long run, it will reduce PRH stock in the short term, resulting in applicants having to wait longer for flat allocation. It is also not advisable to carry out massive redevelopment programme which will result in the freezing of a large number of PRH units that may otherwise be allocated to needy households, given the current high demand for PRH. Hence, redevelopment of estates could at best serve as a supplementary source of PRH supply.
Let me elaborate in a more concrete manner. To proceed with redevelopment, we will first need to move sitting tenants in an old estate to new PRH units, then demolish the old estate, and then build new PRH on the site. This process will take years to complete. If we were to move tenants of an aged housing estate into, say, the Anderson Road development that I just mentioned, to facilitate the redevelopment, the 18 000 households that had been waiting for PRH units and could have moved into the Anderson Road development in the coming two years, would have to wait a few more years for allocation until the redevelopment of the aged estate is completed. What we have to choose here is, whether we should let 18 000 tenants living in old estates move into the new PRH units in the Anderson Road development, or let 18 000 households who have been waiting to be housed move into these units.
Another suggestion is the provision of transitional housing. After careful examination, we consider this idea not practicable. First of all, the time it takes to build transitional housing may not be much shorter than that required for PRH. Housing of this kind still requires essential infrastructural works such as sewerage, which takes time. Secondly, transitional housing is less efficient in land use. A site used to construct a five-to-six-storey building does not yield many housing units, but the supply will multiply several-fold, if the same site is used to build a PRH block which is tens of storeys high. Therefore, for suitable housing sites, we should use them for permanent housing instead of transitional one.
Another suggestion is to encourage more contractors, including small and medium-sized ones, to participate in HA’s projects. We could not agree more and have been working on it all along. Regular briefings are held to brief contractors on the latest requirements and specifications of HA. Also, our robust procurement system ensures tenderers are selected under a fair and non-discriminatory manner commensurating with their capability and performance. We will continue our work in this area.
Supply: Optimise Use of Existing PRH
While discussing the supply of PRH, some people will focus on the newly-constructed PRH but overlook three other elements. The first is subsidised sale flats, commonly known as “HOS” in short, which contributes to PRH supply in an indirect manner. The second is PRH units vacated by tenants, which is another important source of PRH supply. The third is the time required for allocation of PRH units, whether newly-completed or recovered units, to new tenants. It also has an impact on the supply.
Regarding HOS, in the past 50% of the flats were purchased by Green Form buyers on average. Based on this experience, the supply of approximately 20 000 HOS flats in the next five years may enable us to recover thousands of PRH units which can be allocated to PRH applicants.
In respect of PRH units surrendered by tenants, on average 7 000 tenancies are terminated for various reasons every year. This enables us to recover the PRH units and re-allocate them to applicants. Based on such experience, PRH supply from this source may amount to tens of thousands units in the next ten years.
As for the third factor, I shall broadly refer to it as allocation efficiency, which means the time required for allocating PRH units to applicants.
At the last meeting, a Member cited Hung Fuk Estate as an example, pointing out that 1 000 PRH units remained vacant six months after completion. In fact, the actual figures and situation are more complex. First of all, Hung Fuk Estate has its own unique background. While we could have started intake by applicants immediately after obtaining the Occupation Permit for the Estate, we did not do so. At that time we discovered excess lead in drinking water in some PRH units. To ensure the safety of drinking water in Hung Fuk Estate, HD arranged with the Water Supplies Department to conduct a second round of water quality tests, and removed some components of the pipings for testing. Since it took additional time to complete these additional steps, it was not until end-July last year that HD could sign tenancy agreements with those applicants who had accepted advance allocation in the first two phases and hand over the PRH units to them.
There is another factor relating to Hung Fuk Estate and other housing estates which not many people noticed. PRH is not only used to meet the demand from PRH applicants, but also for meeting other kinds of demand, such as transfer of overcrowded households, compassionate rehousing, transfer scheme that encourages tenants to live with their elderly family members, etc. Each of these schemes involves a set of procedures and a lead time prior to the allocation of PRH units to tenants. Take the overcrowding transfer as an example, we conduct two rounds of exercises every year, which involve processing a large number of applications, to be followed by work such as vetting and allocation. These tasks require HD staff resources and more importantly, they take up time before PRH units can be used by applicants. We are currently reviewing these procedures to see if they can be streamlined to minimise the impact on PRH applicants.
Housing Demand
Having talked about quite a number of issues concerning supply, I would now like to turn to the demand for PRH. We have been closely monitoring the changes in average waiting time (AWT) for PRH applicants. As the number of new PRH applications changes significantly every year, there is no way for us to project the future number of applications. Therefore, it is difficult to project the change in the AWT, and hence we are unable to predict when the AWT target of about three years can be achieved again.
In fact, the number of new applications is not the only factor that has an implication on the future demand for PRH. Other factors include, for example, quite a few applicants withdraw their applications or have their applications cancelled, for various reasons. When an application reaches the detailed vetting stage, the applicant will be invited to attend an interview for eligibility vetting. Some applications are cancelled at this stage for reasons such as exceeding the income or asset limit for PRH application, double housing benefits, etc. In 2012-13, 2013-14 and 2014-15, there were a total of 4 066, 4 633 and 2 203 such cases, accounting for about 11.7%, 13.2% and 9.6% of the numbers of applicants invited for eligibility vetting. Hence, among PRH applications, some may end up being cancelled, which makes it more difficult for us to have an accurate estimation of the AWT.
Another much-talked-about issue relating to the demand for PRH is the Quota and Points System (QPS). Members know that it is HA’s long established policy to accord priority to family applicants and elderly applicants in the allocation of PRH. These applicants are known as general applicants. The target is to provide the first flat offer to them at around three years on average. For QPS which applies to non-elderly one-person applicants, HA has not set any such target.
This reflects the relative priority that HA has set for different categories of applicants, having regard to the constraints of resources. However, it makes young people feel that their housing needs have been overlooked. They even request that HA adopt a policy to accord priority to young people. While the Government and HA appreciate that housing is an issue of concern to young people, given the current supply-demand imbalance of PRH and the equally keen demand for PRH from different strata of the society, we cannot afford to adopt policies that accord priority to young people. We appeal for the understanding from the young people.
Nevertheless, taking into account the recommendations of the LTHS Steering Committee, the views collected during the public consultation on the LTHS, and the views of the LegCo Public Accounts Committee, in October 2014, HA adopted some refinements of the QPS, which included an increase of the annual allocation quota for QPS applicants from 8% to 10% of the total number of units to be allocated to general applicants and QPS applicants, subject to a cap increased from 2 000 to 2 200 units.
On the other hand, respondents generally agreed during the public consultations on the LTHS that a mechanism should be developed to regularly review the eligibility of QPS applicants.
The Subsidised Housing Committee decided in October 2014 to conduct regular checking on the eligibility of QPS applicants who have waited for five years but not yet due for detailed vetting within the next two years, with a view to removing those applicants who were no longer eligible for PRH. This will enable HA to have a better grasp of the situation of applicants, and hence a better assessment of the demand.
Some critics are concerned that we are conducting the checking in a hasty manner, resulting in unfairness to the applicants. I will use a little bit more time to explain the process in detail. We adopt a two-stage process in the checking. In April 2015, we conducted the Stage One checking by issuing letters to around 28 000 applicants, asking them to declare their latest income and net assets; to report changes in personal particulars; and to indicate if they wish to withdraw their applications. In October 2015, we issued letters to all the non-responding applicants in Stage One and some of those applicants who had submitted their declarations, asking them to provide supporting documents for paper checking. Subsequently, we sent out reminders by registered mail and mobile phone short message service in November and December respectively to applicants who had yet to reply, asking them to submit the return within a grace period of two weeks. At the end of the grace period, we made three phone calls on different dates, one of which made during non-office hours, to applicants who still had not yet replied. In the end, there were still 9 960 applicants who did not respond and provide documents.
The 2015-16 checking exercise was finally completed by end-March this year, resulting in the cancellation of around 14 100 applications for various reasons, e.g. exceeding income or asset limit, self-withdrawal or failure to respond. Similar to all PRH applications, after an application is cancelled on grounds of exceeding income or asset limit, we will consider reinstating the application if the applicant subsequently becomes eligible again in terms of income and asset limits, and makes a request for reinstatement from six months to two years after the first cancellation of the application. In cases where applications were cancelled as a result of failure to respond to HD, if these applicants can provide valid reasons for their failure to respond before the deadline (e.g. being hospitalised or imprisoned during the period), and if they still meet the eligibility criteria for PRH upon our checking, we will consider reinstating their applications. However, they must make such a request for review and produce supporting documents within two months from the date of the notification of cancellation in accordance with the existing mechanism. If these applicants cannot provide valid reasons for not responding before the deadline, their applications will remain cancelled even though they meet the eligibility criteria for PRH. They may submit fresh applications for PRH if they so wish, but they cannot ask for reinstatement of their applications.
In analysing the various types of demand for PRH, I would like to repeat the point I have just mentioned: the demand for PRH comes not only from applicants waiting for allocation, but also from sitting PRH tenants. As I mentioned, PRH redevelopment is of course a means of increasing the supply in the long term, but it also reflects the wish of some PRH tenants to move into new PRH units to improve their environment. Another type of demand for PRH is from various categories of transfers. Some of these transfers may involve the allocation of an additional unit to a household, while some may involve the transfer to a larger unit, and so on. Even for those “unit-for-unit” transfer cases, it is inevitable that in the transfer process some units will be vacant for a period of time. As I have just mentioned, it is worthwhile for us to examine whether we can improve allocation efficiency in this regard, in order to ensure that PRH units can be most efficiently allocated to our top priority, that is, general applicants who have been waiting for PRH.
The next issue is the demand for HOS. To address the home ownership aspirations of the low-to-middle income families, building HOS has become a regular part of the Government’s housing policy. In this connection, a total of about 3 700 HOS flats located in Sha Tin and Yuen Long were put up for sale early this year in a joint application exercise of HA and HKHS. Even with the changes in the property market during the application period, the sale was about 14 times oversubscribed, which indicates that public demand for HOS remains high.
To meet the home ownership aspirations of those who are eligible as soon as possible, we have been making an effort to compress the time required for various tasks including preparation for, and processing of application, and sales. Drawing on the experience of the HOS pre-sale exercises this year and in 2014, we consider that virtual show flat walkthrough videos produced with building information modeling technique are sufficient to help prospective buyers visualise the design and layout of the HOS flats. Furthermore, given the “no-frills” design of our HOS flats, we consider it appropriate to continue to adopt virtual show flats in lieu of physical show flats in the future.
Another example is that among the tens of thousands of HOS applicants, the majority either will not pass the eligibility vetting or will not have the opportunity to select a flat due to their low priority. To these applicants, essential information of the development, such as its location, layout, flat sizes and selling price range, should be sufficient for them to decide whether to submit an application. At the time of application, it is not necessary for them to read a sales brochure with hundreds of pages. Therefore, when we launched the application exercise early this year, we decided to only distribute sales booklets containing the essential information during the application period. We will provide the sales brochures and price lists to successful applicants only after the application stage and before their scheduled dates of flat selection. As always, we will review the sale arrangements after the sale exercise with a view to seeking further room for improvement so that future operations will become more efficient.
I would like to respond to some queries over the price setting mechanism of HOS flats. There are views in the community that in response to the change in property market circumstances, prices of HOS flats should be adjusted downwards accordingly. The first point to note is that while there is no downward adjustment in the selling prices of HOS flats, we do adjust the discount rate, based on which the premium is to be calculated. A reduction in discount rate means a corresponding decrease in the premium to be paid by the buyers in the future.
However, if we simply focus on the amount that a buyer pays for an HOS flat, HA’s usual practice is indeed not to adjust the announced selling prices upward or downward according to the changes in market value. If HA lowers the announced selling prices of HOS flats in response to changes in market circumstances, it will be unfair to those who are eligible but did not submit an application. If we re-launch the application, the sale process will be delayed. If further changes in market circumstances arise and HA allows another round of application, the whole process will only cause confusion and inconvenience.
Besides, we need to understand that apart from determining the selling prices of individual flats, the setting of prices for HOS also involves determining who are eligible to apply for HOS. If HA lowers the selling price of HOS flats due to changes in market circumstances, we need to consider whether the eligibility threshold for White Form applications should also be lowered on the same ground, otherwise we may be criticised for providing HOS subsidies to those who are not in need. If we lower the threshold, however, some of those who meet the original threshold and have submitted applications may become ineligible as a result.
Many people point out that we should minimise the time gap between price setting and the sale of flats. We agree on this principle and have been endeavouring to do so. Nonetheless, we need to understand that the procedures HA need to go through for the sale of flats are different from those for private developers. Unlike the sale of private developments, the sale exercise of HOS does not start with the actual sale of flats. Before the sale of HOS flats, there is an elaborate process that we have to undergo to decide who are the eligible buyers. It starts with the Subsidised Housing Committee’s endorsement of the eligibility criteria as well as the income and asset limits of White Form applicants, followed by invitation of applications, and then the initial screening of application forms. An open ballot is conducted thereafter to determine the priority sequence for vetting applications. Thereafter, according to the order generated, applicants are required to submit supporting documents for detailed vetting to confirm their eligibility. Only those applicants who pass through the above procedures will be invited for flat selection. It is only at this stage that the processing of applications is completed and the sale of flats begins. During the process, we have to ensure that the large number of applications received are all handled in an accurate and fair manner, and this process takes time. As I have said, we will endeavour to further streamline the procedures, but we do not expect a large room for such streamlining.
Pre-sale of the Green Form Subsidised Home Ownership Pilot Scheme (GSH) flats at San Po Kong is planned for the second half of this year. Taking into account the experience in recent sale exercise of HOS flats and comments from the public, before the sale of GSH flats, we will review the time required between the application period and the sale of flats, so that the selling prices can be set to better reflect the latest market situation. Members can take the opportunity to further discuss issues relating to the selling prices of HOS flats.
Non-domestic Properties
After discussing the demand and supply of public housing, I would like to talk about another topic which many Members have discussed, i.e. non-domestic properties.
The Government and HA have always been paying attention to non-domestic properties and facilities for public housing. As a matter of fact, HA is currently providing about 1.7 million square metres of non-domestic facilities, of which 49% are welfare and community facilities, 13% are shops and market stalls, 12% are factory buildings and the remaining 26% are used for other purposes such as government rented premises, offices, storerooms, etc.
Some people are of the view that HA has the obligation to provide non-domestic facilities pursuant to Section 4(1) of the Housing Ordinance. For an accurate understanding of the statutory obligation of HA in respect of non-domestic facilities, one needs to study Section 4(1). Section 4(1) stipulates that HA shall exercise its powers and discharge its duties under the Housing Ordinance “so as to secure the provision of housing and such amenities ancillary thereto as the Authority thinks fit for such kinds or classes of persons the Authority may, subject to the approval of the Chief Executive, determine.”
In its judgment in the case of “Lo Siu Lan v. Hong Kong Housing Authority”, the Court of Final Appeal (CFA) discussed this section. The CFA agreed that HA’s retail and carparking facilities were “amenities ancillary to housing” (i.e. ancillary amenities) mentioned under the provision. Regarding these facilities, the judgment of the CFA could be understood with reference to the following two points. First, the CFA pointed out that it was not stipulated in the Housing Ordinance that tenants of PRH had any statutory right to the continued retention and control by HA of the facilities while the tenants were still using the facilities; and so long as the facilities were available to tenants, it meant that HA had secured the provision of such facilities, even if they were provided by a third party over whom HA had no control. Secondly, the provision of such was subject to the stipulation that these ancillary amenities were provided “as the Authority thinks fits”.
In view of the above, HA’s statutory obligation is to consider and decide what are “amenities ancillary to housing as the Authority thinks fits”. It is an obligation requiring HA to exercise discretion. In fact, there is no way to have a mandatory and one-size-fits-all rule. Same as members of the general public, PRH tenants need various services and facilities in their daily lives, including educational, medical, social, cultural, leisure, recreational and commercial facilities. The need for such facilities and services vary among districts and change over time. Besides, some such facilities and services may have already been provided in the neighbourhood by the Government or other parties, and HA has the duty to consider whether it should duplicate the provision of such facilities.
In practice, in the planning of new public housing development projects, HD complies with the Hong Kong Planning Standards and Guidelines published by the Government, and consults government departments and organisations, District Councils and the local community, in considering which ancillary facilities should be included in the public housing estates and are permitted by the circumstances of the projects.
In existing public housing estates, there is less room for adding facilities not planned during the design stage. We also need to take into account the diverse views of PRH tenants on the usage of space. Having said that, HA has been exploring opportunities to expand the variety of services that will better serve the needs of our tenants and provide them with more choices on top of the existing facilities. These include mobile community activities, mobile libraries, mobile banking service, mobile post offices, mobile Chinese medical and physiotherapy services, etc. By doing so, we need to make sure that it would neither reduce the number of residential units nor affect the standard of existing facilities such as ground level open space, greening ratio, etc. We have to also comply with relevant Government policies such as hawker control.
As to the recent suggestion of providing additional markets, hawker bazaars, parking spaces, ward offices, social welfare facilities, tea houses, restaurants, etc. in existing PRH estates, I am of the view that these suggestions do not present legislative or policy problems for HA. As to exactly how much HA can do, this is something that had to be decided by the actual circumstances. In our experience, there are constraints in many existing PRH estates. That is why we try to provide more services for our tenants using various mobile means as mentioned just now. Moreover, we will continue to liaise with relevant Government departments to ensure that HA’s provision of non-domestic facilities is in line with the legislation and Government policies.
I would now like to talk about the single-operator letting arrangement in HA’s markets in public housing estates. I want to make it clear that HA’s single-operator letting arrangement is different from similar practices adopted by some private owners. We have established a set of monitoring mechanism over the single operators’ performance through specific terms in the standard tenancy agreement and daily management measures. The single operators are not allowed to charge stall operators fees other than rent, air-conditioning charges, rates and management fees. Also, the single operators are required to provide sufficient management manpower and to maintain 24-hour security services. The tenancy agreement also stipulates that single operators shall ensure that the premises are operated as a traditional market with the provision of a certain proportion of food and miscellaneous trades. We adopt the single-operator letting arrangement to tap into the expertise and experience of the private sector for better choices and services to our tenants. At the same time, our measures for monitoring the single operators can ensure that their operation is not solely preoccupied by commercial gains without consideration of the needs of tenants and stall operators. This has been an effective mechanism, but we will keep the situation in view and look out for room for improvement.
Incident of Excess Lead in Drinking Water
Now, I would like to turn to the biggest challenge faced by HA last year － the handling of the “excess-lead-in-water” incident, on which many Members have expressed concerns. HA set up the Review Committee on Quality Assurance Issues Relating to Fresh Water Supply of Public Housing Estates (the Review Committee) immediately after the incident with a view to reviewing the quality control and monitoring system for HA’s construction works. The Review Committee published its final report in January this year, putting forward a number of recommendations on enhancement measures, ranging from contract specifications, delivery and verification of materials, monitoring during construction to testing upon completion. These measures will strengthen the monitoring of contractors and sub-contractors as well as the control and checking of materials, including soldering materials. We have already fully implemented all these measures and the Commission of Inquiry into Excess Lead Found in Drinking Water (the Commission) is also in support of them. I would like to thank all Members of the Review Committee again for their time and efforts. We will continue to carry out the work in this area conscientiously.
In order to keep Members informed of the latest developments of the incident, we have been reporting to Members on the follow-up actions including water tests conducted for all PRH estates, relief measures implemented to assist affected tenants, and follow-up actions taken against the contractors concerned, etc. But there is still a lot of work to do. Shortly after the publication of the Commission’s report, the Chairman of HA convened an HA meeting on 3 June to listen to Members’ views on the report and to discuss follow-up actions. Issues of Members’ concern can be broadly categorised into five main areas, namely, the testing of drinking water, rectification works, compensation, contractor’s liabilities, and the quality assurance system.
Many Members are concerned about whether we will conduct tests on drinking water for all PRH estates again. We understand the concerns of Members and the public over the safety and quality of drinking water. HA has to recognise that the water sampling protocol devised by the Water Authority under the Waterworks Ordinance has been in use for years; is applicable to both new and existing developments; and applicable to both PRH estates and non-PRH premises. If the Water Authority adopts a new water sampling protocol, it would not only be applicable to PRH estates. The international expert panel set up by the Development Bureau has already convened its first meeting. The panel will put forward a proposal suitable for the actual circumstances in Hong Kong as soon as possible. It will cover various issues, such as the water sampling protocols, appropriate lead content level, and the action levels for lead concentration in water tested. HA will fully co-operate with the Government in such follow-up work.
The second area of Members’ concern is the progress and schedule of the rectification works in the affected PRH estates. The contractors have started in March to replace the drinking water plumping in the public areas of the 11 affected PRH estates. The works have been going on for more than three months now and the progress is generally satisfactory. We have also asked the contractors to enhance communication with tenants and minimise the inconvenience caused to them while the works are in progress, such as reducing the frequency and duration of water supply suspension as far as practicable. Up till now, apart from a few isolated cases, the works have generally been progressing smoothly. May I use this occasion to express my gratitude for tenants’ understanding and tolerance. Upon the completion of works in the public areas, works inside flats will start. This will be another challenge for HA as rectification works inside flats involve various kinds of complex technical and enforcement issues. For this reason, we have been discussing with contractors on the arrangements for rectification works inside flats. As the furnishings and the pipe routings of individual flats can vary greatly, we have asked the contractors to devise work plans for different scenarios inside flats for tenants’ reference. We have also been liaising closely with the Water Supplies Department in respect of various enforcement issues concerning the Water Authority. We will make the best use of our time to resolve these issues as soon as practicable so that rectification works inside flats can start promptly once the works in the public areas are completed. We will provide tenants with information about the works in advance and will continue to report progress to Members.
Thirdly, some Members suggested that HA should consider providing compensation to affected tenants. We understand that the “excess-lead-in-water” incident has caused inconvenience to affected tenants. However, as far as compensation is concerned, many factors have to be taken into account. The matter must be considered in a prudent manner. HA’s resources are public money. We have to bear in mind the principle of fairness to all stakeholders in handling the issue.
Fourthly, a number of Members remarked that the contractors should be held accountable for their contractual liabilities. In fact, right after the outbreak of incident we started taking actions against the contractors on various fronts for their liabilities under the contracts. We have requested the contractors to provide temporary water points on each floor, to install water filters, to provide a water charge subsidy and a performance bond; and to carry out rectification works. In addition, the Tender Committee took regulatory actions against the four contractors last year based on information available at the time. We are now collating relevant information and will submit it to the Tender Committee for discussion and consideration as to whether any further follow-up action should be taken.
Finally, I would like to say a few words on our preliminary thinking regarding the follow-up actions for enhancing HA’s quality assurance system. At the meeting on 3 June, Members generally advised that it was necessary to ensure that the enhancement measures implemented would not become mere ink on paper, and that the risk assessment and management system should also be strengthened. In order to comprehensively review HA’s quality assurance system, we should not just focus on the issue of water quality, but should also draw a lesson and identify areas for improvement in various aspects of quality assurance. Reform in the areas would likely be effected under list management and contract management measures of HA, which should be overseen by the Tender Committee. Therefore, we will invite the Tender Committee to discuss these issues. We believe this work is ongoing and requires long-term development and implementation.
Conclusion
Lastly, I would like to quote the recent advice of the Chairman of HA to HD and his expectation on us, that is, “back to basics”.
On “back to basics”, I have the following reflections myself. First, HD has to adhere to its core responsibilities in the construction and maintenance of housing, that is, to provide no-frills and safe accommodation, which is conducive to tenants’ healthy living. Secondly, we have to enhance communication among all sections, all grades and all levels of staff in the Department at all times to ensure that we respond to problems, be they big or small, as a team. These are the “basics” that an organisation with nearly 10 000 staff members must not forget. Our colleagues fully demonstrated their team spirit in the past by responding to the “excess-lead-in- water” incident on the one hand and carrying on with their daily work in a steadfast manner on the other. We did it in the past year and we can do it in the future. I hope Members will continue to oversee and support our work in this respect and in other areas. Thank you.
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