OFFICIAL RECORD OF PROCEEDINGS Thursday, 29 November … · telecommunications industry, which is...

LEGISLATIVE COUNCIL ─ 29 November 2012

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OFFICIAL RECORD OF PROCEEDINGS

Thursday, 29 November 2012

The Council continued to meet at Nine o'clock

MEMBERS PRESENT: THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P. THE HONOURABLE ALBERT HO CHUN-YAN THE HONOURABLE LEE CHEUK-YAN THE HONOURABLE JAMES TO KUN-SUN THE HONOURABLE CHAN KAM-LAM, S.B.S., J.P. THE HONOURABLE LEUNG YIU-CHUNG THE HONOURABLE EMILY LAU WAI-HING, J.P. THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P. THE HONOURABLE ABRAHAM SHEK LAI-HIM, S.B.S., J.P. THE HONOURABLE TOMMY CHEUNG YU-YAN, S.B.S., J.P. THE HONOURABLE FREDERICK FUNG KIN-KEE, S.B.S., J.P. THE HONOURABLE WONG KWOK-HING, M.H. DR THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P. THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P.

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THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P. THE HONOURABLE WONG TING-KWONG, S.B.S., J.P. THE HONOURABLE RONNY TONG KA-WAH, S.C. THE HONOURABLE CYD HO SAU-LAN THE HONOURABLE STARRY LEE WAI-KING, J.P. DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P. THE HONOURABLE CHAN HAK-KAN, J.P. THE HONOURABLE CHAN KIN-POR, B.B.S., J.P. DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, J.P. DR THE HONOURABLE LEUNG KA-LAU THE HONOURABLE CHEUNG KWOK-CHE THE HONOURABLE WONG KWOK-KIN, B.B.S. THE HONOURABLE IP KWOK-HIM, G.B.S., J.P. THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P. THE HONOURABLE PAUL TSE WAI-CHUN, J.P. THE HONOURABLE ALAN LEONG KAH-KIT, S.C. THE HONOURABLE LEUNG KWOK-HUNG THE HONOURABLE ALBERT CHAN WAI-YIP THE HONOURABLE WONG YUK-MAN THE HONOURABLE CLAUDIA MO


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THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P. THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P. THE HONOURABLE NG LEUNG-SING, S.B.S., J.P. THE HONOURABLE STEVEN HO CHUN-YIN THE HONOURABLE FRANKIE YICK CHI-MING THE HONOURABLE WU CHI-WAI, M.H. THE HONOURABLE YIU SI-WING THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P. THE HONOURABLE CHARLES PETER MOK THE HONOURABLE CHAN CHI-CHUEN THE HONOURABLE CHAN HAN-PAN DR THE HONOURABLE KENNETH CHAN KA-LOK THE HONOURABLE CHAN YUEN-HAN, S.B.S., J.P. THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P. THE HONOURABLE KENNETH LEUNG THE HONOURABLE ALICE MAK MEI-KUEN, J.P. DR THE HONOURABLE KWOK KA-KI THE HONOURABLE KWOK WAI-KEUNG THE HONOURABLE DENNIS KWOK THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, J.P. DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG


THE HONOURABLE SIN CHUNG-KAI, S.B.S., J.P. DR THE HONOURABLE HELENA WONG PIK-WAN THE HONOURABLE MARTIN LIAO CHEUNG-KONG, J.P. THE HONOURABLE POON SIU-PING, B.B.S., M.H. THE HONOURABLE TANG KA-PIU DR THE HONOURABLE CHIANG LAI-WAN, J.P. IR DR THE HONOURABLE LO WAI-KWOK, B.B.S., M.H., J.P. THE HONOURABLE CHUNG KWOK-PAN THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P. THE HONOURABLE TONY TSE WAI-CHUEN MEMBERS ABSENT: DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P. THE HONOURABLE VINCENT FANG KANG, S.B.S., J.P. THE HONOURABLE GARY FAN KWOK-WAI THE HONOURABLE IP KIN-YUEN DR THE HONOURABLE ELIZABETH QUAT, J.P. PUBLIC OFFICERS ATTENDING: THE HONOURABLE MRS CARRIE LAM CHENG YUET-NGOR, G.B.S., J.P. THE CHIEF SECRETARY FOR ADMINISTRATION THE HONOURABLE GREGORY SO KAM-LEUNG, G.B.S., J.P. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT


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CLERKS IN ATTENDANCE: MISS ODELIA LEUNG HING-YEE, ASSISTANT SECRETARY GENERAL MRS PERCY MA, ASSISTANT SECRETARY GENERAL


MEMBERS' MOTIONS PRESIDENT (in Cantonese): Good morning, the meeting now resumes. We will continue to debate the motion on "Domestic free television programme service licence applications". DOMESTIC FREE TELEVISION PROGRAMME SERVICE LICENCE APPLICATIONS Continuation of debate on motion which was moved on 28 November 2012 MRS REGINA IP (in Cantonese): President, after listening to the remarks made by Ms Claudia MO and a few Members who moved amendments last night, I found that all these speakers except one criticized the Government for the delay in issuing licences and they also criticized the two existing television broadcasters. I call upon Honourable colleagues to find out more about the structure of the television industry and the background of the changes in television policies before making comments, and I hope they would do so. The television industry has always been rather centralized because enormous investments are required, but the period of return is very long. In the past, there were only two to three national television networks even in countries such as the United States. Of course, this situation has changed with technological advancement. Therefore, the Government has all along attached great importance to the regulation of the television industry, and the purpose is to prevent anti-competitive behaviours. This phenomenon also appeared in the telecommunications industry, which is the "twin sister" of the television industry. Mr WU Chi-wai also mentioned last night the liberalization and de-regulation of the telecommunications industry. With global technological development, the Government had conducted a series of policy reviews in the 1990s, in pursuit of de-regulation and liberalization of the telecommunications industry and the broadcasting industry. Some Honourable colleagues have mentioned the Consultation Paper on 1998 Review of Television Policy, which we all have a copy. In that Paper, it was mentioned that the Government permitted new modes for the provision of television services in view of technological advancement, and less regulations would be imposed on


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the premise of not violating anti-competition requirements, more free licences would be issued, and royalties would be waived under this policy. All this happened in 1998. Before the reunification, the Government also liberalized the telecommunications sector, which was in principle a good arrangement. But, today, after more than a decade, it is necessary to review the effectiveness. In the telecommunications industry, telephone charges have undoubtedly become much cheaper, and it is now convenient and cheaper to make long-distance calls. As we all know, the roaming charges are very high, and industry experts have stated that, due to the intense competition among telecommunications service operators, the profits are not as high as one would imagine. Thus, various operators have reduced investments. Some experts also pointed out that our telecommunications network is already ageing and not modern enough and it may not be able to cope with the dissemination needs arising from new technologies. While we are paying attention to the further opening up of the television industry, we should also pay attention to these situations, as well as the qualities of the television industry. In addition to its entertaining functions and its being the provider of popular entertainment programmes to consumers, the television industry is also a cultural and creative industry. As it is a cultural industry to provide television services, many countries around the world are focusing on its cultural impacts. This famous book in my hand, published in the early 1970s, is a bit old, but the publisher is the leading Brookings Institute Press in the United States, and it is entitled Economic Aspects of Television Regulation; I suggest that the Commerce and Economic Development Bureau should get a copy of this book and draw reference from it. Although some parts of the book are outdated, mainly the parts on technology, its ideas are still applicable to our society nowadays. It is mentioned that all governments are concerned about the "Problem of Tone" caused by television as a cultural product, that is, the impact of its style. I think another noteworthy point is that, as the name of the book suggests, it explores the economic aspects and examines the television industry from an economic point of view. Hence, it also mentions the need to consider the impacts on the overall economic benefits before issuing licences.


What licensing policy is cost-effective according to the book? All the resources used by the industry as a whole should be used most effectively and efficiently. And, the community will not be adversely affected because of the transfer of resources to or out of the television industry. In other words, if a lot of resources are put in the television industry at the same time, a messy situation will be resulted, as in the case of the closure of Commercial Television in 1970, or the recent case of suspended broadcasting by DBC, which will arouse discontent and indignation from people ― just like the grumblings I heard when I attended the public hearing of this Council that Saturday ― there will be vicious impacts on the social and economic benefits. There are all sorts of very professional economic theories, but I do not have enough time for detailed discussions. I just want to point out, the licensing policy should not only be speedy actions taken to address the dissatisfaction of viewers against television broadcasters, the most important consideration is to be cost-effective and the cultural impact, a factor that many governments in various parts of the world would take into consideration when they regulate the television industry. There is another saying that if television broadcasters pay too much emphasis on entertainment, their programmes will create a cultural wasteland. For this reason, many governments provide public broadcasting services, as in the case of Radio Television Hong Kong which makes up for the deficiencies of the commercial radio and television services. I hope Honourable colleagues will not adopt a one-sided approach and blame the Government for being too slow in issuing licences. Instead, we should consider the matter from different angles, just like what the Education Bureau has taught students, and carefully consider what mode of regulation is practically needed by this industry. As regards the delay in issuing licences, I have tried to find out more about that from the Commerce and Economic Development Bureau. They received three applications in late 2009 which were submitted to the Broadcasting Authority (BA) for consideration, and the BA only submitted a report to the Administration in July 2011. In other words, the BA has taken more than a year and a half to handle these applications. During the period, a television broadcaster filed a petition in opposition and asked for a judicial review. The Government must deal with these things. As our society and this Council frequently boast about the emphasis attached to the rule of law, I believe we


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should respect that the Government needs time to deal with these requests, (The buzzer sounded) …… and act in accordance with the law while respecting procedural justice. I so submit. MR NG LEUNG-SING (in Cantonese): President, after making basic deliberation on this motion and the amendments, I agree with Ir Dr LO Wai-kwok's amendment, and I request the Government to make a decision on the issuance of additional free television licences (free TV licences) by the end of March next year, and issue the licences expeditiously. The cultural industries, including the film and television industries, have once been priority industries in Hong Kong. In the last century, Hong Kong once ranked third in the world in terms of film output, only after the United States and India. Our film industry has remained powerful for a fairly long time. According to the statistics of Screen Digest, the per capita film output in Hong Kong in 2008 ranked third in the world, only after Iceland and Switzerland. In fact, Hong Kong films have repeatedly won awards and special honours at international film festivals. However, this is not the case of the television industry. From the mid-1970s to the 1990s, Hong Kong was the production centre of Chinese dramas in the world; the annual output was up to 2 000 hours and the dramas were exported to every corner of the global Chinese communities. These dramas were even dubbed into foreign languages and exported to non-Chinese speaking regions. However, in the 21st century, changes have obviously taken place and the industry has lost its flair. Hong Kong people now watch Korean, Japanese and Mainland dramas, and there is a declining foreign demand for Hong Kong-produced dramas. The lack of competition in Hong Kong-produced television dramas have led to a declining quality while foreign dramas have made continuous improvement, both in terms of quantity and quality. This naturally eroded the market for television dramas in Hong Kong. In 2010, the output of television dramas shot on the Mainland exceeded 20 000 hours, significantly higher than the output of dramas produced in Hong Kong. The different achievements of local film and television industry are attributed to the forms of competition. While there is competition in the film


industry and the threshold is low, the television industry has a high threshold but with little competition. For a decade or so, one television broadcaster has almost stopped producing dramas. With a lack of competition, the quality of Hong Kong-produced television dramas has steadily deteriorated, so some Hong Kong people watch dramas produced from other places instead. The television industry is in a precarious situation. Therefore, I support the Government's granting of additional free TV licences to encourage competition and promote the enhancement of standards of our television industry. Competition can also change the phenomenon of following the beaten path and the mentality of resting on one's laurels. According to a survey conducted by the Centre for Communication and Public Opinion Survey of The Chinese University of Hong Kong from October to November this year, 75% of Hong Kong people supported the issuance of more licences by the Government. The public opinion is obvious. It must be noted that a free television broadcaster opposes the issuance of new licences on the ground that the revenues from advertising have not increased in the past 15 years. This argument does not seem to comply with economic laws. According to the theory of economic cycle, as long as the products have higher standards, they will naturally have their appeal. When the viewership rate becomes higher, the advertising revenues will naturally increase. Moreover, a large part of the revenues of local television industry come from overseas markets, and the television markets in South China and the Mainland are the world's largest. There is also a huge demand for quality programmes on the Mainland. Under CEPA, television programmes jointly produced by the Mainland and Hong Kong will have greater market access. So long as the industry makes efforts and operates well, there will be a virtuous cycle, and the "pie" will become bigger and bigger; why would we need to worry about the source of advertising revenue? President, based on the above arguments, I support expanding the free television platform to help the development of the local cultural industry and the persons engaged in the industry. President, I so submit.


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MR RONNY TONG (in Cantonese): President, the most severe criticism against TUNG Chee-hwa is that he made no decision after discussion and took no action after a decision was made. Why do we say so? In respect of how to make good use of television channels, his malpractices have perpetuated. President, Mrs Regina IP has left the meeting again. As we all know, she is a member of the Executive Council and she has to defend the Government. In her speech, she asked us to consider this issue from different perspectives, which actually means that a lot of things have to be considered. I have never opposed the practice that we should consider this issue from different perspectives; however, we should at least have some guiding principles. If we are going to examine this issue from different perspectives but without guiding principles, this would precisely result in making no decision after discussion and taking no action after a decision is made. Anyway, on a number of occasions in the past and even today, when the Secretary expounded on the reasons why it took more than three years to deal with such a simple issue, his words can be expressed in only one sentence, that is, we must take procedural justice into account. The Secretary is a lawyer and I certainly respect his legal advice. Nevertheless, I think the Secretary should also understand that an important point in violation of procedural justice is making no decision after discussion and taking no action after a decision is made. When the law empowers the Government or a person to exercise certain power, especially to use the power for the benefit of Hong Kong people, he has not exercised this power because he thinks that the issue should be examined from different perspectives and procedural justice must be taken into account. Thus, there is a delay of more than three years in handling this issue, which is actually a violation of procedural justice. The Secretary has never explained what procedural justice is, but I can imagine that he may mean to say that the two existing television broadcasters ― TVB and ATV ― engaged a large group of lawyers to argue with him, so he must resolve the matter first. In that case, I think the Secretary is really a bit naïve, and I hope he would not be offended. As I am a lawyer like him, I also know that the functions of lawyers are to delay when there are no justifications and kill the enemies when there are; we are delaying right now. Decisions on legal disputes should not be made by the Secretary, the Chief Executive or the Executive Council. If there are legal disputes, another party should be asked to


go to court together. What are the justifications for delaying for more than three years? I am filled with admiration and I really want to know who the brilliant lawyer is. Of course, it is another matter as to whether the Secretary can be easily convinced; if another person has taken office as the Secretary, he may also be easily convinced. President, there should be a limit to the period of delay due to legal justifications. Frankly speaking, if a court case is not heard after three years, some will question if the judge is incompetent or the system is ineffective. This is definitely unacceptable because three years have passed but the case has not been heard in court and there is a constant delay. Nonetheless, the information revealed is very important. TVB's taste may be "a little better" than ATV in terms of the tricks employed. TVB sent a lot of letters and provided a lot of figures to Members, which made me a bit angry. It provided in a table form how much money was earned in a certain year and how much money it is now earning. By comparing the figures, we found that there is a minor difference. In other words, TVB always has substantial profits, but it still asks the Government not to not grant additional licences, for it will earn less money. President, is that also a reason? I am really sorry that the television channels currently used by TVB are not the properties handed down from ancestors but the public resources of Hong Kong people. TVB should rejoice for its being able to make a fortune on this public resource throughout the years, and it should not ask us not to stop it from making a fortune in the future. What justification is that? Not only so, TVB also claimed that it would sue those who stop it from making a fortune. Such a remark should only be made by a businessman or a wealthy person, and an ordinary person who has some common sense, intelligence or concepts of social justice will not dare to say so. How can it claim that other licences should not be issued for reason that it may cause reduced profits? If an industry player is eliminated due to the lack of competitiveness after another licence has been issued, this demonstrated the power of the market. From this point of view, competition will only bring more diverse choices. In fact, TVB should review its deficiency, that is, it has only put emphasis on entertainment and it has neglected important social issues. President, I believe you also know that one of the candidates who ran in the Legislative Council election is "Whatever Man" who used the expression "TVB News,


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Whatever". He is a candidate running in my constituency but he has unfortunately lost the election, which highlighted TVB's bias. As the Secretary is aware, TVB has taken a lot of anti-competitive acts. It has always stifled competition in other aspects and it is even stifling competition in another way now. The Secretary is a lawyer who promotes the competition law, why can he not see these things clearly? President, I think that even the need to discuss this issue is an insult of the wisdom of Hong Kong people. Public resources should be open for bidding and competition, in order to benefit the community. Thank you, President. MR CHEUNG KWOK-CHE (in Cantonese): President, another opinion poll conducted last week showed that 90% of Hong Kong people supported the issuance of new free television licences. We already know the people's aspiration without having to conduct any more opinion polls. It is because watching television is an essential part of people's daily life, if we ask our friends and relatives, we will know about that. The general public has reached a consensus long ago that there should be new free television broadcasters in Hong Kong. The Government removed the cap on the number of free television licences back in 1998; since then, free television broadcasters no longer had to pay franchise fees. According to some media reports, for more than a decade, TVB has paid $2.4 billion less for franchise fees. Fourteen years have passed and new competition has still not been introduced into the market. On the contrary, the study conducted earlier by Prof Clement SO and Prof Louis LEUNG of The Chinese University of Hong Kong told us that young people with high education levels and household incomes support granting more licences, so as to introduce competition and improve the quality of services. Three years ago, the Government announced the opening up of terrestrial airwaves in a high-profile manner, which seemed to encourage consortia to apply for the operation of free television licenses. The consortia's response was favourable and three applications were received. The then Broadcasting Authority responded very quickly and clearly indicated its support for the issuance of additional licences. After much deliberation, a positive proposal was submitted to the Government a year ago. All Hong Kong people hope that the Government would follow the procedures and administrative procedures so that we will soon have new television channels. Unfortunately, things turned


out contrary to our wishes and the Government has delayed in making the final decision. Three years ago, a consortium announced its application in a high-profile manner, and it started recruiting new staff and getting fully prepared. Has this consortium misjudged the situation and spent huge sums of money for nothing just because of its wishful thinking? We can regard this as a mistake in business decision-making, but the decision should have been made within a short time and the Government has procrastinated; it is completely abnormal for three years to be taken to make the decision. If the Government fails to give a reasonable explanation or make compensation for the delay, it would be unfair to the consortium concerned and the public. In 1998, the Government already planned to introduce more free television broadcasters but it only invited applications three years later, which is outrageously late. If it fails to give an account today, it would be irresponsible to the consortium concerned and the public, and it would have even wasted the valuable airwave resources for a decade or so. I ask the Government, especially Secretary Gregory SO, to give the community an account and an explanation; otherwise, another Secretary may have to step down in order to be accountable. If there are more operators, the public will be provided with more information and entertainment choices, and the standards of television programmes will also be upgraded. Room for social and industrial development will also be created. In addition to directly creating thousands of jobs, this will promote the development of upstream and downstream industries, which may create tens of thousands of jobs and bring about excellent social and economic benefits. For the sake of giving people more choices of entertainment and information, for the development of the relevant industries and professionals concerned, as well as for getting social and economic benefits, the Government cannot delay further. For such a matter-of-fact issue, if the Government delays further, it will certainly make us wonder if there are any perfunctory dealings with the consortia. Let me warn the Government, it should learn a lesson from the previous monopolization incidents involving the Grand Promenade, the Hunghom Peninsula and Tin Shui Wai, and refrain from engaging in the transfer of benefits; otherwise, the public will lose confidence in the Government again. President, throughout the years, ATV has given up the production of dramas, and its low-cost programme production has led to continuously low viewership rates. In recent years, it has kept airing reruns, and I think it is going to give up the operation, and just drags on day after day. The new management


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team has a lot of problems with complicated background. There are suspected cases of interfering with the freedom of the press and broadcasting paid news programmes. Now, it has even used public resources for private purposes and launched programmes to combat competitors; these moves are deliberately stepping on the line, completely ignoring the proper conduct of media workers. Last week, TVB followed suit. It placed advertisements against its competitors, attempting to stop their entry into the market. I think the Government should not tolerate that, so, I agree with Mr Gary FAN's proposal to investigate whether the two parties have violated the "Accuracy, Impartiality and Fairness" requirements. I also urge the Communications Authority to commence hearings as proposed by Ms Emily LAU, to investigate if the television broadcaster has violated the licence conditions and the relevant Codes of Practice. President, the chaos caused by the two television broadcasters gave people an impression that they fear nothing with somebody backing them, and they are challenging the Government and the general public who cannot do anything against them. In order to maintain the value of people-oriented public services, and for the reasons of giving the public more choices and promoting the development of television production and television industry as I have mentioned, I agree with the proposal of Mr SIN Chung-kai that the authorities should put up the broadcasters' exclusive spectra for public auction before their licences expire in the end of 2015, so that operators will be more dedicated to providing services to Hong Kong people. I so submit, President. MR CHARLES PETER MOK (in Cantonese): President, the hot topic for discussion in the Legislative Council this year is definitely related to free television licences. I have asked a question at the first Legislative Council meeting this year about when the Government would issue new free TV licences. The Secretary replied that the Government had to consider a lot of factors at this stage before making a decision. As in the past, the Government has answered my question in a way that it seemed as though it has not answered. Basically, it said that "the Administration has been processing the recommendations submitted by the former BA expeditiously and prudently in accordance with the statutory requirements and established procedures" and that the assessment is based on the criteria set out in the guidelines issued by the Communications Authority (CA).


At the third Legislative Council meeting, Mr Frederick FUNG asked the Government again why licences had not been issued but he was given the same answer. I also asked in a supplementary question whether the Government would prepare another economic study report as reported; yet, the Secretary did not directly answer my question. President, since the Government's decision to open up the market was based on the economic and market research report as rumored, and the report was prepared with public funds, I would like to ask the Government to be frank and make public the report. The public, the three applicants and the two existing licensees want the relevant information. Now that the current broadcasting policies have not capped the number of free licences, making public the report will be fair, open and transparent to the existing applicants and licensees and even the future applicants. The Government should not say that the information on certain companies is involved because the information is related to public interest. Regarding the broadcasting policies, the two existing licensees ― TVB and ATV ― have actively and unequivocally opposed the Government's issuance of new licences these days. What ATV did was shocking and I think it is more entertaining than the television programmes it provided to the public. As regards the two existing television broadcasters, one of them wants to continue to "stay on the boat" and monopolize the licence and airwave while another thinks that the free television market has been strictly regulated at present, and deregulation would be necessary if addition licences are granted. About these remarks, I would like to make reference to the liberalization of the telecommunications market. The fixed-line telecommunications industry also makes huge investments on infrastructure. At the very beginning, there was only one operator in the market. Though there is no limit on the number of licences, there have all along been six licensed operators in the market. Before 1995, many people worried that the liberalization of the market might cause the collapse of the industry. After new licences had been issued under an open and transparent assessment mechanism, we have seen that there is no progress if there is no competition. There are lower telecommunications charges, improved service quality, more choices for consumers and greater business opportunities for the industry players, as well as increased opportunities for employees, benefiting members of the community. Just like what happened in the fixed-line telecommunications market, if free television licences can be issued under open


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and transparent licensing criteria and procedures, competent applicants can enter the free television market, consumers and industry players would be benefited. President, I understand that the revenues of free television broadcasters come from advertisements, and that is why some have said if new licences will be issued, there should be less regulation so that a larger "pie" can be created. I believe appropriate liberalization can be considered but it must be fair to new and existing television broadcasters alike. However, relaxing the regulation of advertising by television broadcasters has impacts on the community as a whole and that is not simply an issue concerning television advertisements. For instance, the licence conditions specify the number of hours of specific types of programmes to be broadcast by a licensee, the number of Radio Television Hong Kong (RTHK) programmes to be broadcast or the Government's Announcement of Public Interest (API) to be broadcast each day. I think the regulation of existing and new licencees can be equally relaxed. RTHK will soon use its own digital channel for broadcasting and the Government has jumped the gun and it is now using the APIs to advocate policies pending the Legislative Council's funding approval or on which the public has not reached a consensus, such as the Old Age Living Allowance and the North East New Territories development, in an attempt to create public opinion, playing political advertisements in disguise. Hence, I believe there is no problem at all to shorten or cancel a licensee's timeslots for broadcasting APIs. If there will be reduced regulation on television advertisements after the issuance of new licences, such that tobacco and pharmaceutical companies are allowed to place advertisements and there are even political advertisements, it will have far-reaching impacts on our society. A final decision should not be made on these issues while we are having discussions about the television market. The issuance of free TV licences has brought unprecedented political effects on the broadcasting industry and also immense pressure on the CA, the broadcasting regulator. In the past, the regulation of the telecommunications and broadcasting industries was achieved through technology-led and technology-neutral methods, and the issuance of licences and the handling of complaints were done under the sun in open and transparent manners. I hope these methods would continue to be adopted and the Government should put an end to this farce by expeditiously issuing new licences to the applicants who passed the vetting.


The Government has said that sufficient time is needed to process these complicated applications. Nevertheless, we found that it is clearly presented in the websites of the CA and the former Broadcasting Authority how long it takes to process applications: "The processing time varies by case and depends on how adequate the documents submitted are. In general, it takes about four months from the receipt of all required documents and clarifications from the applicant". This government information is set out in the websites of the former Broadcasting Authority and the CA. Does this mean that the authorities take four months to process the applications but these applications will be discussed in the Executive Council for an unlimited time? If so, I am very sympathetic to the situation of the Secretary. President, I support the original motion and other amendments, and I especially want to say that I absolutely agree with Mr SIN Chung-kai's proposal that, before the licences of the existing two free television broadcasters expire, the authorities should conduct a study on putting up the broadcasters' exclusive spectra for public auction. This would avoid some television broadcasters' occupying public resources as if there is a hereditary system. I so submit, President, thank you. MR MA FUNG-KWOK (in Cantonese): President, from late 2009 to early 2010, three institutions had respectively submitted free television programme service licence (free TV licence) applications to the Broadcasting Authority, but no decision has yet been made on these applications up until now. I have all along supported the Government's issuance of an adequate number of additional free TV licences, so as to open up the free television market in a responsible manner. Only two free television broadcasters, TVB and ATV, are left after the closure of Commercial Television in 1978. The two broadcasters had gone through a few television battles in the past, resulted in the dominance by one television broadcaster today. Television viewers benefited most in the past, no matter it was the time when there were three television broadcasters or at a time when the two television broadcasters engaged in fierce competition. The television broadcasters tried to win viewership ratings by all possible means, and quite a number of outstanding


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television programmes were produced in those competitive years. It was a glorious era for the local television industry. In respect of the development of the television industry, an additional television station can provide more employment opportunities to professionals in the industry, either front stage or backstage employees. It is also conducive to nurturing more outstanding newcomers. In particular, with the close relationship between the local television industry and film industry, many famous actors and directors have started the career from television stations, and some of them are concurrently singers, movie stars and television artists. If the television industry has a large number of talents, it is also conducive to injecting new blood into the film industry, so as to promote the development of the performing arts industry. In recent years, with the rapid development of the television industries in the neighbouring countries and regions, the local television industry is facing a number of challenges. In this age when information development has become increasingly advanced, more choices are available for local viewers, and they are no longer limited to locally produced programmes. There is a growing penetration of Japanese, Korean, Taiwanese dramas, and even Mainland-produced dramas; the quality and standards of these programmes are not inferior to those of local programmes, and they have even surpassed local productions. If the local television market is still at a stalemate with low competition, the development of the local television industry will only stay put, which is detrimental to the competitiveness of the industry. Issuing additional free TV licences is an important measure to consolidate Hong Kong's position as a broadcasting hub in the Asia-Pacific region. However, when the Government issues new licences, it should specify certain terms and conditions in the new licences, so as to ensure that new operators would shoulder social responsibilities of the public media, especially the responsibilities for cultural development and harmonious social development. For example, owing to consideration of viewership ratings or advertising, the broadcasters will tend to produce dramas, and commentary programmes will tend to please the public with claptrap. For this reason, the licensing conditions should require a proper proportion of different types of programmes, such as drama, news, information, general entertainment, sports, and culture and arts, in order to ensure the quality of the programmes. Alternatively, there should be


specialized channels, including the culture and arts channels that I have always advocated, to provide room for survival of different types of programmes. President, I must emphasize that I support the issuance of free TV licences to create a fair, reasonable and competitive market environment, and promote competition among industry players, thereby benefiting the viewers and promoting the industry's continuous development. Under this principle of competition, we should not and it is also impossible for us to preset the number of licences to be issued. Somebody has made investments in advance to indicate his sincerity in participating in the industry, and this should not be interpreted as taking his own risk. Despite what he has done, we cannot say for sure that he will be issued a licence. If this comment is made by a commentator, I would agree to it. But if it is made by the Secretary responsible for promoting commercial development and is directly in charge of the policy areas concerned, what he said will easily be interpreted as shirking responsibility, and he will even give us an impression that he is a bit cold-blooded. New competitors will inevitably have impacts on the current licencees. They have recently provided some data to prove that there has not been any increase in the local advertising revenues over the years, arguing that there should not be too many free television broadcasters. Yet, the licence applicants have provided data to conversely prove that there has been a continuous growth in the advertising revenues of free television broadcasters, strongly supporting the issuance of additional licences. Which one is telling the truth? Are the two parties purposely groping in the dark for getting what they want? President, I do not have the right to comment as I have not conducted an in-depth study, but I believe the Government is in the best position to grasp the data on the broadcasting industry. The Government should know clearly whether there has been growth in the advertising market in the past few years, how big is the share taken up by free television broadcasters and whether more free television broadcasters can be accommodated. This should be an important basis on which it determines whether more free TV licences should be issued. Nonetheless, the Government has all along failed to announce or comment on the data, giving us an impression that it intends to stay aloof from the affair, which is an irresponsible act.


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President, the three institutions filed applications for free TV licences almost three years ago. I can understand that there are some changes in the new government in the past few months, and it may take some time to deal with the policies in this area. Nevertheless, I notice that the Secretary responsible for the policies has basically remained unchanged, and in the past few months, there are no highly controversial incidents in the relevant policy area, which may affect the Government's decisions on the issuance of new licences. So, I think the Government should issue licences as soon as possible. If the Government has other considerations, it should explain clearly the reasons to the general public, instead of constantly saying that the applications are being processed, asking the three applicants and the public to wait indefinitely. I urge the Government to expeditiously announce the results of the three applications for free TV licences, and grant new licences, if possible, so as to give the public a reasonable explanation. President, I will support Ir Dr LO Wai-kwok's amendment. Although the Government failed to give an account of the issuance of free TV licences in the past three years, at this stage, I have not found any evidence that this is due to political considerations. Hence, I will not support Ms Claudia MO's original motion and the amendments of Mr SIN Chung-kai, Mr Gary FAN and Ms Emily LAU. Thank you, President. MR KENNETH LEUNG (in Cantonese): President, in 1980, the United Nations Educational, Scientific and Cultural Organization endorsed and published the most important document in the contemporary international communications field: "Many Voices, One World", which made 82 recommendations on the establishment of an international information order. I am going to talk about three of the recommendations:

(a) diversity and choice; (b) strengthening independence and self-reliance; and (c) towards improved international reporting, striving to be

comprehensive and objective.


These three recommendations are closely related to the issue for discussion today concerning the issuance of local free programme service licences (free TV licences). The mass media belongs to Hong Kong people and media channels are the public assets of the community. Television broadcasting is an important channel through which the public has access to social information. After the digitalization of television channels, the number of channels transmittable by our terrestrial airwaves has increased significantly. Why do we only have two free television channels today, that is, Asia Television Limited (ATV) and Television Broadcasts Limited (TVB)? According to the United Nations' "Universal Declaration of Human Rights", everyone has the right to freedom of expression; this right includes freedom to seek, receive and impart information and ideas. The freedom of access to information is also protected under the Basic Law and the International Covenant on Civil and Political Rights. The depressing situation of having only two television broadcasters in Hong Kong has existed for over 30 years, and the quality of the programmes of local free television broadcasters has been declining. Take ATV as an example, the "ATV Focus" programme recently commented on the national education incident but it was criticized for its biased and untrue contents, suspected of misleading the public and smearing. More than 40 000 complaints have been received, which has broken the record in terms of the number of complaints ever since the commencement of television broadcast. There were also complaints against the ATV's latest live broadcast of "Care for Hong Kong's Future" rally for it distorted the facts, misled the public, abused the terrestrial airwaves and used public resources for private purposes; more than 2 000 complaints have so far been received. Another television broadcaster, TVB, is not much better. It constantly produced inferior and vulgar dramas and low-intelligence game shows. The dramas are shoddily produced, very often copied from foreign dramas. Evidently, people are strongly dissatisfied with the quality of the television media, and they strongly feel that the television broadcasters are no longer upholding neutrality.


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While there is a decline in the quality of the media, there is also serious dominance by one major television broadcaster. According to the viewership rating survey conducted by the former Broadcasting Authority (BA) in 2010 on a review of free TV licences, the ratio of the viewership ratings of TVB to ATV is 9:1. ATV has recently conducted a poll that it claimed to be fair, but the 4:6 ratio as proposed is completely divorced from the facts. Not long ago, a group of people from the entertainment industry, the film and television industry and the cultural sector, as well as some Members had jointly made a public statement published in newspapers, asking the Government to immediately issue new free TV licences. They pointed out that fair and open competition can expand the local creative market, enhance the quality of Hong Kong and the related industries, including the film industry and other creative industries, thereby providing general viewers with more diversified and high-quality choices. The results of public opinion polls showed very clearly that the vast majority of the public supported the issuance of licences immediately. A recent opinion poll conducted by the University of Hong Kong (HKU) showed that 85% of the respondents supported issuance of new licences, and the opinion poll conducted by The Chinese University of Hong Kong also showed that 74.5% of the respondents were in favour of issuing new licences. As stated in the reference material of the Legislative Council on the 1998 Review of Television Policy, insofar as the advance of technologies allows, no artificial limits should be set for the number of players in the field. The authorities will consider television licence applications according to established policies; and all eligible applicants can submit applications at any time. Based on past experience, the local commercial broadcasters take less than one year to apply for licences from the date of application to the date of issuing the licences, and the time taken is even as short as 10 months in some cases. In mid-2011, the former BA had also confirmed to the Chief Executive in Council that the three companies applying for new licences fully complied with the relevant licensing conditions. So, why has the Government been delaying? Secretary Gregory SO keeps telling this Council that there are procedural issues; what procedures are involved that complicate the matter? Can he frankly tell us the details?


Finally, some recent events including DBC's suspension of broadcasting, ATV's outrageous comments and the Government's delay in issuing licences made people feel that the freedom of expression in Hong Kong has been stifled. An HKU opinion poll showed that a quarter of the respondents considered that the Government's delay in issuing the third free TV licence was related to political considerations. Hence, I support Ms Claudia MO's original motion and other Members' amendments. I so submit, President. MR LEE CHEUK-YAN (in Cantonese): Mr MA Fung-kwok has just said that he opposed Ms Claudia MO's original motion and all other amendments, meaning that he opposed the issuance of the third local free television programme service licence (free TV licence), and I find that really strange. As he is a Member from the culture functional constituency, I think most members of the cultural sector would like to have diversified and fair competition in respect of entertainment. I wish to remind Mr MA Fung-kwok, though it is already very bad that functional constituencies have to depend upon the electors' inclination, there are other electors in his sector, not just the two companies. The biggest problem with functional constituencies is that enterprises are very influential; at least, he should not bring shame on the cultural sector. As the representative of the cultural sector, he has unexpectedly expressed opposition to the issuance of additional free TV licences. The issuance of the third free TV licence is really important because the cultural sector needs room for expression, creativity and performance. The cultural sector will not be treated fairly if they lack performance opportunities. I think functional constituencies are "eccentric". However, the Government is also "eccentric". The Government is suffering from a new disease known as "softness and toughness disorder". What is "softness and toughness disorder"? It does not become soft when it needs to be soft and it is not tough when it should be tough. To put it simply, why has the Government been so tough concerning the Old Age Living Allowance? The


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Government should have been soft as we should have properly discussed and negotiated about the well-being of the elderly. Everybody will be happy if the Government can relax the requirements a bit. Yet, the Government has been very tough and it has refused to yield all along. On this matter, the Government should become soft …… I should say that the Government should stand firm and expeditiously issue additional free TV licences. But, the Government is unwilling to do so, which reflects that the Government is not tough when it should be tough. There is a lot of speculation in the community about the Government's political considerations. Does the Government have any political considerations? Nobody knows. We do not know what factors the Government has considered. Gregory SO is suspected of black box operation when dealing with the matter. This matter has dragged on for a year and a half, excluding the time taken by the Broadcasting Authority (BA) to process the application. The BA had also submitted its views to the Chief Executive in Council for consideration but a year and a half has elapsed. What is the purpose? The Government wants to achieve procedural justice but it cannot tell us what procedures are involved. It might as well tell us what those procedures are. Has the Government told the public anything about those procedures? No, it has not. The Secretary has just said that four months would be taken as stated in the relevant documents. We really do not know what procedural justice is involved. Are there political considerations? We do not know. Does the Government think that the issuance of an additional free TV licence would seriously affect the ideology of Hong Kong people, so it just allows the two television broadcasters, the Asia Television Limited (ATV) and the Television Broadcasts Limited (TVB) to compete against each other in terms of "rottenness"? Does the Government think that it is unnecessary to cause the collapse of ATV as "ATV Focus" has readily supported the Government? Is this the Government's ideology? If the Government does not have political considerations, does it have other considerations? Some said that there are legal considerations. However, someone from the Legal Department must be responsible for handling the matter; have the legal factors not been considered? These factors should have been thoroughly


considered. On this basis, we can just say that we do not know what the Government's considerations are; thus, there has been much delay in handling the matter. I suspect that TVB is currently filming a farce, entitled "James SHING vs. Ricky WONG". As in a soap opera, these two persons abuse each other every day; one of them says that he will call the police while another says that he has to sue the other for libel. Under these circumstances, does Gregory SO feel sorry that he has been unfair to Ricky WONG? Yet, Ricky WONG has made a mistake. I would like to apologize to the blind and I ask them to forgive me for using this statement: "we will be blind if we believe the Government". Ricky WONG unexpectedly believed the Government. Sometimes, I think this serves him right. Nevertheless, he is really miserable; he is in a dire situation just because he believed what others said. Frankly speaking, I have not talked to him and I do not know whether he is really in a dire situation. To be sure, the Government has dragged on for a year and a half, which is unfair to all applicants and the public. It is because the public would like to have competition and diversified programmes, and they do not want to see monopolization by one television broadcaster. There is habitual rating due to the absence of competition. People want a richer cultural life, so the Government might as well issue additional free TV licences as soon as possible, so as to allow greater competition in the market and create a better environment for creative work. Last but not least, I want to speak up for the employees. I strongly condemn the behaviours of the bosses of ATV and TVB. ATV has forced the employees to join the rally, some of them have complained to me that they have been manipulated for no good reason. They have told me that their participated in the rally was considered as "working hours". Will "working hours" override everything? They asked me about the relevant provisions in the labour laws. I answered that the labour laws specify that employees have the rights not to engage in work outside the scope of their contracts, and their contracts do not require them to participate in rallies organized by their boss. Their spontaneous participation in the rally is a different matter, but they are now forced to participate. These employees want greater competition, which would provide them with more opportunities.


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Similarly, TVB has also "manipulated" its employees for no reason. It told the South China Morning Post that if the Government issued additional free TV licences next year, its employees would not get a pay rise, and they would not be given an extra month of salary. It is really outrageous! The employees have brought the company huge profits but they will not be given an extra month of salary. Is it not outrageous to link up free TV licences and employees' salaries? It is unacceptable to manipulate employees; it is outrageous to use employees' benefits and salaries as the bargaining chips to threaten the community and the Government. We will not accept such a practice. We think that the two things should not be linked together. Employees are entitled to share the fruits of prosperity and profitability, and the company has no reason to make the threat by manipulating the employees. Lastly, we hope the Government would expeditiously issue additional free TV licences to facilitate greater competition in the market. We do not want to watch this farce and we hope that the Government would seek medical advice for its "softness and toughness disorder" (The buzzer sounded) …… PRESIDENT (in Cantonese): Mr LEE, your speaking time is up. (Mr MA Fung-kwok raised his hand in indication) PRESIDENT (in Cantonese): Mr MA, do you have any questions? MR MA FUNG-KWOK (in Cantonese): President, when Mr LEE Cheuk-yan was speaking a while ago, he mentioned my name a few times and I found it necessary to clarify one point. I am not sure if he has listened to my full speech but I must say that I support the issuance of additional free TV licences. I just disagree with Ms Claudia MO's remark that the Government has not issued the licences for political considerations. I just want to clarify this point. MR ALAN LEONG (in Cantonese): President, he does not agree with Ms Claudia MO's remark that licences are not issued because political factors may be involved. But this is not a reason why he should oppose Ms Claudia MO's


motion. I hope Mr MA Fung-kwok would think about this point clearly because it seems that his argument is not very logical. President, this farce featuring James SHING and Ricky WONG is actually quite entertaining. However, television viewers in Hong Kong do not want to watch this farce. What concern us is when the Government is going to issue licences. When will it introduce healthy competition to make better use of the television spectra which are public resources? President, many Honourable colleagues have just cited the polls conducted by the Centre for Communication and Public Opinion Survey of The Chinese University of Hong Kong in October and November. The Community Development Initiative has also commissioned the University of Hong Kong to conduct an opinion poll. President, the findings of the two polls clearly indicated that Hong Kong people were eagerly waiting for new free television broadcasters and the introduction of competition. No one will agree with the present two free television broadcasters that the competition will be vicious. What is a vicious competition? Can the broadcasters tell us why this competition is not healthy but vicious? The viewers believe that more competitors will bring about dramas of better quality, and there will not only be soap operas, farces and highly abominable programmes. If vicious competitions mean that the two existing television broadcasters will have lower advertising revenues, we have to say that this factor will not be taken into consideration. Moreover, there are figures showing that their advertising revenues have not been reduced. President, the Government should be blamed for triggering the controversies over the issuance of additional free TV licences, and we will understand this when we consider a few dates. In December 2009, the Government already started receiving free TV licence applications. Under the Broadcasting Ordinance, the Government had carried out a consultation and the consultation had been completed between July and September 2010. The third date is May 2011 when the Government had agreed in principle to the issuance of additional licences. President, I would like to ask a question: the Government agreed in principle to issuing additional licences in May 2011. Had it considered at that time if it would be subject to legal challenge? Had it conducted surveys? How


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could it suddenly chicken out in such a strange manner? Some have inevitably speculated whether political factors are involved. What are the political factors? Why would people have such suspicion? An analysis has pointed out that the issuance of licences are suddenly stopped because the Central Authorities noted that during the Chief Executive Election, a new radio station fired at a candidate called LEUNG Chun-ying. Therefore, the Central Authorities is unwilling to open up the broadcasting space. There is another comment that Henry TANG alleged during the election debate that, when the Executive Council discussed the renewal of licences in 2003, LEUNG Chun-ying, the incumbent Chief Executive (the then Convenor of the Executive Council) remarked that the Commercial Radio often criticized the Government; thus, he requested to shorten the term of operation of the Commercial Radio to three years after the renewal of its licence. These are objective facts, which inevitably made people doubt if political factors are involved. Otherwise, why have the procedures suddenly been suspended now, given that the applications were made in December 2009, a consultation was conducted in 2010 and it was declared in May 2011 that additional licences would be issued in principle? President, if it is said that there are now two television broadcasters …… it is rumoured that WANG Zheng, the person currently in charge of ATV, has a communist background. He has already applied to the High Court for a judicial review. Nevertheless, Mr Justice LAM said at the time that it was too early to say anything and he only asked WANG to wait for the green light from the Executive Council and a practical decision before talking about the impacts. He did apply to the High Court for a judicial review but his application was unsuccessful. I have learnt from the relevant studies that TVB's initial response to the Government's intention to issue new licences was "competition was welcomed", and its position has completely changed with increasing opposition after Dr Charles CHAN became the majority shareholder. President, the public opinion is quite clear; Hong Kong people have had enough, they can no longer tolerate the two existing free television broadcasters monopolizing the terrestrial airwaves. Since some television broadcasters, though they are pay television broadcaster, have joined in the competition and


have been broadcasting programmes of high quality and standards, the public consider the competition is healthy, and they will certainly support and endorse the Government's issuance of additional licences to introduce competition. Hence, I hope Secretary Gregory SO would not worry too much. Even if he is really worried, he could share his worries with us as it would be much better than his being forced by us to be a scapegoat. I so submit. MR CHAN CHI-CHUEN (in Cantonese): President, as we all know, everything is all set for the issuance of domestic free television programme service licences (free TV licences) except the Government's final decision, and there is very clear public opinion in this regard. Today, a good initiative with wide public recognition, full readiness and viewers' support has resulted in a complete mess. It just shows how amazing the Hong Kong Government really is. In this so-called free city, the number of free television broadcasters is even less than those in relatively totalitarian countries and places, and it is also a well known fact that the political inclination of the two existing free television broadcasters tends to be conservative. In May 2011, given that the three applicants had fully met the vetting requirements, the Broadcasting Authority (BA) agreed in principle to issue free TV licences to them. Hence, Hong Kong people can hardly understand why this licensing incident would result in mayhem or even a farce today. It has been 35 months to date since City Telecom (HK) Limited formally lodged its application in December 2009. On retrospect, it only took over one year to process the licence, as revealed in the applications from the seven successful broadcasters. But since the completion of the vetting process by the BA, it seems that Secretary Gregory SO has become a recorder by repeatedly stating that the matter must be "handled prudently in accordance with established procedures". Are there problems with the established procedures or was the issuance of licences in the past not prudent enough, such that the present matter has to be handled with extra prudence? When answering a number of oral questions in the Legislative Council, fortunately, Secretary Gregory SO has specifically stated that the Government


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would not be influenced by any pressures from the two existing free television broadcasters, and it has no intention of aborting the issuance of licences. That being the case, if the Government still fails to give a reasonable answer to all the queries, it should not blame Members or the general public for suspecting that the Government has delayed the issuance of licences due to political pressures. As things stand now, we are not the ones who intentionally politicize the licensing incident, but the repeated delays of the Government have attracted the criticism that the incident has been politicized. The domination of one television broadcaster, as well as the habitual ratings are widely known. Due to the long absence of competition in Hong Kong's television industry, as well as the repeated delays in the issuance of licences, Hong Kong people begin to feel disappointed at the quality of television programmes, and have no expectation at all. Some even stop watching television altogether. They switch off the television and surf on the Internet instead. Hence, one could say that the advertising market will dwindle ― perhaps it will actually dwindle in future ― but if the cause is attributed to the issuance of additional licences, it is putting the cart before the horse and reversing the cause and effect. In fact, according to the Legislative Council Brief in relation to the 1998 Review of Television Policy: A Consultation Paper, most of the submissions received at the time in response to the Consultation Paper supported the issuance of additional free TV licences to promote competition, and according to paragraph 11 of the Legislative Council Brief, "the proposal to replace the present transmission-based licensing regime with a technology and transmission neutral regime" was widely supported at that time. Paragraph 12 of the Legislative Council Brief further states that according to the Telecommunications Authority, insofar as domestic "free television service" was concerned, spectrum constraint did exist in 1998, but with the emergence of other technically feasible means of transmission, the relevant licence applications could be considered, and there would be no limit on the number of free TV licences to be issued. As 14 years have elapsed since then, the current broadcasting technologies have already resolved the spectrum constraint in the yesteryears, and the two existing free television broadcasters also know that since the Government's proposal of not limiting the number of free TV licences in 1998 and the abolition of exclusive market franchise in 2000, they have not paid any royalty for a total of 12 years. This would also mean that all limitations or obstacles, both


technology-wise and principle-wise, against the issuance of free TV licences have been removed. Discussions on additional criteria or review on the regulation of free television service could proceed in parallel with the opening up of the market as such discussions are unrelated to the principle on the number of licences to be issued, and more importantly, the demand for the introduction of new regulatory criteria before the issuance of additional licences is invalid. In fact, the recent acts of opposition of the two existing television broadcasters are made with hindsight: had it not been the Government's stalling, the licences would have long been issued. On 11 November, ATV organized a "Concern about the Future of Hong Kong" rally at the Central Government Offices in the name of Asia Club, which attracted thousands of complaints, and the station has kept airing reruns of the same programme. To prevent ATV from stealing all the limelight, TVB also made some moves and regrettably, TVB's understanding on the term "competition" has been distorted due to the long absence of competition. According to TVB's logic, competition means vicious competition and more competitors will undercut its current advertising revenue, resulting in total extinction. It is not the healthy competition we always talk about. To us, competition means progress, enhanced programme quality, higher ratings, higher advertising revenue, as well as a bigger "pie" which allows the survival of all operators. In fact, ATV should not worry too much. ATV had seen some good times in the yesteryears. I recall that in 1998, I have hosted a programme for ATV with 18 rating points, defeating TVB's programme in the same timeslot. While ATV's performance over the years has been unenterprising, some slight hope has emerged lately. ATV's "Concern about the Future of Hong Kong" rally has amassed hundreds of thousands of views on the Internet, proving that there are still viewers for ATV's programmes. If, as depicted by ATV, the Government should ignore the survival of the industry and engage in abusive issuance of free TV licences, causing operational difficulty on ATV, ATV can in fact consider an operational restructuring to become an online television broadcaster, which might perhaps give it a larger scope for development. Regarding today's amendments, if Ir Dr LO Wai-kwok's amendments merely seek to postpone Ms Claudia MO's deadline for issuing the licences within this year until the end of March next year, that is, a further delay for three months, I could barely give my support. But the request in his amendments is


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that the Government should make a decision on the issuance of additional free TV licences before the end of March next year, and issue the licences as soon as possible. By "as soon as possible", it means that the Government can take action slowly on the pretext of acting fast, that is, he is giving the Government a chance of not implementing the decisions it made. In addition, the suspension of licence is mentioned in Ms Emily LAU's amendments, and I consider these few words extremely dangerous. Although the Government has the power to do so under the ordinance, once a precedent of licence suspension is set, it will have terrible consequences for the media because this weapon can be used on this occasion and on other occasions in future to target ATV as well as other television broadcasters. Therefore, I can hardly support Ms Emily LAU's amendments. I so submit. MR ALBERT HO (in Cantonese): Although I have not conducted any specialized research on broadcasting policy, our party has spokesmen for this policy area. Hence, two Members of the Democratic Party have proposed amendments to this motion today and have delivered their speeches. As I sat in the Chamber yesterday listening to the Secretary's initial response, I felt so angry that I am compelled to speak today. Having been a lawyer for 30-odd years, and a Member of the Legislative Council for 10-odd years, I have certain knowledge about the Government's organization, the operations of the business world, as well as a series of fundamental legal principles. Having heard the Secretary's reply, I think it is just complete crap. It has been over a decade since the decision to open up the broadcasting market, and royalty has even been exempted for 10-odd years. Several years ago, "Ah Ngau" (TSANG Kin-shing) applied for a licence for Citizens' Radio, but the Government did not take his application seriously, thinking that he was merely an on-street broadcaster without any specific plans. Today, there are three organizations with serious intention to invest on the operation of new television broadcasters so as to give Hong Kong people more choices, yet they have been waiting for the outcome for three years, and it is still uncertain how much longer they have to wait.


In his reply, the Secretary has said that the four months' processing time stipulated in the guideline for licence applications does not apply to the particular type of licences under discussion. Is the Secretary following the example of the National People's Congress in the interpretation of the Basic Law? Can he just add in what he wants? Is that the express provision in the guideline? Has the guideline specified that the time limit only applies to satellite television services and television services provided in hotels? Will the Secretary please explain to us whether he can casually and wilfully interpret these guidelines even though they are not statutory provisions? How can the public ever trust the guidelines promulgated by the Government? That is my first point. Second, the Secretary has stated time and again that the Government must prudently consider the applicants' financial position, technological development, and so on. I believe that the applicants should have totally fulfilled their obligations and provide the Government with the necessary information. If the Government claims that the information provided by the applicants is inadequate, may I ask the Secretary to tell us directly later that the organizations concerned have not provided the necessary information as requested by the Government, in order to prove that they are capable of operating a television station to the required standards. Will the Secretary please tell us how many correspondences have been exchanged with these organizations, how many requests have been made, and how much time has been hence delayed? I invite him to tell us all. If, for most of the time in the past three years, the Government merely tells us that the applications involve complicated issues of procedural justice …… Having been a lawyer for so long, I still do not understand what this term means. Of course, procedural justice involves the process of hearing, but procedural justice is also about timely handling of the matter and exercising reasonable discretion. If the handling procedures of many applications have been unreasonably delayed, the authorities have already violated this legal principle. I think Members would have heard of this famous saying: "Justice delayed is justice denied." The rationale is crystal clear. President, what we are talking about now is not one month, one year, or one and a half year. What we are talking about three years, that is, 1 000 days. After a lapse of three years, how can the Secretary explain, in high-sounding words, in the Legislative Council today that they will handle the matter, but when asked how much longer is the waiting period, sorry, he has no answer. Is that


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what he should do as an accountability official? The public cannot help but ask, given his fat pay cheque, has he ever performed his duties for Hong Kong people? Given that Hong Kong's economy is so deplorable now with problems such as lack of industrial diversification and youth unemployment, does he feel shameful for maintaining such an attitude in handling our current social development? Does the Secretary consider himself worthy of his fat pay cheque? If the Secretary has encountered some untold difficulties as a result of covert pressures, yet he cannot publicly point out that the problem has nothing to do with him, it is just too bad because as an accountability Director of Bureau, he must bear the responsibility. I am now telling the Secretary that to date, three motions of no confidence have been proposed and dealt with by the Legislative Council, and if he maintains the same attitude in handling this matter, he may be the subject of the fourth motion. What I have said is just simple truth that is understandable to any person with common sense. I do not care what type of applications are involved, but if it is the norm of this society to take three years, or even three plus N years, to process licence applications from business operators, and that the applicants are told that they have to wait indefinitely for the outcome, I can tell you that Hong Kong is finished. In three years' time, the entire operating environment for enterprises can change substantially. If financing is involved, the amount of interest payment will be high, don't you think so? If advanced technological equipment is required, a lot of development will have taken place in three years' time. The society is changing so rapidly, don't you know how long three years are? The Secretary's tenure is just four years. Hence, President, the Secretary may not have provided us with detailed explanation in his opening speech. It is alright, he can explain to us further in detail. Perhaps he will tell us later, sorry, the authorities have in fact sent 10 letters to City Telecom (HK) Limited and Fantastic Television Limited asking them to give an account of certain technological requirements, but they fail to do so; asking them to explain their management, but they fail to do so; asking them to provide some financial information, but they fail to do so. Perhaps he will tell us that over the past three years, 20 months or 30 months have been spent on stalling, and no reply has been received to date. If that is the case, I should apologize to him and admit that my remarks and criticisms just now are incorrect. But the Secretary has not provided any such information just now. He just closes the door, operates in a "black box" and sternly tells the operators and


applicants to wait. However, such a reply is hardly acceptable to the general public. MR ABRAHAM SHEK: President, I must confess that I am not much of a television addict, and I know very little about the subject. Since last night, I have listened patiently and attentively to all the speeches made by Honourable colleagues and the Government. The proponent of this subject which is of great public interest spoke eloquently and logically in defence of the issuance of free TV licences. Unfortunately, the Government spoke little of logic, and it did not come up with any argument to convince us that there is a reason for the three-year lapse which the Honourable Albert HO was talking about. I think the Government needs to explain all this. As I said earlier, I know very little about the subject, but I hold an open attitude to it. Before I decide on how to vote, I would like to ask the Government the following few questions regarding the issuance of domestic free TV licences, or the so-called free TV licences, to help me make up my mind. The first question is: What exactly are the criteria which the Government has considered for the issuance of free TV licences? Will there be any limits for the number of free TV licences to be issued? Or will there be no limit? Secretary, tell us what exactly is on your mind. You just cannot hide under the cloak of secrecy and use the Chief Executive in Council as your defence. That is not an answer. The second question is: If there is no limit on the number of free TV licences to be issued, will the Government accept the applications from any Joe Blow or the DBC, or the Falun Gong or any other organizations which want to have a free TV licence? Tell us the criteria for judging to whom the licences will be issued. The third question is: If there are limits on the number of free TV licences to be issued, how will the Government determine how many free TV licences are to be issued? What is that particular number and how actually did the Government come up with it? Will the Government consider local market condition and environment, as well as economic performance? Can our society


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afford to have all these free TV licences, or does the Government just intend to create a shambles that anybody comes in can have it? Please explain to us. The fourth question is: In light of the excess demand for free TV licences, what are the criteria which the Government will consider in selecting potential free TV licensees? What are the considerations which the Government has in setting up these criteria? Furthermore, I would like the Secretary to explain what makes the three applicants think that the Government has agreed to give them the licences. Have you given them any notices or invitations asking them to apply? What exactly is happening? This is a big farce which has made Hong Kong a laughing stock of the world. I would like to hear the Secretary's reply before deciding on how to vote. Thank you, President. MR ANDREW LEUNG (in Cantonese): President, as free-to-air television spectrum is the common property of Hong Kong society, the Business and Professionals Alliance for Hong Kong (the Alliance) and I agree that the market should be opened up to competition, which will be beneficial to the general public. It is true that when the going gets tough, the tough gets going. So, existing operators should not be afraid of the impact brought by the entry of new operators. I believe that so long as the market is opened up properly, a greater choice of free television channels and programmes will be provided for the viewing public, while more employment and development opportunities will be created for young people for endeavour and exploration. As mentioned by many Honourable colleagues earlier, the Government conducted a review on television policy in 1998, with the decision made in the end of 1999 to open up the market. There is public expectation for more free television broadcasters in Hong Kong, and yet the Government has taken almost three years to process the applications for additional licences. While I understand that many complicated issues are involved in vetting and licence issuance, it is baffling because no decision has been made after three years, and even hardly any explanation given. My friend from the Alliance, Mr Abraham SHEK, has just raised a number of questions, and I consider that the Government


is duty-bound to enhance the transparency of the decision-making process. As the Chief Executive has always stressed the importance of being open and transparent, we support Ir Dr LO Wai-kwok's amendments, requesting that the Government should make a decision on and provide an account of the issuance of additional domestic free television programme service licences (free TV licences) before the end of March next year, and issue the licences as soon as possible. President, how many additional operators can the market accommodate actually? While this has become a much-debated question lately, I think it is not a matter of concern for the Government because a good example can be found in the telecommunications market. With the opening up of the telecommunications market, the number of service providers has increased resulting in more competition, which has in turn brought benefits to members of the public. Businessmen believe in market forces, as well as survival for the fittest in the market; they strongly believe that new competition will provide the stimulus for free TV licencees to do better, so that a greater variety of programmes and information can be provided to the viewing public in due course. Hong Kong has always been a city teeming with competition, and we support the introduction of competition. Besides, considering the performance of the two existing pay television broadcasters, the market is seemingly more than capable of accommodating new operators. I strongly believe that the entry of new competitors will promote market diversification, and perhaps free animation channels, sports channels, religious channels, and so on, will also be available someday in future. The development opportunities and potential triggered off by the introduction of new competitors may well exceed our expectation because the creative industries are not bound by any hard-and-fast rules and young people aspiring to join the creative industries will have much room to realize their potentials. The television industry leads the way for various creative industries relating to the production of movies, records, animation and multimedia programmes. A genuinely opened-up free television market will offer diverse opportunities for young people to give play to their creativity as well as Hong Kong's innovative spirit. President, with these remarks, I support the amendments proposed by Ir Dr LO Wai-kwok.


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PRESIDENT (in Cantonese): Does any other Member wish to speak? MS CYD HO (in Cantonese): President, I support the issuance of additional domestic free television programme service licences (free TV licences), in order to introduce competition to the television broadcast industry in Hong Kong. As pointed out by many Honourable Members yesterday, the television industry is a vital link in Hong Kong's creative industries, and it has nurtured many outstanding talents in the film industry in the past, including award-winning directors TSUI Hark and Patrick TAM whose films were critically-acclaimed and with good box office. They had propelled the development of Hong Kong New Wave Cinema in the 1970s and 1980s. Of course, there is the Radio Television Hong Kong, a quasi-public broadcaster, which has nurtured film director Ann HUI. The point I am driving at is that the then era of flourishing talents, albeit in the television or film industries, had coincided with the era of fiercest competition in the "Five Stations Hill". Due to the operators' creative management at that time, television broadcasters could venture into new directions offering a whole host of opportunities for young creative talents. At this juncture, I must thank our former colleague, Mrs Selina CHOW, for her revolutionary approach in the planning and operation of a television broadcaster. Nonetheless, competition and new direction were indeed necessary for the television industry at that time. Hence, a new scene was ushered in for the film, television and creative industries. But regrettably, the domination of one television broadcaster today has given rise to the assembly-line or "copycat factory" approach of television programme production. In the last one or two decades, the quality of television programmes has been worsening; even though they can still draw in advertising revenue, the viewing public has hardly any expectation at all in terms of their creativity. On the other hand, the other television broadcaster has becoming increasingly disadvantaged …… Of course, people who oppose the issuance of licence will say that presently, intense competition already exists in the market with the underdog broadcaster barely able to survive, and if additional licences are issued, the situation will worsen. However, is the underdog broadcaster barely able to survive because of its own problems in terms of abilities and internal operation? Or, has the prospect of its closing down been hastened by the licenses yet to be issued and competition yet to happen? I think both factors


have played a part. At present, there are two pay television broadcasters in Hong Kong. Even though viewers are charged a monthly fee, these two broadcasters can still survive so long as they produce creative and high-quality programmes, regardless of whether they are variety shows or news programmes. From the perspective of public interest, the standard of television programmes will only improve with competition, regardless of whether they are information, news or variety and entertainment programmes. However, the underdog television broadcaster has now mustered all its creativity and efforts to struggle for survival by producing some "borderline" programmes, or even organizing a rally ― I really cannot tell whether it was a rally or a programme ― in the public places outside the Central Government Offices, and then airing reruns of its live broadcast continuously. Although the move itself is nothing short of creativity, is it already a violation against public interest and whether it has complied with the requirements laid down by the Broadcasting Authority with regard to the number of hours of station production, as well as programme content? All these questions are worthy of our deliberation. To a large extent, the Government is also responsible because it has taken as long as three years to vet the licence applications. During the previous term of the Legislative Council, Members had already asked the Secretary whether political reasons were behind the delays in licence issuance. The Secretary's reply then was that the outcome would be available soon. But it is already late November now, and four months have elapsed since the new Government assumed office on 1 July. Actually, what are the obstacles? The Government must come forth and give us an account, or else, it will come under the suspicion that the issuance of licences has been withheld for the purpose of limiting the platform as well as scope of expression. I hope the Government will not work with such an attitude, and I hope the Secretary will no longer remain silent and keeps on filibustering. I invite him to tell us later specifically the reasons why the matter has been stalled for so long. President, the industry needs competition. Nowadays, apart from pay television broadcasters, many creative talents have produced microfilms on the Internet, that is, visual recordings with a length of several minutes to be uploaded onto the Internet, and the advertising industry has also started moving towards the direction of microfilms. Nonetheless, I believe that if the entire television industry can provide additional space for the development of young people and


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the new generation, it will help develop our creative industries more systematically, and hopefully we can catch up with South Korea in this regard someday. In fact, creativity is not lacking in the underdog broadcaster; apart from producing some "borderline" programmes ― I really cannot tell whether it was a rally or a programme ― there was a genuinely creative programme several years ago called "Telefishion" which was aired in late night. While "Telefishion" was just a broadcast consisting of a video camera pointed at a fish tank, it was nonetheless a production programme offering a serene scene to the sleepless at late night, which was better than the test card aired by the dominating broadcaster together with the annoying sound of a frequency sweep. Hence, being an underdog is no excuse, and being an underdog can still do well. As pointed out in a recent Internet post by a journalist working in Asia Television Limited, employees of an underdog broadcaster can still win the respect and trust of the community so long as they devotedly, diligently and duly perform their duties. But as the current situation has become so bad, the Government must seriously consider how to exercise regulation properly and introduce competition so as to prevent the worst from happening. Thank you, President. MR WONG YUK-MAN (in Cantonese): As a former educator in mass communication with some 30 or 40 years of experience in the field of mass communication, I unequivocally support the opening up of terrestrial airwaves. I had been prosecuted by the SAR Government for contravening the Telecommunications Ordinance (the Ordinance) because of my support for the broadcast of Citizens' Radio. The case, which had dragged on for four years, was eventually settled when I appealed to the Court of Final Appeal (CFA). According to CFA's judgment, we, the so-called underground radio station broadcasters, were not guilty. The occurrence of such ridiculous incidents in Hong Kong proves that the SAR Government has failed to go with the tide in refusing to amend the Ordinance even to this date. Let me go back to the issuance of domestic free television programme service licences (free TV licences), which has even become the subject of this


motion debate in the Council today. Not long ago, a number of oral questions have been raised in this Council on this subject matter as Members are concerned about the Government's delay in licence issuance. Of course, the most concerned person is Ricky WONG. The factor of competition between television broadcasters aside, it is only natural for the existing free TV licencees, namely, Asia Television Limited (ATV) and Television Broadcasts Limited (TVB), to oppose the opening up of the market because their market share will be undercut by new operators, and they will provide us with many data to show that the advertising market is not unlimited. But as Members of the Legislative Council, we must support the opening up of the terrestrial airwaves and the issuance of additional free TV licences so as to provide greater choices for the audience as well as the employees. This reason cannot be refuted by any dissenting voice or any person who requests the Government to withhold the licence issuance. First, public interest is involved. What is the problem if most of the audience have a greater choice of television broadcasters? Given the claim of a free market, television broadcasters should be allowed to compete on their own so that the loser will close down as in the case of the closure of Commercial Television previously. Strangely, this issue has even become the subject of our motion debate. What is left to debate now? We should ask the Government to issue the licences right away; if it refuses to do so, it should give us the reasons, but not the ones they have told us already. Originally, I have prepared a speech in order to present my views methodologically. But after hearing the speeches of some Honourable colleagues, I know that it is just a waste of effort because nobody would understand had I talked about some theories. I might as well speak on some relatively practical issues. The situation with the two existing television broadcasters has left the viewing public no choice because TVB has completely dominated the market and the audience are forced to watch its television dramas in the absence of other alternatives. Nowadays, instead of bringing intellectual enlightenment, TVB is running a race of anti-intellectualism, and this also applies to ATV. We all have certain expectations …… Of course, Ricky WONG's television station could turn out to the equally rubbish, yet there is no way to tell now. But the public should


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at least be given the opportunity to make choices, and with more competition, the two television broadcasters will definitely try to boost audience support by enhancing programme quality in order to attract advertisers. Separately, more chances will be given to artists and programme hosts, so that they will not meet with the same fate as we had in the past when we had nowhere to go after being fired by Commercial Radio (CR). Because when CR dismisses its employees, it is quite certain that neither RTHK nor Metro Radio will hire them. In that case, they will have nowhere to go, not even television stations. At present, the Government's policy is not only lagging behind the situation …… At present, it is plain to see how far new communications technologies have developed; otherwise, there is no need for the Government to enact the Communications Authority Ordinance. With the integration of telecommunications and broadcasting now, content is king. While there is no problem in respect of the hardware for content transmission because it is readily accessible, the authorities have resorted to restricting this so-called vessel of content production …… Now two applicants have already given up; PCCW has its own television broadcaster and Wharf has also given up. Perhaps after analysing the market, these two companies have given up as the business is considered not profitable. But the Government's original intention was to issue three licences. As these are all practical matters, I do not understand why there is so much clamour now. A Member suggests that the licence of a particular television broadcaster be suspended. I find this proposal extremely ridiculous. On the one hand, they claim to fight for the freedom of expression ― some Members of the Democratic Party would invariably relate every issue with the freedom of expression ― but what is the big deal about ATV's WANG Zheng dancing in the Central Government Offices or James SHING talking nonsense, which are just some laughing stock for the public? We are free to criticize them, but why should ATV's licence be suspended? I am really baffled by the logic. For instance, in the incident of the "Six Gentlemen" back then, ATV was severely criticized by public opinion for interfering with the editorial independence of its news department, but the suggestion of licence suspension had not been made lightly. Television licences are not issued by the


Government willfully; instead, considering that terrestrial airwaves are public assets, a regime of licensing requirements should be formulated for compliance by the licensees. Generally speaking, the licensing requirements are laid down in a code of practice as well as the relevant ordinances, covering a myriad of areas such as anti-competition, programme standard, and so on. In case of non-compliance, the authorities can impose fines or issue warnings to the licencee concerned in accordance with the statutory requirements, yet the decision of licence suspension will not be taken lightly. If ATV's licence can be suspended casually, by the same logic, we can also say that the current TVB drama series "The Confidant" has not portrayed history accurately. In the drama, the burning of the Summer Palace and invasion of Beijing by the Eight-Nation Alliance had happened in the time of Empress Dowager Cian and Prince Gong Yixin. Such misrepresentations in television drama series are the norm of the day ― an illustration of problems in programme quality of the television broadcaster. Even though ATV has problems in its senior management, and it has misreported the death of JIANG Zemin, they are not reasons for suspending its licence. It is extremely ridiculous that while we are asking the Government to open up the market and issue additional licences on the one hand, some Members, on the other hand, are asking the Government to suspend ATV's licence. Hence, I must make this point clearly now. No matter how much we dislike this television broadcaster, its licence should not be suspended (The buzzer sounded) …… That is all I have to say. PRESIDENT (in Cantonese): Does any other Member wish to speak? DR FERNANDO CHEUNG (in Cantonese): Even though I am unfamiliar with public broadcasting and the Broadcasting Ordinance, I still want to share with Members some of my living experience in the United States. In the San Francisco Bay Area in the United States where I lived, a dozen or so channels are available at the local free-to-air television stations, a free-to-air Spanish radio station for the ethnic minorities, and two free channels for Cantonese programmes which are Hong Kong people's favourite. Even locally-produced new programmes are available on these channels. People who have lived abroad,


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albeit in Toronto or Vancouver in Canada, or New York or San Francisco in the United States, are familiar with the situation. Although we are just a small minority in these overseas countries, we still have a choice when it comes to watching television programmes that relate to us. Hong Kong is an international city with a population of 7 million, yet there are only two television stations. This is really a laughing stock. Our information has been monopolized, and even more so, by one single dominating station. In the past, one television station has mandated the information and entertainment available freely to most people of Hong Kong on television. Everything is completely controlled by one television group. Isn't that an unhealthy phenomenon? From what I gather from Honourable colleagues, the fight has been going on for years, and exclusive franchise has already been cancelled more than a decade ago. But no achievement has been made so far, and this major group is allowed to remain in control. What has actually been done by the Government? The scene is more diverse in overseas countries with some television stations dedicated to the natural environment and conservation, while others politics. Parliamentary proceedings would also be broadcast publicly on free-to-air television stations. Needless to say, they also place a heavy emphasis on public broadcasting resource allocation and programme production. In the United States, many people grew up with "Sesame Street", and this hugely successful children programme has become an integral part of its public broadcasting. In the United Kingdom, BBC is well-known even around the world. Yet we still narcissistically flatter ourselves as a member of Nylonkong, which is just a laughing stock. In Japan, there are 30-odd television stations, while in Taiwan, 50-odd. If we still want to compare ourselves with New York and London …… I do not know if I have counted correctly because I did not live in New York, but from what I see on the Internet, there are 70-odd television stations in New York, while the number in London is even more staggering with over 100 television stations. Hence, what has been going on in Hong Kong? Must we impose such a restriction on the general public? For many poor families having difficulty in making ends meet, free television is in fact their only entertainment and primary source of information. Why has nothing been done by the Hong Kong Government? With these remarks, I support the opening up of free television broadcast service with additional operators. Thank you, President.


PRESIDENT (in Cantonese): Does any other Member wish to speak? (No Member indicated a wish to speak) PRESIDENT (in Cantonese): If not, Ms Claudia MO, you may now speak on the four amendments. The speaking time limit is five minutes. MS CLAUDIA MO (in Cantonese): Last night, I was reminded that I might need to declare my interest by mentioning that on a public occasion earlier, I was told to "get lost (Putonghua)" by WANG Zheng of Asia Television Limited (ATV) in Putonghua; and as such, whether I have targeted ATV specifically because I had been offended? No, I have no such feeling at all. When it happened, I just thought he was being ridiculous, like, "Is he nuts?" I am definitely and clearly discussing the subject matter on its own merits. I thank Ir Dr LO Wai-kwok very much for his amendment. The fundamental difference between my original motion and his amendment is that I request the Government to act by the end of this year while he changes the deadline to March next year. I must also mention Mr Christopher CHUNG who said last night that the deadline of March next year was more rational, implying that I was irrational to set the deadline by the end of next month. But honestly, the Government has been dealing with this matter for so long, and if the licences are to be issued, I do not see why the authorities cannot do so within a month. What is the big deal? If the deadline is to be extended to the end of March, I am really alright with that because after all, we have waited for three years, and it makes no big difference to wait three months more. I set the deadline at the end of next month primarily for the purpose of bargaining with the Government because I doubt very much that had the original motion set a deadline by early next year or March next year, there were bound to be amendments to change it to the middle of next year or June next year. That would not be a good deal. Having waited for three years, we do not mind another wait of three months. Hence, I thank Ir Dr LO Wai-kwok for his amendment. I have no objection to the amendments proposed by Ms Emily LAU and Mr SIN Chung-kai. Regarding Mr Gary FAN's amendment, I cannot agree with it more. However, I deeply regret that throughout this debate, Secretary


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Gregory SO has merely responded like a "human recorder" by repeating his two usual clichés of "established procedures" and "effectively handling", as well as his new mantra of "procedural justice". I have no idea what justice he is referring to, but insofar as procedures are concerned, how much longer does the Secretary intend to stall in this matter, perhaps another 10 years? The relevant recommendations have already been submitted to the Chief Executive in Council. All along, the Secretary has given us the impression that once the recommendations are submitted to the Executive Council, the collective confidentiality rule applies; the matter is out of his hand; he should not be blamed; he knows nothing. However, as an official drawing a monthly salary of several hundred thousands dollars, can he face Hong Kong people with no qualms for his actions? He is an accountability Director of Bureau. I very much hope that the Secretary can answer my question: After the reunification, it normally takes about one year for the Government to process applications for television or radio broadcasting licences or other licences …… I mean, television or radio broadcasting licences, why has the matter been stalled for three years this time? Also, I very much hope that the Secretary will no longer reply our questions with the cheeky attitude he had when responding to questions about the digital radio broadcaster, such as saying that the Government can do nothing, the matter is strictly a commercial dispute, so on and so forth. Perhaps the Secretary considers that his duties are only related to the areas of commerce and economy, but even if the scope is restricted to the areas of commerce and economy, we must still seek justice for the consumers. At present, they indeed have no choice because one broadcaster is devastated by the dominating broadcaster. Advertisers are also consumers, and it turns out that the highest advertising rate is as much as $8,000 per second. For example, if I speak for three seconds, the cost would work out by $8,000 times three, which equals to $24,000. This is something hardly imaginable. Likewise, the advertisers have no choice. For the viewing public and the consumers, we are stuck with the status quo year in and year out: The underdog broadcaster is always devastated by the dominating broadcaster who has never felt threatened. Now, the underdog broadcaster is fighting with others like a rascal. I call on the Secretary to reply all questions from Members concisely and certainly. If there is no political consideration in this matter, what are the Government's considerations precisely? Insofar as talents, resources and


technology are concerned, there is no question at all. Regarding the legal aspect, Mr Ronny TONG has already pointed out that if supported by justifications, the Government should close the door immediately by stating that the issuance of licences is not feasible; but if there is no justification, the Government is merely stalling the matter. Is that what the Government has actually done? Thank you, President. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): President, thanks to Honourable Members for their views on this motion. Recently, the applications for domestic free television programme service licences (free TV licences) have given rise to a lot of discussion in the community, which I am also aware of. Lately, we note that there are views stating that the Government has not specified the number of new licences to be issued as well as the validity period concerned, the selection criteria are unclear, and the issuance of additional licences has not been mentioned in the mid-term review of free TV licences (the mid-term review), so on and so forth. These questions have also been raised by Honourable Members just now. I would like to take this opportunity to reiterate to Members the Government's announced television policy, in order to clarify the misunderstanding. As I mentioned in the opening speech, the Government conducted a comprehensive review on television policy in 1998. During the course of review, views of the public, including the two free television broadcasters, had been consulted. Following the review, the Government announced its decision to open up the television market in December 1998. The new policy had been explained clearly in the Legislative Council Brief (the Brief) issued at that time, and paragraph 12 of which states that, "…… transmission of free television service is not limited to using the UHF spectrum. General and direct-to-home satellites, for example, can be used to provide free television services. Under the new technology-neutral licensing regime, there would be no limit on the number of domestic free licences to be issued. Applications for domestic free licences transmitted through other technically feasible means will be considered."


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President, before July 2000, the Government also levied royalties on broadcasting licensees who received revenue through the use of the scarce public resource (such as radio spectrum), or were conferred with the privilege to operate in an environment with limited competition (such as Cable TV). However, as market competition would become keener with the opening up of the television market, it was unjustified to maintain the charging of royalties. Hence, the Government suggested that the charging of royalties on television and radio broadcasters should be abolished at the same time when the market was opened up. This point had also been announced and specified in the Brief issued by the Government in 1998. In order to give effect to the above policies, the Government enacted the Broadcasting Ordinance (BO) (Cap. 562) in July 2000 to replace the former Television Ordinance (Cap. 52). Under the BO, there is no pre-set limit on the number of free TV licences to be issued, and the charging of royalties on television and radio broadcasters is formally abolished. To date, the above established policies have remained unchanged since its announcement in 1998. To provide guidelines and reference to people interested in applying for free TV licences, the Communications Authority (CA) issued the Guidance Note for Those Interested in Applying for Domestic Free Television Programme Service Licences in Hong Kong (Guidance Note) which specifies the criteria adopted by CA when considering licence applications. The organizations concerned can submit applications for free TV licences to the CA any time. President, on the basis of background information and facts about the Government's television policy I just mentioned, I think Members would all understand that there is no undertaking on the Government's part to consider the issuance of additional licences after the existing licences' expiry in November 2015. Upon receipt of licence applications, we are statutorily required to process them. It is as simple as that. Some hold that as the issuance of additional licences has not been mentioned by the Government during the mid-term review, the understanding is that the Government has undertaken not to consider issuing additional licences before the existing free TV licences expiry in November 2015. This view is invalid because the mid-term review will also be undertaken on the basis of the Government's television policy of encouraging competition and having no pre-set limit on the number of free TV licences as previously stated. In addition,


according to my understanding, public announcements had been made by the three organizations after submitting their applications, and such announcements were made at a time before the completion of the mid-term review in June 2010. Hence I find it difficult to understand why some licencees said that they are unaware of the relevant applications. As I have explained repeatedly on different occasions, and as stated in public documents, the Government's television policy of opening up the market has remained unchanged since its announcement in 1998. This is a fact. Besides, when the Government conducted a review on television policy in 1998, public consultation had been conducted, and the broadcasting industry's views had been solicited specifically. According to records, the Government had already stated clearly in the consultation paper that consideration was being given to opening up the market, which included removing any artificial ceiling on the number of free TV licences. At that time, written submissions on the review had been made by the two free TV broadcasters. They had no objection to having no pre-set limit on the number of free TV licences. As regards the Government's proposal to abolish the then royalties levied on licencees including free TV broadcasters as a result of opening up the television market, it was supported by both of them. Therefore, I think it is crystal clear as to whether the two free TV broadcasters are aware of the implementation of the Government's policy of opening up the television market. I would also like to provide further information. According to records I have in hand, the Government has not made any undertaking to the existing free TV broadcasters that free TV licences would not be issued again. Here, I would also like to clarify another point. As the television market has already been liberalized as early as 10-odd years ago, the legal basis as well as procedures for submitting licence applications have already been clearly stipulated by law, the Government needs not extend and has never extended open invitation for licence applications. As I pointed out just now, our policy is to open up the market. Any person can submit an application to us any time in accordance with the law and the CA's Guidance Note, and there is really no need for us to make any appeal. Under the above established policy, whenever any organization indicates its interest on submitting an application, it will generally be welcomed by the Government. Every application will be handled by the Administration prudently in accordance with the established broadcasting policy I just mentioned, as well as the relevant requirements and procedures stipulated by law. As regards whether or not a licence will be issued, the decision will be made by the Chief Executive in Council after considering all relevant factors.


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President, the background information and facts about the Government's television policy I just mentioned are all readily available public information, which can also be downloaded from the websites of the Government, CA or the Legislative Council. I also note that there are recently some views that if the Government opens up the television market, all regulation on free TV services should be abolished. I do not agree with this viewpoint. I must stress that the opening up of a market is not the same as doing away with all regulation in the relevant market. For instance, when the pay television market was opened up years ago, we did not abolish all regulation on pay television services. Instead, we still impose an appropriate level of regulation on the programmes of pay television broadcasters, the contents of advertisements, technical requirements, and so on. By the same token, this also applies to the free television market, which has already opened up. I am aware of Members' grave concern about the progress of vetting the applications. As I have stated clearly in my opening speech, the former Broadcasting Authority (former BA) received three applications for free TV licences between December 2009 and March 2010. The former BA subsequently vetted these applications in accordance with the BO and established procedures, which include publishing a notice in the Gazette stating that name of the applicant, the type of licence sought by the applicant and other particulars, and conducted a public consultation on the applications from July to September 2010. In July last year, the former BA submitted its recommendations on the three applications for free TV licences to the Chief Executive in Council. In other words, the Chief Executive in Council took over the handling of the applications from July 2011 onwards. I can totally understand that the public want to know the outcome of the licence applications as soon as possible. Nonetheless, the relevant applications must be handled in accordance with the established procedures. Since July last year, the Government has been handling each application expeditiously and prudently in accordance with this set of established procedures and the BO. I must emphasize that since the handling of free TV licence applications involve complex matters including the requirements under the relevant statutory provisions, as well as the issue of procedural justice, time is needed to handle


them carefully. Generally speaking, if the recommendations concerned are unfavourable to certain organizations or persons, for the sake of procedural justice, the Administration must provide the relevant information to those organizations or persons so that they can make representations thereon before a decision is made by the Administration. The Administration is obliged and required to process each application prudently in accordance with all statutory requirements. In case of new development in the handling process, which includes the relevant organizations trying to appeal against the former BA's recommendations by way of a petition to the Chief Executive in Council, the relevant organizations' subsequent application for leave to apply for judicial review, and so on, the Administration needs time to handle the relevant statutory requirements and procedures involved. Nonetheless, as I said earlier, progress has been made by the Government in respect of the handling of applications, and there is no delay in the process. It is not that I do not want to share with Members information about the handling of the applications, but given that we must respect the confidentiality principle of the Executive Council, I am sorry that I cannot disclose the relevant particulars. Regarding the factors considered by the Administration when processing the free TV licence applications, which Mr Abraham SHEK has just mentioned, I have explained in my opening speech as well as on various occasions. When deciding whether a free TV licence will be granted or not, the Chief Executive in Council will consider a set of relevant factors which include the relevant statutory requirements under the BO, assessment criteria set out in the Guidance Note issued by CA and public opinion; political consideration is not one of the factors. I implore Members' understanding that as complex matters are involved in the applications, a certain amount of time is required to handle them prudently for we can neither bypass the necessary procedures nor set a time limit arbitrarily for consideration by the Chief Executive in Council. If the Administration is only concerned about speed and adopts an attitude of "let's go to court" as suggested by Mr Ronny TONG just now, the Chief Executive in Council may make a decision hastily, it will go against public interest and will easily be under legal challenge. Hence, at present, the most appropriate course for the Administration is to continue with the handling of the three applications strictly in accordance with the relevant procedures, and once the Chief Executive in Council makes a decision, it will be announced as soon as possible.


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President, a lot of different views on the free TV licence applications have been expressed by many organizations and persons in the media lately, and certain matters are involved. I would like to take this opportunity to provide Members with some supplementary information and clarification. The first point is about the period of validity of the relevant licences. In this regard, no mandatory requirement on the period of validity of free TV licences has been laid down in the BO, and generally speaking, the period of validity is 12 years. According to the requirement set out in the Guidance Note issued by the CA, the applicant must specify in the application its preferred period of validity of the licence. The CA will consider the applicant's preferred period of validity of the licence and make its recommendations to the Chief Executive in Council. The second point is about measures taken by the SAR Government on behalf of the broadcasting industry (particularly, the television industry) to promote market liberalization in the Mainland. In this regard, since the introduction of the policy on Closer Economic Partnership Arrangement (CEPA), the SAR Government has been striving for the Central Government's support for more liberalization of the Mainland market on behalf of the broadcasting industry. Our stand in this regard is very clear, that is, to bring a win-win situation for Hong Kong and the Mainland through the relevant measures. We consider that the liberalization of the Mainland market is not only beneficial to the local television broadcasting industry, but can also increase the exchanges between the two sides in the cultural and creative industries and in turn, facilitate mutual knowledge and understanding between people of the two places. Through the concerted efforts of the SAR Government and the industry, a number of liberalization measures for the television industry have been secured under CEPA. Hence, allegations about the SAR Government's refusal to help local television broadcasting industry enter the Mainland market are not based on facts. Of course, the SAR Government understands that there is still a lot of work to be done in this regard. Hence, we will, on behalf of the local industry, continue to discuss with the Mainland authorities to strive for more liberalization measures which are beneficial to Hong Kong and the Mainland.


President, regarding the application made by City Telecom (Hong Kong) Limited (CTI) for the use of land at Tseung Kwan O Industrial Estate to build a multi-media centre, I would like to clarify that according to the records I have, the relevant application was made by CTI on its own initiative, and neither the Government nor the Hong Kong Science and Technology Parks Corporation (HKSTPC) had invited CTI to make such an application. I want to point out that "welcome" and "invite" are two different concepts. Even if the Government has publicly conveyed the welcome message, it does not mean that the Government will extend the relevant invitations to individual persons or organizations. As I understand it, any interested and eligible organizations can, at any time, submit an application to the HKSTPC for the use of land at the industrial estate. Upon receipt of such applications, the HKSTPC will notify other organizations which have expressed interest on the use of the same site previously, and make an announcement at its website. Apart from the applicant, any interested organizations may also submit applications within the same period. Lastly, I note that there is a view recently that as the responsible Secretary for handling the free TV licence applications, seemingly, I do not have much contact with the relevant organizations of the industry. I would like to clarify this point here. In fact, in the course of processing the applications for free TV licences, for the sake of fairness, it is indeed inconvenient for me to conduct any informal communication with individual organizations and persons concerned on the licence applications because had I done so, it might arouse the suspicion of other relevant organization. This practice is somewhat similar to general tender procedures. When we are invited to discuss licence applications with individual organizations, we would explain the above situation to them, hoping that they would understand the issues involved. But no matter what, it will not affect the Commerce and Economic Development Bureau's continuous communication with the relevant industries on other aspects, on the premise of providing members of the public with more high-quality and diversified broadcasting services. In addition, a Member suggested that the current exclusive spectra for free television broadcasters should be put up for public auction. In this regard, according to the existing spectrum management policy, given the significant public interest involved in the provision of terrestrial broadcasting services (including television and radio broadcasters), the relevant spectrum is assigned administratively, unlike other spectrum for other purposes (for example, the provision of telecommunications services). We understand that radio spectrum


2917

is a scarce public resource, and free television broadcasting is one of the major sources of information, education and entertainment for the general public in Hong Kong. Hence, the Government will continue with its efforts to ensure that services provided by free TV broadcasters to the viewing public are in line with the prevailing broadcasting standards, so as to ensure the effective utilization of radio spectrum. President, I would also like to respond to the views expressed by Honourable Members in various aspects. First, Ms Claudia MO mentioned that in the past it took one year to issue the licences. I think she may be referring to the renewal of domestic pay television programme service licence of TVB Pay Television Limited, and the grant of a digital sound broadcasting licence in recent years. In fact, for application for renewal of free or pay television licence, the main focus of vetting is to assess the compliance of regulatory requirements by the existing licensees and their future service commitments. Given the completely different nature of these two types of applications, the processing time of licence renewal applications should not be compared with that for new licence applications. In fact, I have explained this point vide an earlier letter to the Panel on Information Technology and Broadcasting of the Legislative Council. With regard to digital sound broadcasting, Members would know that while both digital sound broadcasting and free TV broadcasting fall under the broadcasting industry, they are different in respect of technical levels, market regulation as well as mode of operation. Naturally, the processing times of these two types of licence applications should not be compared directly. President, last night, I have already explained the time required by the CA in processing licence applications, and Mr Charles Peter MOK might have missed that part. I am glad that he is in the Chamber now, and I can explain the matter again. According to information on CA's website, the processing time, in general, "…… takes about four months from the receipt of all required documents and clarifications from the applicant". Mr Albert HO, this is information taken from the website ― not something we can change arbitrarily to cater for different situations. I believe that the licence applications mentioned in the website do not refer to free TV licences, but "non-domestic television programme services" and "other licensable television programme services". The former refers to satellite television services which do not primarily target Hong Kong and the latter mainly refers to the television services provided in hotels. Of course,


these two types of services are not free TV services as we talk about, and we should not link the two together. If the processing time is only four months, we might hardly have enough time even for conducting public consultation and collating the public views collected. Both Ms Claudia MO and Ms Emily LAU mentioned the airing of reruns. I would like to provide some supplementary information in this regard. At present, there is indeed neither any licensing condition nor regulatory requirement which prohibits free TV licensees from airing reruns as part of their locally-produced programmes. According to information provided by Asia Television Limited (ATV) to the CA, during the evening prime time of its Home Channel on 12 to 18 November, 97% of the programmes shown were premieres, while almost 47% of the programmes shown were premieres outside prime time. The airing of reruns and scheduling of programmes are subject to the programme arrangements and resources of the licencees. All along, the CA respects the editorial independence and creativity of the licencees, and will not interfere with the relevant matters. The CA notes that over the past year, ATV has frequently aired reruns of programmes repeatedly over a short period of time. In the context of review conducted before licence renewal of the two free TV licencees, the CA will collect public views in this regard and examine whether it is necessary to impose restrictions on the airing of reruns. Ms Claudia MO, Mr Gary FAN and Ms Emily LAU all mentioned the complaints about the programme entitled "ATV Focus". I would like to point out that according to the provisions in Chapter 9 of the Generic Code of Practice on Television Programme Standards (TV Programme Code) on "Accuracy, Impartiality and Fairness", the licensees shall make reasonable efforts to ensure that the factual contents of current affairs programmes and personal view programmes are accurate, due impartiality is preserved as respects factual programmes dealing with matters of public policy or controversial issues of public importance in Hong Kong (except personal view programmes which are dealt with separately under paragraph 17 of Chapter 9), and the relevant discussions are dealt with even-handedly through a balanced presentation of principal viewpoints as far as possible. The licencees also have a responsibility to avoid unfairness to individuals or organizations featured in factual


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programmes, in particular through the use of inaccurate information or distortion, which misleads the audience. In this respect, the CA received over 42 000 complaints about the television programme "ATV Focus" broadcast on ATV's Home and Asia Channels from 3 to 7 September 2012. The main allegations are: partiality and inaccuracy, not adopting a neutral stance, breach of the fairness principle in election publicity, misleading the public and defamatory to a particular organization. The CA is now processing the complaints in accordance with the Broadcasting (Miscellaneous Provisions) Ordinance, the BO as well as the relevant provisions of the TV Programme Code. The CA is processing these cases actively, and will announce its decision as soon as possible. The suggestion of licence suspension has been mentioned by some Members. I concur with Mr WONG Yuk-man's view that the decision of licence suspension should not be made rashly because it will create extremely serious impact on any licencee. In this regard, if there is such a likelihood, we must handle each case in accordance with the relevant provisions of the BO as well as the established procedures. I concur very much with Ir Dr LO Wai-kwok's view that the BO and codes of practice should keep pace with the times. Given the rapid pace of technological advancement and Hong Kong's position at the forefront of the global trend of technological application and media convergence, our broadcasting regulatory legislation must also respond to the new trends of technological advancement and keep pace with the times. In fact, after the establishment of the CA in April this year, preparatory work has commenced for the review of the Telecommunications Ordinance and the BO. On the other hand, the codes of practice are issued in accordance with the BO to clearly specify various programme, advertising and technical standards for compliance by the licencees. All along, the CA has reviewed the codes of practice for television and radio periodically to ensure that they are in line with the changing needs of society as well as the broadcasting industry, and keep pace with the times. Before approving any new code of practice or any amendments, The CA will definitely consult the views of the licencees as well as the public.


A valid case in point is the public consultation conducted by the CA recently on proposed amendments to the code of practice governing television advertising. President, I very much thank Honourable Members for their valuable views on the subject matter, and for giving me the opportunity to reiterate the Government's established broadcasting policy, and clearly explain our work in processing free TV licence applications. Regarding the three free TV licence applications, we undertake to continue processing the same expeditiously in accordance with the relevant procedures, and announce the outcome after a decision is made by the Chief Executive in Council. As always, the Government will strive to implement the established broadcasting policy and ensure that the broadcasting licensing and regulatory regime can keep pace with the times, so as to develop Hong Kong into the broadcasting hub in the Asia Pacific region. Established this year as an independent statutory body tasked to regulate the broadcasting industry, the CA will continue to monitor the quality of broadcasting services in accordance with the relevant legislation, licensing conditions, as well as programme standards and advertising standards under the codes of practice. President, I so submit. Thank you. PRESIDENT (in Cantonese): I now call upon Ir Dr LO Wai-kwok to move the amendment to the motion. IR DR LO WAI-KWOK (in Cantonese): President, I move that Ms Claudia MO's motion be amended. Ir Dr LO Wai-kwok moved the following amendment: (Translation)

"To add ", given that" after "That"; to delete "all along been indecisive about the applications, suggesting that there are unspeakable reasons which make people worry that political factors are involved; in this connection" after "but the Government has" and substitute with "not yet announced the application results, causing various speculations in society; in order to give the local free television industry a business environment


2921

for fair competition and sustainable development"; to delete "given that" after "(a)" and substitute with "as"; to delete "and the Chief Executive has emphasized time and again his intention of doing real work" after "open society"; to delete "the Government has adopted a stalling tactic and" after "applications for free TV licences," and substitute with "it"; to delete "this year" after "before the end of" and substitute with "March next year and issue the licences as soon as possible"; to delete "given that" after "(b)" and substitute with "as the cultural and creative industry is one of the six industries where Hong Kong enjoys clear advantages, and"; to delete "courses relating to television production, but due to the limited size of the free television market, they can hardly pursue their ambitions after graduation, and the granting of additional free TV licences can" after "young people enroll in" and substitute with "relevant multi-media courses, in order to"; to delete "dovetail with" after "Government should proactively" and substitute with "formulate"; to delete "given that a free television broadcaster which has kept airing reruns to fill up air time allegedly contravenes its undertaking on producing local programmes," after "(c)"; to delete ", and keep pace with the times by updating" after "public misgivings" and substitute with ";"; and to add "should keep pace with the times and, on a fair and equal basis, apply across the board to existing free TV licensees and operators joining the competition in the future" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment, moved by Ir Dr LO Wai-kwok to Ms Claudia MO's motion, be passed. PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands? (Members raised their hands) PRESIDENT (in Cantonese): Those against please raise their hands. (Members raised their hands)


Mr WONG Yuk-man rose to claim a division. PRESIDENT (in Cantonese): Mr WONG Yuk-man has claimed a division. The division bell will ring for five minutes. PRESIDENT (in Cantonese): Will Members please proceed to vote. PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed. Functional Constituencies: Mr Albert HO, Mr James TO, Mr Abraham SHEK, Mr Tommy CHEUNG, Dr Joseph LEE, Mr Andrew LEUNG, Ms Starry LEE, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr IP Kwok-him, Mr NG Leung-sing, Mr Steven HO, Mr YIU Si-wing, Mr MA Fung-kwok, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr Dennis KWOK, Mr Christopher CHEUNG, Mr Martin LIAO, Mr POON Siu-ping, Mr TANG Ka-piu, Ir Dr LO Wai-kwok, Mr CHUNG Kwok-pan and Mr Tony TSE voted for the amendment. Mr Frederick FUNG and Mr CHEUNG Kwok-che voted against the amendment. Geographical Constituencies: Mr CHAN Kam-lam, Ms Emily LAU, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Mr Ronny TONG, Mr CHAN Hak-kan, Mrs Regina IP, Mr Alan LEONG, Ms Claudia MO, Mr Michael TIEN, Mr James TIEN, Mr WU Chi-wai, Mr LEUNG Che-cheung, Miss Alice MAK, Mr SIN Chung-kai, Dr CHIANG Lai-wan and Mr Christopher CHUNG voted for the amendment.


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Mr LEE Cheuk-yan, Mr LEUNG Yiu-chung, Ms Cyd HO, Mr Albert CHAN, Mr WONG Yuk-man, Mr CHAN Chi-chuen and Dr Fernando CHEUNG voted against the amendment. THE PRESIDENT, Mr Jasper TSANG, did not cast any vote. THE PRESIDENT announced that among the Members returned by functional constituencies, 26 were present, 24 were in favour of the amendment and two against it; while among the Members returned by geographical constituencies through direct elections, 25 were present, 17 were in favour of the amendment and seven against it. Since the question was agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was passed. MR ANDREW LEUNG (in Cantonese): President, I move that in the event of further divisions being claimed in respect of the motion on "Domestic free television programme service licence applications" or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute. PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr Andrew LEUNG be passed. PRESIDENT (in Cantonese): Does any Member wish to speak? (No Member indicated a wish to speak) PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands? (Members raised their hands)


PRESIDENT (in Cantonese): Those against please raise their hands. (No hands raised) PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the motion passed. I order that in the event of further divisions being claimed in respect of the motion on "Domestic free television programme service licence applications" or any amendments thereto, this Council do proceed to each of such divisions immediately after the division bell has been rung for one minute. PRESIDENT (in Cantonese): Mr SIN Chung-kai, as Ir Dr LO Wai-kwok's amendment has been passed, you may now move your revised amendment. MR SIN CHUNG-KAI (in Cantonese): President, I move that Ms Claudia MO's motion as amended by Ir Dr LO Wai-kwok be further amended by my revised amendment. President, my amendment is very simple; it only involves two important words, which are "public auction". This is an essential part of my amendment, which is simply asking for putting up the spectra for public auction before the licences expire. Mr SIN Chung-kai moved the following further amendment to the motion as amended by Ir Dr LO Wai-kwok: (Translation)

"To add "; and (d) before the licences of the existing two free television broadcasters expire in November 2015, the authorities should conduct a study on putting up the broadcasters' exclusive spectra for public auction as early as possible, so as to allow applicants intending to apply for free TV licences to bid for the licence for broadcasting business through auction proceedings" immediately before the full stop."


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PRESIDENT (in Cantonese): I now propose the question to you and that is: That Mr SIN Chung-kai's amendment to Ms Claudia MO's motion as amended by Ir Dr LO Wai-kwok be passed. PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands? (Members raised their hands) PRESIDENT (in Cantonese): Those against please raise their hands. (Members raised their hands) Mr SIN Chung-kai rose to claim a division. PRESIDENT (in Cantonese): Mr SIN Chung-kai has claimed a division. The division bell will ring for one minute. PRESIDENT (in Cantonese): Will Members please proceed to vote. PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed. Functional Constituencies: Mr Albert HO, Mr James TO, Mr Frederick FUNG, Dr Joseph LEE, Mr CHEUNG Kwok-che, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr Dennis KWOK and Mr POON Siu-ping voted for the amendment.


Mr Abraham SHEK, Mr Andrew LEUNG, Dr LAM Tai-fai, Mr CHAN Kin-por, Mr NG Leung-sing, Mr YIU Si-wing, Mr MA Fung-kwok, Mr Christopher CHEUNG, Mr Martin LIAO, Ir Dr LO Wai-kwok and Mr Tony TSE voted against the amendment. Mr Tommy CHEUNG, Ms Starry LEE, Mr IP Kwok-him, Mr Steven HO, Mr TANG Ka-piu and Mr CHUNG Kwok-pan abstained. Geographical Constituencies: Mr LEE Cheuk-yan, Ms Emily LAU, Mr Ronny TONG, Ms Cyd HO, Mr Alan LEONG, Ms Claudia MO, Mr WU Chi-wai, Dr Fernando CHEUNG and Mr SIN Chung-kai voted for the amendment. Mr LEUNG Yiu-chung, Mrs Regina IP and Mr Michael TIEN voted against the amendment. Mr CHAN Kam-lam, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Mr CHAN Hak-kan, Mr Albert CHAN, Mr WONG Yuk-man, Mr James TIEN, Mr CHAN Chi-chuen, Mr LEUNG Che-cheung, Miss Alice MAK, Dr CHIANG Lai-wan and Mr Christopher CHUNG abstained. THE PRESIDENT, Mr Jasper TSANG, did not cast any vote. THE PRESIDENT announced that among the Members returned by functional constituencies, 26 were present, nine were in favour of the amendment, 11 against it and six abstained; while among the Members returned by geographical constituencies through direct elections, 25 were present, nine were in favour of the amendment, three against it and 12 abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived.


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PRESIDENT (in Cantonese): Ms Emily LAU, as the amendment of Ir Dr LO Wai-kwok has been passed and Mr Gary FAN has withdrawn his amendment, you may now move your revised amendment. MS EMILY LAU (in Cantonese): President, I move that Ms Claudia MO's motion as amended by Ir Dr LO Wai-kwok be further amended by my revised amendment. President, my amendment simply urges the Communications Authority to conduct a hearing under the Broadcasting Ordinance to investigate whether ATV has contravened any licence condition and the relevant Code of Practice, and if so, consider suspending its licence. Ms Emily LAU moved the following further amendment to the motion as amended by Ir Dr LO Wai-kwok: (Translation)

"To add "; this Council urges the Communications Authority to conduct a hearing under section 31 of the Broadcasting Ordinance to investigate whether the free television broadcaster concerned has contravened any licence condition and the relevant Code of Practice, and if so, consider suspending its licence" immediately before the full stop."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That Ms Emily LAU's amendment to Ms Claudia MO's motion as amended by Ir Dr LO Wai-kwok be passed. PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands? (Members raised their hands) PRESIDENT (in Cantonese): Those against please raise their hands. (Members raised their hands)


Ms Emily LAU rose to claim a division. PRESIDENT (in Cantonese): Ms Emily LAU has claimed a division. The division bell will ring for one minute. PRESIDENT (in Cantonese): Will Members please proceed to vote. PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed. Functional Constituencies: Mr Albert HO, Mr James TO, Mr Frederick FUNG, Dr Joseph LEE, Mr CHEUNG Kwok-che, Mr Charles Peter MOK, Mr Kenneth LEUNG, Mr Dennis KWOK and Mr POON Siu-ping voted for the amendment. Mr Abraham SHEK, Mr Andrew LEUNG, Dr LAM Tai-fai, Mr NG Leung-sing, Mr YIU Si-wing, Mr MA Fung-kwok, Mr Christopher CHEUNG, Mr Martin LIAO, Ir Dr LO Wai-kwok and Mr Tony TSE voted against the amendment. Mr Tommy CHEUNG, Ms Starry LEE, Mr CHAN Kin-por, Mr IP Kwok-him, Mr Steven HO, Mr TANG Ka-piu and Mr CHUNG Kwok-pan abstained. Geographical Constituencies: Mr LEE Cheuk-yan, Ms Emily LAU, Mr Ronny TONG, Ms Cyd HO, Mr Alan LEONG, Ms Claudia MO, Mr WU Chi-wai, Dr Fernando CHEUNG and Mr SIN Chung-kai voted for the amendment.


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Mr LEUNG Yiu-chung, Mrs Regina IP, Mr Albert CHAN, Mr WONG Yuk-man, Mr Michael TIEN and Mr CHAN Chi-chuen voted against the amendment. Mr CHAN Kam-lam, Mr TAM Yiu-chung, Mr WONG Kwok-hing, Mr CHAN Hak-kan, Mr James TIEN, Mr LEUNG Che-cheung, Miss Alice MAK, Dr CHIANG Lai-wan and Mr Christopher CHUNG abstained. THE PRESIDENT, Mr Jasper TSANG, did not cast any vote. THE PRESIDENT announced that among the Members returned by functional constituencies, 26 were present, nine were in favour of the amendment, 10 against it and seven abstained; while among the Members returned by geographical constituencies through direct elections, 25 were present, nine were in favour of the amendment, six against it and nine abstained. Since the question was not agreed by a majority of each of the two groups of Members present, he therefore declared that the amendment was negatived. PRESIDENT (in Cantonese): Ms Claudia MO, you may now reply and you have one minute 19 seconds. MS CLAUDIA MO (in Cantonese): President, Secretary Gregory SO has kept on nagging for a long time. But, all in all, he can simply say that the Hong Kong Government also wants to issue the licences and wants very much to do so quickly, yet it is not allowed by the Western District. Secretary, just say it loud and clear! Regarding the reply played by a "human recorder", I will not respond any further. Everyone can see that LEUNG Chun-ying's Government is now facing a very severe governance crisis which arises from the national education subject, Lung Mei Beach, and even his own problem of unauthorized building works. No matter what he proposes, the public will say "Stop" or "No", or it should not be done. Luckily, the issue of free TV licences has come along, which has got almost full consensus in society, and even the royalist and pro-establishment


camps do not mind issuing the licences by the end of March. To put it bluntly, the Chief Executive should really "grab" this opportunity because he is already in deep water. I now implore the Chief Executive to take advantage of the situation expeditiously. Thank you. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): I would like to elucidate the remarks just made by Ms Claudia MO. President, I have not said that the matter was not permitted by the Western District. PRESIDENT (in Cantonese): Secretary, the people can hear the speeches made by Members and public officials. If your speech has been distorted by Members or other public officials, it would also be heard by the people. In accordance with the Rules of Procedure, you should not speak again after you have made your speech. PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Ms Claudia MO, as amended by Ir Dr LO Wai-kwok, be passed. PRESIDENT (in Cantonese): Will those in favour please raise their hands? (Members raised their hands) PRESIDENT (in Cantonese): Those against please raise their hands. (No hands raised) PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the motion as amended passed.


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PRESIDENT (in Cantonese): The fourth Member's motion is an adjournment motion. In accordance with Rule 16(6) and (7) of the Rules of Procedure, the total speaking time for this debate is one and a half hours, of which 75 minutes are for speeches by Members, and in accordance with rule 18(b) of the House Rules, each Member (including the mover of motion) may only speak once and may speak for up to five minutes. The speaking time limit for reply by public officer is 15 minutes. I wish to remind Members that if the total speaking time of Members reaches 75 minutes, even if there is a Member speaking, I am obliged to direct the Member to discontinue immediately. It is now exactly 11.30 am. The debate will now begin. Members who wish to speak on the motion will please press the "Request to speak" button. I now call upon Mr Alan LEONG to speak and move the motion. MOTION FOR THE ADJOURNMENT OF THE COUNCIL UNDER RULE 16(4) OF THE RULES OF PROCEDURE MR ALAN LEONG (in Cantonese): President, I move that this Council do now adjourn for the purpose of debating the following issue: the arrangement for leave of absence of Mr Franklin LAM Fan-keung, Member of the Executive Council. President, on 26 October, the Government introduced two forceful measures on stamp duties, namely, the SSD and BSD, to curb the property market. However, according to the information of the Land Registry, on 10 October, Franklin LAM's wife sold Unit 14C at Casa Bella at $9.62 million as the seller without signing any provisional agreement for sale and purchase then. On 11 October, a formal agreement for sale and purchase was signed to sell Unit 14B at Casa Bella. By selling these two units, Franklin LAM encashed a total of $20 million, and it was estimated that he made a profit of about $10 million. Mr Franklin LAM denied having any conflict of interests on the


grounds that when the Government rolled out the measures on 26 October, he was not in Hong Kong, and he had not attended the special meeting of the Executive Council. However, the Executive Council is the Government's think tank. I believe that before the introduction of such an important policy, there must be an incubation process. Before the measures were rolled out to curb the property market, had the Executive Council deliberated on different initiatives? Besides, the formal agreements for sale and purchase of the two units for sale held by Franklin LAM showed that he was anxious to sell the properties, since he promptly sold these two units at prices below the market value even though there was not any unusual phenomenon in the market. A property agent working in that district revealed that he had asked Franklin LAM before if he agreed to sell Unit 14B at Casa Bella for $11 million, but he refused. Before the Government rolled out the measures, however, he hastily sold it for $9.95 million. What he did was extremely suspicious. The formal agreements for sale and purchase of the two units even exceptionally included a specific performance clause, indicating that Franklin LAM was determined to sell the units in any case. President, to cover up his unreasonable manner in selling the units at prices lower than the market value, on the morning of 29 and 30 October, Franklin LAM openly disclosed to the media that to motivate his agent to put more efforts to sell his properties, he had agreed with the agent on a floor price of the selling price, and if the agent sold the units at a higher price, the difference would become the agent's commission. However, such an act was obviously in contravention of section 9 of the Prevention of Bribery Ordinance, because the buyer's and the seller's agent cannot accept commission without the buyer's knowledge. After someone reported the case to the Independent Commission Against Corruption, Franklin LAM changed his version of the story. On the night of 30 October and 1 November, he claimed that he had paid the agent only 1% commission according to the usual practice. Then he lied to the public that in June, he had reached an agreement with the agent that the extra amount gained from the property sale would be donated to "Centaline Charity Fund". Later, however, Centaline Property Agency issued a statement which stated that it had always been the practice of Centaline Charity Fund not to directly accept donations from clients, thereby exposing Mr LAM's lie. After being refuted by Centaline Property Agency, Mr LAM changed his version again and claimed that the extra amount obtained from the property sale would be donated to a green group. As


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Franklin LAM's explanation on the commission changed again and again, he was bankrupt of integrity. Later, he even shirked the responsibility to his wife, showing his complete lack of commitment. President, owing to two reasons, even though Franklin LAM has not been charged, his conduct no longer meets public expectations on Executive Council Members and he is not suitable to stay in office. Firstly, in the past, if an Executive Council Member did something wrong, he would either resign or be suspended from duty. No Member has ever taken an indefinite leave of absence. This sets a very bad precedent of refusal to take responsibility. Secondly, allowing Franklin LAM to keep his membership in the Executive Council is not in line with public interests because in theory, he still has a remaining term which is as long as some four years. Are we supposed to wait for him? Furthermore, he can still attend public occasions in his capacity as an Executive Council Member. If he suddenly changes his mind and asks for his salary, the Government cannot reject such a request. Therefore, the Civic Party hereby appeals to Franklin LAM to resign and take his responsibility expeditiously. The Government should also take this opportunity to establish an objective mechanism to sanction Executive Council Members in fault. If it harbours Franklin LAM merely to save its face, it is just making another mistake. I so submit. Mr Alan LEONG moved the following motion: (Translation)

"That this Council do now adjourn for the purpose of debating the following issue: the arrangement for leave of absence of Mr Franklin LAM Fan-keung, Member of the Executive Council."

MR WONG YUK-MAN (in Cantonese): President, last month, the media uncovered that within a month before the Special Administrative Region (SAR) Government introduced new measures to curb property speculation, Franklin LAM, the Executive Council Member nicknamed "King of Properties", declared to the Executive Council Secretariat that two luxury properties in the Western Mid-Levels had been sold, and a big profit was made. So it was suspected whether he sold the properties to make a profit in advance because he knew about the new measures.


No matter whether what he said was inconsistent or whether he lied, I do not care. With such Executive Council Members, what we see in the Executive Council is really a big pile of rubbish. Birds of a feather flock together, and people of a mind fall into the same group. President, is that right? What a big pile of rubbish. Now the people opine that this Government is swaying in the midst of a raging storm with its members getting into trouble one after another. There was something that I wanted to say. Let me think …… I love watching horse races or betting on horses, but in these 10 years or so, I seldom did it because I did not have time. Horse racing is very interesting. Now seeing Carrie LAM in her seat, I think of horse racing. She does not have any cover. Do you understand? In horse racing, there has got to be a cover. Do you know that placing is important? However, now there is no cover at all. Trouble is getting near, you know? That is also the case for fixing horse races. Everyone has agreed on their own placing. Now Franklin LAM is acting as the cover, and this is the best opportunity to target him. Since he may shield LEUNG Chun-ying, Mr WU Chi-wai advised that instead of proposing a motion of no confidence in Franklin LAM, he would propose such a no-confidence motion in LEUNG Chun-ying. He has to fix a shield and a cover as well. How unfortunate you are, dear Carrie. In each case you need to show up in support without any cover, right? Now people delve into your past records, and it was found out that when you were Secretary for Development, you might have acted in cahoots with AU Choi-kai, Director of Buildings, to hide the truth. What a plight! The more is said, the darker the picture is painted. It is such a big trouble. So some people who sympathize with the Government may think, let us not stir up any more trouble. If you give the Government any more trouble, how can it operate? If you give the Government any more trouble, how can it do real work? Let it be. Who does not have any unauthorized building works (UBWs)? As Fanny LAW has said, if you pick someone to do a check, you may find UBWs at everyone's home. How can she say that? She is obviously making things difficult for you. Carrie LAM, you combat UBWs in such a high profile and put up your stance against those men in the New Territories with such a strong voice …… PRESIDENT (in Cantonese): Mr WONG, you have digressed from the subject.


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MR WONG YUK-MAN (in Cantonese): How did I digress from the subject, President? This is an illustration that birds of a feather flock together, and people of a mind fall into the same group. The whole team of the SAR Government is unbearably rotten. That is particularly the case for the Executive Council Members. I have digressed from the subject? Are you kidding? How did I digress from the subject? We should really make some serious reflection and dismiss these people, President. Franklin LAM must assume the political responsibility and resign immediately. This is not digression from the subject, is it? The reason is very simple. This Government, already deep in its plight, is about to break apart. I do not want to see that either ― though I am in the opposition ― so let us target this person first. The next one is CHEUNG Chi-kong. Being an Executive Council Member, he often talks a lot of nonsense which is way out of line with no sense of propriety. Every day he writes articles in the newspaper to rebuke the opposition, talking without any sense. Again, he belongs to the Executive Council. Being the Chief Secretary for Administration, you sit here today, though there are few people in the Chamber. Only 15 people speak. After you listen to their speeches, you respond with a few words and knock off. Yet the Government needs to reflect on why the governing team ― whether it be the Executive Council or the Secretaries of Departments and Directors of Bureaux in the SAR Government ― has become thoroughly discredited and bankrupt of integrity. After all, it is because there is such a Chief Executive who tells blatant lies without feeling any shame. An unauthorized structure which has been handled is no longer an unauthorized structure. Rape with a condom is not rape. President, is that right? Hence, when this bunch of people has such a Chief Executive, may Heaven have mercy on Hong Kong people. What wrong have Hong Kong people done? A "Hong Kong communist" is ruling Hong Kong. With this LEUNG Chun-ying, together with this bunch of rubbish in the Executive Council, followed by these Secretaries of Departments and Directors of Bureaux, what else can Hong Kong people do apart from resorting to revolution? Let me tell you, you must stay cautious and alert, Chief Secretary. You will have a hard time in the coming days. Then we will have to undergo the hard time with you, and that is truly miserable. You really should make some reflection. How difficult will it be to sweep away these black sheep, buddy? At least you have to put off the fire. You have to save LEUNG Chun-ying. Target these people first. As for Secretary for Development Paul CHAN, tell


him to go home to sleep. Tell Eddie NG to go home to sleep. Franklin LAM? Tell him to resign immediately. You are spared because there is a cover ― in a horse race, with no shield or cover, if you are not the leading horse but a long distance horse, you are really doomed, right?(The buzzer sounded) …… There is no horse covering you in front. As you go further and further, you fall to your doom …… PRESIDENT (in Cantonese): Mr WONG, your speaking time is up. MR WONG YUK-MAN (in Cantonese): …… I have finished. MR JAMES TIEN (in Cantonese): President, I find myself at a big disadvantage to speak after Mr WONG Yuk-man, since my speech certainly will not be as dramatic as his. Yet President, you need not pay excessive attention to my speech because I will be very focused and will not go off the track. I will focus on the incident where Mr Franklin LAM, an Executive Council Member, sold his properties. Mr Alan LEONG has already given a detailed account of the whole course of the incident, so I am not going to repeat it. I would like to talk about what information held by an Executive Council Member is confidential, where the confidential information has come from, and what action he will take then. Of course, those who are invited to act as Executive Council Members are certainly experts. Mr Franklin LAM is a property expert as well as an analyst. Holding some 20 units, he is obviously very familiar with this field, and the Chief Executive invited him to join the Executive Council probably because of his familiarity with this field. We may look at his move from two perspectives: one view is that with a discerning vision, he predicted that the property market would fall, so he arranged to sell his properties in advance, whereas another view is that being an Executive Council Member, he had engaged in discussion on certain issues beforehand. President, my view on this question is that the subject discussed does not need to be as specific as what measures would be rolled out. It does not necessarily need to touch on the fact that the BSD would be implemented, that means an


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additional stamp duty of 15% would be levied on foreign investors. I do not think this would be the only piece of so-called inside information which would cause an Executive Council Member to take certain action. Simply put, being an Executive Council Member, if the Government opines that the present property market is so overheated that members of the public are unable to buy their first property and thus it is necessary to adopt measures to curb the property price, he certainly knows that there are only two solutions. One of them is to increase the land supply. However, as we all know, several pieces of land have been auctioned off over the past few months, yet it is likely to take five or six years for buildings to be constructed. Coupled with labour shortage, it is possible that the length of time will prolong from five or six years to six or seven years. As the saying goes, distant water cannot put out a fire nearby. So the only solution is to lower the demand. There are actually many ways to lower the demand. I can readily quote the following examples. For instance, in Beijing, purchase of the first property does not pose any problem. Purchase of the second property is also allowed, but the bank will not grant you any mortgage loan, not even a cent. I believe if such a measure is introduced in Hong Kong, the property market in Hong Kong will only keep declining. Another example is that the second property can only be purchased by your children and not other people. As such, the case of many investors or some of our Honourable colleagues buying 20 units to conduct "confirmor transactions" will not work. If you can buy only one unit and you are not allowed to apply for any mortgage loan for your purchase of the second unit, that means you will be unable to conduct any "confirmor transaction". As such, how can you still buy a number of units for speculation? President, I regard the aforesaid information as ways to suppress the demand. If a certain Executive Council Member put up his property for sale owing to his knowledge of such news, in my opinion, the fact that he had knowledge of such news represents his knowledge of inside information, which would similarly cause him to, for example, include a specific performance clause in the provisional agreement for sale and purchase signed on 20 September, and it would be guessed by the media that the buyer was a mainlander. As for the second unit at Casa Bella, both parties signed the formal agreement for sale and purchase right away and arranged the specific performance clause without signing any provisional agreement, which is a rare practice. Given that Mr LAM is a


property expert, this is an unusual arrangement. Thus I opine that he must have got certain news which prompted him to take such action. Hence, even though Mr LAM said he did not attend the meeting that day, or he had neither attended any formal meetings nor had any indirect involvement before that day's meeting, my view is that as long as he knew the Government intended to curb the demand for properties, he could still take action to sell his properties for personal gain even without knowledge of the specific measures. We do not quite understand his explanation. As he holds some 20 units, the money obtained after making payment for the bank's mortgage interest should be sufficient for paying medical fees and covering expenses in the next few years while he acts as an Executive Council Member. Hence, President, I think this is an issue which needs to be addressed. Thank you. MR RONNY TONG (in Cantonese): President, the Executive Council was generally regarded as the highest advisory body in the colonial era, but after the reunification, the Basic Law has pointed out clearly from the very beginning that the Executive Council shall assist the Chief Executive in his administration. That is to say, the Executive Council is the highest administrative organ in Hong Kong. President, in that case, who should be invited to act as Executive Council Members is highly important. I cannot invite a person to act as Executive Council Member simply because I like this person, he has helped me before or I think he and I sing the same tune. In particular, if this Executive Council Member is very active in the market, there is actually a great chance that there will be a conflict of interests, which is the reason for our debate on this subject today. Let us first put aside whether he knew there would be an increase in tax or whether he had jumped the gun. Being an Executive Council Member, he has access to different information from wide-ranging sources which other people do not know. Such information will also affect the market. Not only will increase in tax by the Government affect the market. Factors like at what time the Government decides to make available how many property units, whether Home Ownership Scheme flats will be constructed, whether Sandwich Class Housing Scheme flats will be constructed, as well as whether public housing will be constructed and how to revitalize the secondary market will all affect the property market. If someone who has been active in the market joins the Executive


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Council, not only will his own integrity be called into question, the integrity of the whole Government will also be questioned on this ground. President, it can be said that at the present stage, the Government completely lacks integrity. It is time to stop the bleeding, or I should say, time to take away the dirty blood rather than taking leave. Even if we put Hong Kong aside, we have never heard of any other place where, within such a short period of less than 200 days, so many senior officials and people holding office in the Government, including the Chief Secretary who is present, have given rise to so many controversies, doubts and events which people consider as utterly lacking integrity. Up to this stage, can taking leave solve the problem? The mentality it entails may be the same. After you have built a wall, it is likely that no one will know about the problem. As time goes by, it will fade out. The matter will come to an end, and the problem will no longer exist. Does the Government execute its policy with such a mentality? Is taking leave similar to building a wall? President, I do not think so. Such a way of working is merely self-deception. As I have just said, it is time to take away the dirty blood rather than taking leave. If there is any dirty blood, it should be cleaned. Otherwise the dirty blood will lead to death. President, if LEUNG Chun-ying is determined to work for Hong Kong and really wants to stay in office as Chief Executive, should he think about the need to reorganize the whole team and whether the leave arrangement can solve the problem? To be fair, Franklin LAM himself also has problems. Many Honourable colleagues and members of the public have mentioned that he told three different versions of story within three days, dragging in his wife and shirking everything. Then he took leave and disappeared. Thus Franklin LAM himself has to take the responsibility as well. Nevertheless, I opine that in this period, LEUNG Chun-ying's Government has got to ponder over carefully how the issue should be handled in the following days. Regarding the person on leave, better directly tell him not to come back. If he need not come back, why not make it clear but leave a loose end? President, I think today's issue is easy to resolve, yet regrettably, the solution does not rest with the Council. Thank you, President.


MR ALBERT CHAN (in Cantonese): President, the incident where Franklin LAM is alleged of abusing power to seek personal gain and having conflict of interests is a typical example of the disorderly or flawed public administration of the current-term Government. Franklin LAM's incident is a continuation of the loopholes in governance by the three Chief Executives, namely, TUNG Chee-hwa, Donald TSANG and LEUNG Chun-ying, during the 15 years since reunification. Franklin LAM's incident, the accusation against LEUNG Chun-ying for being bankrupt of integrity and the series of misbehaviour on the part of Directors of Bureaux have further indicated that the Government has fallen into the abyss with its governance problem. During the 15 years from TUNG Chee-hwa's era to LEUNG Chun-ying's days, basically personal background has overridden capability in the appointment of Chief Executive as well as the appointments of Secretaries of Departments and Directors of Bureaux. What matters most is who they know, whether they are trusted by the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region (LOCPG), and whether they have a strong pro-communist air rather than their capability. For example, an ophthalmologist could be appointed as a Director of Bureau because he knew someone important in the Central Authorities or he had treated someone important in the Central Authorities, while some other person might get a high position since he had a close relationship with the LOCPG, had worked for the LOCPG or had provided services to the children or relatives of certain officials in the LOCPG or the Central Authorities. As we can see, the governance of the whole Government has degenerated to a genuine practice of differentiating between close and distant relationships ― only close confidants can take up high positions. Recently, the Chief Secretary has bravely come forward to formally negate the power of the Central Policy Unit (CPU) to approve personnel appointments. While the Chief Secretary has made such negation this time, she should make more repudiation bravely with particular regard to LEUNG Chun-ying's policies and choice of candidates. It is generally considered that there is a big problem with the appointments made by LEUNG Chun-ying, including the appointment of Paul CHAN as the Secretary for Development, as well as the appointments of a number of members of the CPU and the Executive Council. The appointees do not only lack knowledge of the positions to which they were appointed ― for example, Paul CHAN lacks knowledge of land development ― their integrity is


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also open to doubt. A number of appointees obviously share a major shortcoming. That is, there is a problem with their integrity. Since LEUNG Chun-ying has assumed office, the Government's integrity checking can be described as completely gone, existing in name only. Integrity checking is significant in that it will examine whether an appointee has any integrity problem in respect of his personal ethics, public morals and business conduct over the years and conduct an in-depth check in this regard. However, the result of a recent inquiry which I have made among the relevant persons to look into this matter fully indicates that the present integrity checking exists in name only. Basically, the so-called "checking" is just a simple inquiry. If the person under checking does not make any declaration, it will be treated as though nothing has happened and no in-depth inquiry will be carried out. The verification work conducted behind is also short of thorough investigation. Consequently, in the Government's record, a lot of appointees …… and the Government did not inquire of the person under such checking about matters which the public may find suspicious or questionable. Thus the Government just has a blank record on many of the problems. With blankness in its integrity checking, the Government is creating a "bomb" for itself. In making appointments for important positions, how come the Government would allow the appointees to have no knowledge of the relevant subject? If the Government does not thoroughly rectify such a loophole, it will only create disasters for itself, and such disasters will never end. As a result, let me advise the Chief Secretary that she must thoroughly plug the loophole, or else there will be endless problems. MR WU CHI-WAI (in Cantonese): May I speak now? Regarding the incident of Mr Franklin LAM's property sale, a number of Honourable colleagues have mentioned that his inconsistent account of the incident has led to questions about his integrity. Most regrettably, the Chief Executive has given approval for him to take an indefinite leave of absence rather than practically making a clear-cut decision in the Executive Council on the problem faced by Mr Franklin LAM. The Government often thinks that there are so many arguments and disputes only because the Honourable colleagues in this Council have stirred up


troubles. However, recently the Democratic Party has conducted a voice telephone survey and interviewed 607 respondents to find out the public impression on Mr Franklin LAM's incident and their opinions on the motion of no confidence in him proposed by Members. We found that 50% of the respondents considered that Franklin LAM had sold his properties through inside information from the Executive Council. Moreover, nearly 50% of the respondents regarded the explanation given by Mr Franklin LAM so far as unsatisfactory or very unsatisfactory. Less than 20% of the respondents found it satisfactory or very satisfactory. The survey also revealed that 48% of Hong Kong people opined that if Mr Franklin LAM continues to attend Executive Council meetings after his leave, it will shake their confidence in the Executive Council. As shown by these figures, the question of integrity faced by Executive Council Member Mr Franklin LAM is not only an overall feeling and impression held by Members in the Council whom the Government has all along referred to as trouble makers. It is also the public's overall feeling and impression of him. Of course, Mr LEUNG Chun-ying's acceptance of Mr Franklin LAM's absence from Executive Council meetings on the grounds of leave of absence in an attempt to evade the problem has undermined the public confidence in the overall governance of the Special Administrative Region (SAR) Government, thus making the problem even more serious. In proposing the motion to cast a vote of no confidence in Mr Franklin LAM, my original intention was to urge the SAR Government to look squarely at the after-effects caused by this issue. I also hoped that the SAR Government could deal with it promptly and properly. To our disappointment, the responses made by both the Chief Secretary and the Chief Executive have merely asked us to believe that he did not receive any information on the relevant policy through the Executive Council. Regrettably, the question of integrity in our course of discussion does not only concern whether he had obtained any inside information on the policy beforehand. It also includes inconsistencies in his words during the course, covering up one lie with another. This is exactly the biggest reproach and challenge faced by the SAR Government today, whether it be the officials or the Chief Executive. In my opinion, if the SAR Government fails to look at the problem squarely and merely counts on "hypocritical rhetoric" to try to retain


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public confidence in the governance integrity of the SAR Government, the problem will only get worse. Today a number of Honourable colleagues have talked on the ins and outs of Mr Franklin LAM's incident, which we are all very clear about. Regrettably, today in the Executive Council, there is still this loose end which has not been cleared up. When an appointed Member of the Executive Council has got a problem, can the Executive Council or the Chief Executive treat the matter as though it does not exist through an arrangement for indefinite leave of absence? Even if the matter is treated as though it does not exist, does that mean it has never happened? I think the SAR Government should give it careful consideration. We propose to cast a vote of no confidence in Mr Franklin LAM because deep in our hearts, we very much hope that the SAR Government can set things right, pay heed to public concerns and make the correct judgment. Thank you, President. MR IP KWOK-HIM (in Cantonese): President, regarding the arrangement for leave of absence made by Franklin LAM in view of the doubts arising from the sale of his properties, the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) considers this an appropriate decision. Since members of the public have different degrees of concern as to whether there was a personal integrity problem in "jumping the gun in selling his properties" as well as whether criminal liability for illegal commission was involved during the course of the property sale, the DAB expects Mr Franklin LAM to make good use of the time during his leave of absence to expeditiously compile the relevant information and give an account to the public. The DAB holds the following view on the whole incident. Since Mr Franklin LAM was appointed as Executive Council Member, he had openly said a number of times that taking into account that he would be fully engaged in the work of the Executive Council without any other income, he would sell some of his properties to obtain cash so as to meet his family expenses. The public have actually been aware of this. It also indirectly reflects that the decision on selling his properties was not based on any policy or measure which the Government was


going to introduce. Rather, it was made out of his personal or familial considerations. Besides, regarding the accusation of "jumping the gun in selling his properties", the DAB opines that there must be a prerequisite for "jumping the gun", which is being able to obtain in advance accurate information, including when the measures would be introduced and details of the specific proposals. It is only when Mr LAM sold his properties before the public got the news and information that he may be regarded as having "jumped the gun". However, under the Government's long-standing principle and approach in formulating procedures, it is actually impossible for Executive Council Members to have prior knowledge of such information, especially when it involves market-sensitive taxation measures. The Administration will not discuss with any non-official Members beforehand. Only officials in the rank of Secretary of Department or Director of Bureau involved in the decision on the relevant policy will have knowledge of the specific measures and the time of implementation. For this reason, people in the community do not believe Mr Franklin LAM was so capable that he could know in advance the specific details of the whole measure to curb property speculation. Mr LAM was informed of this measure only three hours before its announcement, and Mr LAM was not in Hong Kong on that day. He did not attend the special meeting of the Executive Council either. Thus it is possible that he learnt about the measure to curb property speculation even later than the general public who could watch the broadcast of the press conference. Hence, I did not see any supporting evidence for the accusation of the so-called "jumping the gun in selling his properties". Of course, I heard other Members mention that since he was an expert, he might be able to perceive it. I think this is a separate issue. As for whether there was illegal commission during the property sale and whether anyone has contravened the Prevention of Bribery Ordinance, the DAB is of the view that since the case has been passed to the Independent Commission Against Corruption (ICAC) for follow-up and investigation, it is inappropriate for outsiders to make any premature conclusion. A fair and reasonable approach is to wait for the ICAC's investigation results. Of course, we have also noticed the inconsistencies in Mr Franklin LAM's response about the matter of commission. Therefore, apart from waiting for the ICAC's investigation report, we hope that Mr Franklin LAM can take the initiative to expeditiously give a detailed account to the public, including records of discussion with his agent on details of the


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property sale or proxies. I believe that Hong Kong people will make a fair judgment on their own after learning the facts. Owing to the aforesaid reasons, we find it unfair to request Mr Franklin LAM to resign from the Executive Council now. The DAB believes that the public should allow Mr Franklin LAM sufficient time to give explanation on the various unproven accusations. We think it is actually a kind of suppression if we merely rely on the news report and question his integrity. I believe Hong Kong people will not approve of this. I believe only (The buzzer sounded) …… Thank you, President. MR KENNETH LEUNG (in Cantonese): President, just now I browsed a report on the Internet, which was a report published by the Hong Kong Exchanges and Clearing Limited (HKEx) in January 2002 concerning a new provision to be added to the Companies Ordinance, which was the new guideline relating to "price-sensitive information". Under the Companies Ordinance, anyone who makes use of "price-sensitive information" to deal in shares, thereby causing confusion to the market or making personal gain, will be held criminally liable. I am citing this ordinance to expound on the present incident of Mr Franklin LAM. On that very day, Mr Franklin LAM might not know that the Government would adopt measures to raise the stamp duty on the same day. However, let us look at HKEx's document. What is "price-sensitive information"? Its meaning covers "potentially price-sensitive information". That means matters such as measures and administrative means discussed by the Executive Council to fight property speculation may be included as "price-sensitive information". Let us look at the so-called arrangement for leave of absence. What is leave of absence? Is Mr LAM burnt out from work? Does Mr LAM feel unwell? To take a leave of absence means to take leave. There is no such precedent. The Executive Council is the cabinet in the Hong Kong Special Administrative Region Government (SAR) which assists in the Chief Executive's administration. If one of its Members takes an indefinite leave of absence, what actually is the arrangement? If Mr LEUNG Chun-ying or the SAR Government does not know how to deal with this issue, they may draw reference from the Employment Ordinance, though Mr Franklin LAM is not an employee and Mr LEUNG Chun-ying is not an employer either.


Section 11 of the Employment Ordinance provides that in certain cases, including the case where an employee is under investigation in criminal proceedings, an employer may without notice suspend the employee from employment for a period not exceeding 14 days. Nevertheless, such suspension cannot be indefinite. If the employee has worked for just a few months, the period of lay-off shall not exceed half of the total number of his normal working days. That means if the employee has worked for only two months, the period of lay-off shall not exceed one month. If, after the period of lay-off, the employee is still subject to sanction under the legal proceedings, the employer may dismiss him under the Employment Ordinance. If Mr Franklin LAM can take an indefinite leave of absence, that means his role in the Executive Council is dispensable and insignificant. In that case, how come Mr LEUNG Chun-ying cannot make a resolute decision to replace such a member? When Mr Franklin LAM was appointed as Executive Council Member, his appointment aroused a lot of conjectures and disagreements. To put it nicely, Mr Franklin LAM is a businessman and a banker, but it is also said that he is only a second-rate analyst. Of course, regarding these personal criticisms, I will not make any other conjecture, but there is indeed a serious lack of economic talents in Mr LEUNG Chun-ying's Government, especially in the Executive Council. Mr Franklin LAM can be lamely described as an economic scholar, but not of the first class. Being an international financial centre, Hong Kong lags far behind London and New York. In the United States, American President OBAMA has got the Council of Economic Advisers, which comprises only three economic advisers, and a number of these economic advisers were Nobel Prize winners, such as James TOBIN and Arthur LEWIS. However, in this Council or the Executive Council, who can actually offer good recommendations or advice on economic matters to the SAR Government? President, I so submit. MS CYD HO (in Cantonese): President, although Franklin LAM is only an Executive Council Member, the incident where he jumped the gun in selling properties and the way it was handled by the Government can reflect the existing


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corruption problem of the whole Special Administrative Region (SAR) Government. Franklin LAM is alleged of jumping the gun in selling his properties before the tax was raised. He is also alleged of offering an advantage during the property transaction, contravening the Prevention of Bribery Ordinance. However, since the occurrence of the incident, more scandals about the Administration have broken out one after another. Before the Council held the debate on this issue today, it was alleged that when Secretary for Development Paul CHAN acted as President of the Hong Kong Institute of Certified Public Accountants, he improperly handled the Institute's contract concerning compilation of its course materials. In the incident of unauthorized building works at LEUNG Chun-ying's luxury mansion on the Peak, the Buildings Department was suspected of harbouring him, whereas the Chief Executive's wife was alleged of having a hand in the public policy through a registered company without being subject to public regulation. The Government has not yet given any proper response to the aforesaid rumours. Hence, the subject called under question is not only Franklin LAM but also the whole power centre headed by LEUNG Chun-ying, as well as the way the corruption problem was handled by the Administration. So many things have happened, but the Administration still has not handled them seriously and positively. Franklin LAM's leave of absence further makes us feel that the matter will just fizzle out. Public servants must exercise great caution. This is not only about criminal investigation by the Independent Commission Against Corruption, it also concerns the public impression of the Government. Therefore, the Civil Servants' Guide to Good Practices, the code of conduct for politically appointed officials, as well as the Report of the Independent Review Committee for the Prevention and Handling of Potential Conflicts of Interests prepared by former Chief Justice Mr Andrew LI and released in May 2012 have all required that public servants shall not act in such a manner as to cause embarrassment to the Government, and they should not affect the Government's credibility either. In the incident concerning whether any conflict of interest was involved in the West Kowloon Reclamation Concept Plan Competition, when the Chief Executive attended the inquiry of the Select Committee of the Legislative Council before he assumed office, he gave a very narrow definition on "interest", focusing only on


whether there was any signed agreement or contract ― as he said in English, whether there was any "job" ― recorded in the documents, and whether there was any record of pecuniary income and expenditure. Even under such a narrow definition of "interest" given by Mr LEUNG, Franklin LAM's behaviour in selling his properties totally justifies our queries, so the Administration should launch an investigation. However, so far Mr LAM has only taken a leave of absence but not resigned. Nor was he dismissed from his post. Our question is, how should the Chief Executive handle the issue? When we queried that the Chief Executive had tolerated corruption, did he ever come forward to clear our doubts? Does he cherish the hope that as time goes by, the public will forget about the issue, and therefore he continues to sit by, harbouring and shielding Mr LAM? Today we also need to ask the Chief Executive, when the integrity of someone appointed by him has been called into question, why does he just sit by? Of course, the Chief Executive's own integrity is also highly questionable, as he has used one lie to cover up another. Nevertheless, so far he still holds the highest power in the SAR Government, displaying such an attitude as though the public can do nothing to him. In short, when there is an integrity problem with the senior officials in the Government, is he just going to shamelessly ignore the public opinion every day? When editorials of the media and news reports on the front page have continuously exposed his lies, can he go on with his administration without making any response? Hong Kong people attach great importance to staying free from corruption, and they are proud of their past achievement in fighting against corruption. However, is Hong Kong still free from corruption and shame today? Can the Chief Secretary for Administration explain on this in a while? The Chief Executive is already not returned by universal suffrage. He exercised his power to appoint public officers, but he failed to choose the right candidates, thereby giving rise to the corruption scandals. If he does not deal with the problem, then members of the public will distrust not only Franklin LAM but also LEUNG Chun-ying. As long as the Government does not seriously deal with these rumours about corruption, no matter how much money it hands out to the public, it will be unable to gain their trust.


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MR JAMES TO (in Cantonese): President, it has been learnt that the Independent Commission Against Corruption is conducting an investigation on Executive Council Member Mr Franklin LAM's property sale, but the focus of the investigation is on the matter of illegal commission. Yet I think we should pay more attention to whether he had made use of his membership in the Executive Council to obtain inside information so as to make a profit since, as the saying goes, "the duck is the first to know when the water of the Spring River gets warm". President, I believe that many government officials who attended the Executive Council meetings and the other Executive Council Members would say that they did not have prior knowledge of those two harsh measures to curb the speculation in property market. President, having listened to Mr James TIEN's speech, I very much agree with his view. In saying that Executive Council Members have obtained inside information, how accurate, how deep and how specific should such information be? Do they need to know beforehand on which day the new taxes and the relevant tax rates will be announced before they can be regarded as having obtained inside information? Do they need to sell their properties in advance after obtaining such "accurate" information before they can be deemed as having committed abuse of power? President, I believe the answer is definitely in the negative because I have learnt from a number of Executive Council Members that since the Executive Council of the current term was formed, it has held many brainstorming sessions. According to them, such brainstorming sessions were held from 9 am to 6 pm, during which subjects such as real estate, property price and housing supply had been discussed more than once. As far as I understand it, during their discussions they put forward different proposed measures for reference, including measures implemented in overseas countries, with a view to curbing property prices or addressing problems of housing supply. President, why did I say that? Suppose an Executive Council Member has attended these brainstorming sessions, during which he participated in discussions and exchanges of views. The speakers included Directors of Bureaux and Executive Council Members, who looked into the consensus as well as pros and cons relating to the proposed measures. In that case, such discussions were actually very important. If a number of participants in the meeting agreed on a certain measure and thought that it was worth consideration, would the Director


of Bureau not give it serious consideration? Executive Council meetings are of great significance to the Chief Executive in deciding on his policies. Executive Council Members do not necessarily need to know the tax rate imposed on buyers overseas. So long as they know that there has been deliberation on the relevant measure and such a measure has gained general approval, they can actually perceive that it is highly possible for such a measure to be introduced. Since this piece of information is not known to the outsiders, I find it very important. President, I have requested the Chief Executive to find out whether Mr LAM had participated in these brainstorming meetings and whether a consensus had been attained by the majority in the meetings. However, the Chief Executive refused to carry out such investigation. President, Executive Council Members get hold of the Government's internal information. Mr LAM sold his properties hastily under the above circumstances as mentioned by the Honourable colleagues. Even though he had indicated earlier that he would consider selling his properties, I think the public are unable to trust him any more. I hope Mr LAM will resign on his own so that the Chief Executive can convince Hong Kong people that Executive Council Members are impartial and selfless.(The buzzer sounded) …… MS EMILY LAU (in Cantonese): President, Executive Council Member Mr Franklin LAM is alleged to have obtained inside information of the Executive Council and jumped the gun in selling properties. This incident is distressing to the Government of the Hong Kong Special Administrative Region and distressing to the local community. President, as a number of Members have said earlier, the public have expectations of the Executive Council Members, and President, you have expressed such concern before. Their expectations may become lower and lower and they may even query why the Government would appoint these people to the Executive Council. As these people can, in their official capacity, obtain certain information not accessible by the public, the community becomes very indignant whenever something happens or somebody is alleged to have violated certain laws. As you know, President, there are actually a host of problems that need to be dealt with by Hong Kong at the moment, but the Government does not deal


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with these problems through maintaining dialogues and discussions with the Legislative Council. Rather, it pushes through proposals in a hegemonic manner even though these proposals are considered extremely controversial by various political parties and groupings. Added to this is that problems involving the Executive Council and accountability officials have emerged one after another and caused public outcry. Could it be that the Legislative Council has so much leisure time that inquiries can be conducted into each and every of these incidents? But if we do not deal with these incidents, President, that would amount to dereliction of duty on our part. The incident of Mr Franklin LAM occurred in late October. He requested for leave of absence on 2 November. Chief Executive LEUNG Chun-ying made an announcement only on the night of 3 November (he likes the middle of the night best), and today is 29 November. President, Mr IP Kwok-him of your party even suggested that he should be given more time to collate the information, in order for him to make an explanation as early as possible. I think 27 days is already a very long time, and I urge him to give an explanation for whatever that can be explained. I am glad to hear Mr IP say that actions should not be taken only after an arrest by the Independent Commission Against Corruption (ICAC), because an explanation would have been all the more unnecessary by then. As Members of our Democratic Party have just said, we suspect that he had abused his powers for personal gains by jumping the gun in selling his properties, which constitutes a breach of the common law offence of misconduct in public office. He may also have committed the offence of offering unauthorized commission to bribe real estate agents under the Prevention of Bribery Ordinance. Then he also made contradictory remarks. This is how he is described by every Member. Therefore, his integrity has gone bankrupt. President, when such a big black cloud is looming over a person's head, why does your DAB still consider him suitable for taking up the office of an Executive Council Member? While it is said that he is taking leave of absence, what does it mean by taking leave of absence? This is a question that many members of the public have asked. Does it mean that he will get no information and he will not be informed of any information when he is taking leave of absence? Is it that all the treatments given to him in the capacity as an Executive Council Member will stop, or is it that he will still enjoy some of these treatments but not the others? President, we actually do not have a clear idea


about this, and the Democratic Party would like the Administration to further explain a couple of points. It is best indeed that the Chief Secretary is in the Chamber now. I hope that the Chief Secretary will take a fair, open, and honest approach as she always does. I hope that the Chief Secretary will not turn into a different person because she is now in LEUNG Chun-ying's group. We hope that the Chief Secretary can explain this: Executive Council Member Ms Starry LEE, who is not in the Chamber now, once said that the Executive Council did discuss the property market and in this connection, we would like to know whether measures for cooling down the property market, including this new stamp duty, were discussed at the time and whether Mr Franklin LAM had taken part in the discussion. Besides, as Mr James TO said earlier, the Administration conducted a number of brainstorming meetings for Members of the Executive Council in late August. Did they discuss these issues at that time? Did Mr LAM attend these meetings? Moreover, the Administration must explain to the public, when the Chief Executive brought up these issues for discussion, why it seemed that this so-called "expert property buyer" was not in the least consulted. If that was the case, it would really be very strange. An expert is recruited to join the Executive Council but he is not consulted when a relevant issue is brought up for discussion. Why? President, there are also reports that some real estate agents had already learned of this new duty before it was announced by the Government. What is the reason for this? Has the Administration investigated into whether any Member of the Executive Council had leaked confidential information? Furthermore, why is it that when Mr LAM requested leave of absence on 2 November, the Chief Executive made an announcement the following night? With whom did the Chief Executive make enquiries during this period of time? And, what is the Administration going to do when things have developed to such a state? Will actions remain pending until an arrest by the ICAC, or will he be immediately asked to leave his office? MR CHAN CHI-CHUEN (in Cantonese): Today is 29 November, but things have continued to go wrong in less than five months after the new term of the SAR Government has taken office. The stories are even more dramatic than the series produced by the Television Broadcasts Limited. While the best actor award will definitely go to our Chief Executive, LEUNG Chun-ying, I believe Mr


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Franklin LAM might not even be able to make it to the nomination list of the best supporting actors. When I left the Chamber this morning, I heard some pro- establishment colleagues say, "Franklin LAM? What else can I say about him? He is already out. If we really want to discuss, talk about LEUNG Chun-ying". The senior officials of the SAR Government and Executive Council Members seem to be competing for champions of language "hypocrisy". Let us look at the statement made by Franklin LAM, who originally had a lot of sound bites, following his jumping the gun in selling his properties. His remarks include, "I was absent from the meeting held to discuss the new measures", "I was out of town when the measures were unveiled", and "It is a volunteer work to be an Executive Council Member, I need to sell the flats for money to support my family". He acted as if he knew nothing in response to the allegations of him jumping the gun in selling his properties. Later, some people recalled that he had once committed that he would not engage in property transaction during his term as an Executive Council Member. Was he eating his words? As regards the issue of integrity, I would like to share with Members the remarkable reply given by Dr LAM Tai-fai when he was asked by reporters yesterday about whether or not LEUNG Chun-ying had any problem with his integrity. Dr LAM Tai-fai said, since a gentleman, a lowly man, a thief and a philanthropist had different views on integrity and it was difficult to make judgments, the question on whether LEUNG Chun-ying had any problem with his integrity is difficult to answer. According to the logic of LEUNG Chun-ying or the SAR Government under his leadership, the integrity of Mr Franklin LAM should not be a big deal, right? I still recall the incident in which Antony LEUNG, the former Financial Secretary, jumped the gun in buying a car years ago. For such a high-paid senior official who had grasped the top-level information of the SAR Government in making decisions, the public found such act of his unacceptable. Our expectation of him was higher than that of ordinary persons, in that he must be more cautious with his words and deeds. More important still, he should not make the public have the impression that there was a conflict of interests. Now, nearly 10 years have passed. If we look in retrospect at his performance back then, he was really a man of high integrity, or at least he was willing to be held accountable and step down. In comparison, he had acted like a gentleman.


The fact that society has strict requirements for senior officials or Executive Council Members is simple, clear and indisputable. To ensure a strong sense of integrity and avoid conflicts of interests, government officials must have a higher moral standard than ordinary people because they are involved in the network of benefits, which is tens of thousands times larger and more complicated that the network of ordinary members of the public. Without strict rules and restrictions, the clean Government established in Hong Kong for years can be destroyed in a day. Unfortunately, the chart of the current governance crises in the SAR fluctuates swiftly like a pop song chart with swift movement of the ranking of importance. Franklin LAM's incident was once among the top three, but now, it might have dropped out of the top 10 on the chart. Every citizen can easily name some political bombs produced by the new SAR Government within months after taking office. Such bombs include the Government's failure to keep its promise on the "special fruit grant", the controversies concerning the Northeast New Territories development and integration of Shenzhen and Hong Kong, the revival of doubly non-permanent resident pregnant women coming to Hong Kong for child delivery, the further worsening of the disparity between the rich and the poor, the controversy concerning the man-made beach in Lung Mei, and the delay in issuing free television licences. In the face of so many incidents, the one involving Franklin LAM will be further down the chart. Despite its pledge that it will act in an open and frank manner, the SAR Government is actually forcing its way through, with nothing achieved at all during the five months since taking office. The delaying tactic of Mr Franklin LAM's taking leave is very successful. The other day, he came forward to defend the Chief Executive in connection with his problem of illegal structures; today, the Chief Executive came forward to defend him in return. Given that the matter has been delayed for such a long time, honestly, Members have already lost their interest in debating this issue. Moreover, members of the public are no longer concerned about the incident involving Franklin LAM. As Members of the Legislative Council, however, we are duty bound to pursue the matter till the end. Even if this question is put to the vote, not too many Members will remain in the Chamber or be interested in voting in favour of or against the motion. Members might ignore the matter by abstaining from voting. Such being the case, Members might as well stop debating. Not only has "Long Hair" ceased throwing faeces, we should also make an effort to overthrow LEUNG now.


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I hope Members will support us in continuing to strictly monitor the SAR Government in the days to come, for the Government led by LEUNG Chun-ying is absolutely devoid of integrity. DR HELENA WONG (in Cantonese): President, today, a number of Members have pointed out the three sins of Mr Franklin LAM: First, he is suspected of using his power to obtain personal gains by jumping the gun in selling his properties; second, he offered illegal commission to bribe the agent and third, his explanations are self-contradictory, so he has no credibility at all. A public opinion survey conducted by the Democratic Party revealed that many members of the public did not find this Executive Council Member credible. One of the questions is, do they think Mr Franklin LAM has made gains using the insider information of the Executive Council by jumping the gun in selling his properties. Half of the respondents believed he had, whereas those who did not think so accounted for less than 25%. Were the public satisfied with the explanations given by Mr Franklin LAM? Those who were satisfied accounted for only 8.5% and those who were very dissatisfied accounted for 21.5%, whereas those who were dissatisfied also stood at 26.8%. In other words, nearly half of the members of the public were dissatisfied. All right, since the public has such strong and clear impressions and feelings, should the Administration reconsider replacing this Executive Council Member? The public strongly believed that Mr LAM had jumped the gun in selling his properties and had taken advantage of his capacity as an Executive Council Member to engage in acts that have undermined the public's trust and confidence of the Executive Council. Although Mr LAM applied to the Chief Executive for an indefinite leave of absence on 3 November and was granted permission, we find this so-called indefinite leave of absence unacceptable. How long does "indefinite" mean? He started his indefinite leave on 3 November and now, November is coming to an end, does this incident have to drag on for three or four more years? How long do we have to wait? What is even more infuriating is: Why did the Chief Executive approve an Executive Council Member to take an indefinite leave of absence? Mr LAM took an indefinite leave of absence, so that he can cease attending Executive Council meetings for the time being, and thus evade public enquiries


and questions. This course of action has seriously undermined public confidence in the Executive Council's confidentiality system and its impartiality in making policy decisions, as well as the integrity of Executive Council Members. Moreover, during his leave of absence, he cannot discharge his duties as an Executive Council Member with ease and confidence, he cannot act respectably and fearlessly. He cannot help the Chief Executive in making policy decisions. President, as we all know, reluctance will not bring happiness. Can the Government draw out its sword of wisdom and cut this "bad debt" off, so as to salvage the credibility of the Executive Council? Today, the governance of the Government is bogged down by difficulties and people have doubts on many officials. Even the Chief Executive himself is not "clean", so what do Members of the pro-establishment camp intend to do? I remember very well that some Members of the DAB often claim that they are not the royalist camp because they will not say "yes" to everything the Government has done. Members of the DAB also say frequently that they would approve of whatever is right and criticize whatever is wrong. Today, we really hope to see Members of the pro-establishment camp, including those of the DAB, really approve of whatever is right and criticize whatever is wrong, rather than being unable to tell right from wrong, defending and harbouring an Executive Council Member suspected of having committed the aforementioned three sins. If Legislative Council Members do not distinguish between right and wrong and harbour officials and Executive Council Members regardless of what heinous wrongdoings they have committed, I believe the credibility of the Legislative Council would also be toppled. President, I very much hope that the Chief Executive would replace Franklin LAM immediately and cancel this arrangement of an indefinite leave of absence, so as to salvage public confidence in the administration by the Government. MR LEUNG KWOK-HUNG (in Cantonese): President, it would be more desirable had you allowed the discussion of this adjournment motion at an earlier time. We urge the Chief Executive to clean up his mess, as I have said, LAM Fan-keung is extremely good at "pouring muck". But it turns out that the Chief Executive is even better.


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President, we now have a mathematical problem titled "The problem of LEUNG Chun-ying's conjecture", which states that "one plus one equals to zero", for one illegal structure covered by another illegal structure equals to no illegal structure. Even if CHEN Jin-run was brought back to life, he could not solve this problem. How dare he say such words? Honestly, the mistake made by LAM Fan-keung does not warrant him a death sentence. President, "This is not the burial ground for 300 taels of gold" ― the placard put here states so ― Your neighbour has not stolen the money. This is the approach adopted by the SAR Government in addressing the problem, that is, by stating that it has not done so. Three hundred taels of gold have been stolen, yet you said you have not stolen it, and if so, you are stupid. We have recognized the established system and admitted that the Chief Executive takes up the highest position and authority, he can then disrupt the order of the Government with his clans and gangs. Honestly, Chief Secretary for Administration, I would like to give you this motto. This is from a great person, he said, "Qualification and training is secondary, for people who have received too much education are stuffed with knowledge and reasons in their brain, which have nearly stifled all their healthy intuitions; and reasons have become increasingly dictatorial that it has developed into a disease in their life." This great person is Adolf HITLER. In his view, reasoning was unnecessary, and one should act according to his intuition. You are now forcing Hong Kong people to follow their intuition, for a lot of information has not been made public. The brother of Fanny LAW, Henry FAN, is also like that. He had incurred massive loss in foreign exchange speculation, and he joined Larry YUNG in coming to this Chamber, saying that they were not related to the incident. He was advised by a lawyer and an auditor that he should deny any relationship with the incident. As I said in the Legislative Council in the past, those two persons must be arrested. Henry FAN mentioned in his statement that some professionals taught him to do so. However, he wanted to cover up the identity of these two professionals. In what way is it different from the present case involving LEUNG Chun-ying? He said, "I am the Chief Executive, so I will shoulder all the responsibility, I am powerful and can handle difficult situation with ease, so all of you do not need to come forward." Men, this is comparable to killing the witness to cover up the incident. I noticed that he had


deleted some information and signatures. I surely understand that it is necessary, for I may retrieve his money otherwise. But with the information being deleted, how can we conduct investigation? Therefore, the incident of LAM Fan-keung is really a trivial matter. During chats of corrupt officials in the Mainland, they say, "What? Donald TSANG is a corrupt official? Hong Kong people are kidding, are they not? How can he be regarded as a corrupt official?" This is national education. You are now teaching the people to follow you blindly. Chief Secretary for Administration, please come forward to explain the case for LEUNG Chun-ying. In the case of MAK Chai-kwong, you came forward to shoulder the responsibility. I surely believe that, for you two have been friends for 10-odd years, and you watch him grow old, but I think you may not have witnessed him getting bad. However, now you say you will support LEUNG Chun-ying, when have you two been friends? How do you know that his conjecture of "one plus one equal to zero" made in October can be trusted? Had he discussed the issue with you? If he had, it means that you are involved in concealing the fact. If not, on what basis would you trust him? PRESIDENT (in Cantonese): Mr LEUNG, you are deviating from the subject. MR LEUNG KWOK-HUNG (in Cantonese): What? I am talking about whether LAM Fan-keung should resign. I am pondering whether the Chief Executive has the rectitude to do so. Am I deviating from the subject? He is a Member of the Executive Council. Honourable Members, the President ruled that I have deviated from the subject, and I respect the President. President, I learn that mathematics is your major, and you were awarded a scholarship to fulfil the objective of your life of serving the country. Will you please help to explain why one plus one equals to zero? If you can explain this conjecture, honestly, I will call you "Elder Brother" whenever I meet you in future. President, as a common saying goes, do not ask the blind for direction. Now, we are asking a corrupt Chief Executive to punish an official selected by him, whose corrupt act is not comparable to one-tenth of that of the Chief


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Executive. What a pity! This legislature deceives the elderly by stating that the allowance does not carry retrospective effect, and if more money is handed out to all elders, the Government will collapse. Does it have any credibility? The authorities said that if the motion is not passed, the elderly cannot get the allowance; if so, why judges and civil servants' pay can be dated back? In terms of credibility, how dare you talk about credibility to me? Hurry up and get back to the Democratic Alliance for the Betterment and Progress of Hong Kong to discuss the issue in detail! MR PAUL TSE (in Cantonese): President, the greatest merit of our highly respected common law system is that there are always precedents which have enlightened us and perfected the legislation. Although to some people concerned, the judgment made may not be entirely fair, but on a whole, society has become better. The same argument can apply to this case about Franklin LAM who is the subject of the debate today. Although we do not know what will become of this case, we should make use of this opportunity to talk about what lesson has been learnt under the present system. I think there are a number of points worth mentioning. President, first, Article 56 of the Basic Law clearly states the circumstances under which the Chief Executive must consult the Executive Council. One of which is he should consult them before making important policy decisions. What are important policy decisions? Of course, no clear provisions have been provided for in the Basic Law. But I am sure any member of the public will agree that the two so-called harsh measures will not only affect the property market of Hong Kong, but may also affect people's confidence in the policy of positive non-intervention, which has all along been practiced in Hong Kong. In the eyes of other people, the economy of Hong Kong is extremely free and if not for very good reasons, restrictive measures will not be imposed, such as restricting foreign businessmen in buying properties in Hong Kong, or rashly adopting any measures that may incur losses to investors, and so on. In my view, these two so-called harsh measures should be regarded as important policies. So before making any decision, the Chief Executive must have consulted the Executive Council Members. Regarding this case, who is telling the truth and who is telling lies? According to Mr Franklin LAM, it seems that the Chief Executive had not


consulted the Executive Council, or at least not on these two harsh measures, before he made a decision. Of course, other Members of the Executive Council had vaguely disclosed and discussed measures to address the problems related to the property market. And owing to certain restrictions, they cannot disclose the contents of discussion. But the question is, who have been in dereliction of their duties on this occasion? Had the Chief Executive consulted the Executive Council? If he had, why so many people said that he had not done so? In this regard, I think there is a need for us to clarify under what circumstances the Chief Executive must consult the Executive Council. Even if we cannot make an exhaustive list, at least we should roughly define a certain scope and formulate some sort of guidelines so that we can know if Article 56 of the Basic Law still serves any substantive meaning. Second, I would like to talk about the composition and operation of the Executive Council. I remember in the process to study, draft and formulate the Basic Law, sections 1 and 2 of Chapter IV were completed quicker than the others. Sections 1 and 2 of Chapter IV are the most crucial parts of the Basic Law for they stipulate the formation of the Executive Council and the Legislative Council in the Government. As a general rule, much more time should be devoted to the discussion of these parts and it is particularly difficult to reach any conclusions. But why were these parts completed in such a short time? This is because the provisions are basically modelled on the system back in the days of the British Hong Kong Administration. So the discussions made were comparatively briefer and an attempt was made to copy the system in haste. During the Hong Kong British era, the role of the Executive Council was so stipulated due to certain special reasons. In the early days, information was not so easily accessible and it was not possible for the British Parliament or the royal family which was so far away in London, to have a quick grasp of things that happened in Hong Kong. The purpose of the Executive Council was to prevent the Governor of Hong Kong from acting in an arbitrary and uncontrolled manner. In Article 56 of the Basic Law, there is even a provision which stipulates that "If the Chief Executive does not accept a majority opinion of the Executive Council, he or she shall put the specific reasons on record." This stipulation which dated back to the British rule was put down in the Basic Law. As to whether this provision has been enforced, I have no idea. However, such a provision was very much needed in the days of the British Hong Kong Administration and particularly, during the early days of the colonial era. It was


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because it enabled the relevant policies to be relayed to the United Kingdom to facilitate any review which might be found necessary. Is such provision still needed today, that is another question. As there is not much time left, I would like to talk quickly on another point. After the introduction of the Accountability System for Principal Officials, is the appointment of Executive Council members and their participation still as important as in the past. If we only need professional advice from people like Mr Franklin LAM, actually we can just consult some experts for their advice. There is no need to appoint them as Members of the Executive Council. In my opinion, a more appropriate practice is that the Executive Council should only recruit people who are really willing to serve the community; their commitment as well as their integrity and conduct have been well proven over the years. If we just want to get some professional advice, just seek the comment of some consultants. There is no need to appoint all these people into the Executive Council. PRESIDENT (in Cantonese): Mr TSE, the speaking time for all Members is up. MR PAUL TSE (in Cantonese): Thank you, President. PRESIDENT (in Cantonese): I now invite the Chief Secretary for Administration to speak in reply. CHIEF SECRETARY FOR ADMINISTRATION (in Cantonese): President, I have just listened to the speeches made by 15 Honourable Members. The Administration appreciates Members' concerns about this issue very well. The subject of this adjournment debate relates to the arrangement for Executive Council Members to take leave of absence, but in delivering their speeches, most of the Members also expressed their concerns and even queries as to whether Mr Franklin LAM had any conflict of interests or had obtained market-sensitive information in his capacity as an Executive Council Member when the Government introduced the new round of measures to manage the demand for


and supply of residential properties. Thus it is necessary for me to give a detailed explanation on the relevant system of the Executive Council first. Actually I can only direct my speech at the existing system and the known facts instead of responding to various conjectures. First of all, I would like to point out that matters of the Executive Council are under the charge of the Chief Executive's Office and its Executive Council Secretariat. Of course, I am also one of the Executive Council Members. All along, the Executive Council has played an indispensable role under the political system in Hong Kong. Holding a significant constitutional position, the Executive Council is, as provided in Article 54 of the Basic Law, an organ for assisting the Chief Executive in policy-making. According to Article 56 of the Basic Law, except for the appointment, removal and disciplining of officials and the adoption of measures in emergencies, the Chief Executive shall consult the Executive Council before making important policy decisions, introducing bills to the Legislative Council, or making subordinate legislation. The Executive Council is the highest organ which assists the Chief Executive in making policies. The composition of the Executive Council, which is also clearly provided in Article 55 of the Basic Law, shall include three types of people, namely, principal officials of the executive authorities, Members of the Legislative Council and public figures. This balanced and representative composition ensures that the Chief Executive can obtain appropriate advice from different social strata, facilitating him to consider the interests of various social sectors as well as the overall interests of the community, so as to make practical policies beneficial to members of the public. When the Chief Executive appoints Non-official Members of the Executive Council, his prime consideration is to select capable and experienced persons who are committed to Hong Kong and concur with his governance philosophy, with a view to analysing the needs of various sectors in society by capitalizing on the professional knowledge they offer and the experience they share in serving the community. Moreover, with their discerning views, the Chief Executive can draw reference from the concerns and opinions of various parties in his administration and come up with policies which are sensible, reasonable and beneficial to the general public.


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We fully understand that members of the public have high demands and expectations on the behaviour and conduct of Executive Council Members, and they are also concerned that Executive Council Members may need to deal with matters which are in conflict with their interests. In fact, with the numerous matters submitted to the Executive Council, Executive Council Members will inevitably encounter issues which may be deemed as being related to their interests. The crucial point is that they must clearly identify their interests, weigh their importance and deal with them properly, so as to ensure that Executive Council Members offer fair, unbiased and impartial advice to the Chief Executive. To deal with matters relating to interests, the Executive Council has put in place a rigorous and established system for declaration of interests. The declaration system mainly comprises two parts. The first part is regular declarations. On first appointment and annually thereafter, each Executive Council Member should declare their personal interests by completing the "Annual Declaration of Registrable Interests of Members of the Executive Council". Registrable interests include the following:

(a) remunerated directorships in any public or private company; (b) remunerated employments, offices, trades, profession, and so on; (c) if the interests at the above two items include provision to clients of

personal services which arise out of or relate in any manner to Members' position as Executive Council Members, the names of clients;

(d) land and property owned by Members in or outside Hong Kong,

including those which are held in the name of Members' spouses, children or other persons or companies but are actually owned by Members; or those which are not owned by Members but in which Members have a beneficial interest;

(e) names of companies or bodies in which Members have, either

themselves or with or on behalf of their spouses or children, a beneficial interest in shareholdings of a nominal value greater than 1% of the issued share capital; and

(f) membership of boards, committees or other organizations.


Declared interests of each Executive Council Member will be uploaded to the Executive Council website for public inspection. Executive Council Members should notify the Clerk to the Executive Council of changes to any of their declared interests. In addition, on first appointment and annually thereafter, Executive Council Members should declare to the Chief Executive on a confidential basis and in greater detail their financial interests, including shareholdings (irrespective of the amount) in companies as well as futures and options contracts, held by themselves or jointly with their spouses, children or other close relatives. Any changes to their financial interests as well as any currency transactions involving the Hong Kong Dollar amounting to more than HK$200,000 should be notified to the Clerk to the Executive Council within two trading days after their occurrence. Executive Council Members should declare within 14 days the acceptance by them or their spouses of any financial sponsorship, sponsored overseas visits, or gifts worth HK$2,000 or more in relation to their Executive Council membership, by completing the "Declaration of Acceptance of Sponsorships and Gifts". The declarations are also uploaded to the Executive Council website for public inspection. The second part of the declaration system is declarations in respect of individual items discussed by the Executive Council. It is the personal responsibility of Executive Council Members to examine whether they have an interest in any item discussed by the Executive Council, and declare it before the Executive Council discussion. Based on the interest declared, the Chief Executive will assess whether Executive Council Members may have a potential or real conflict of interests in the item considered by the Executive Council. The Chief Executive will decide whether Members should participate in or withdraw from the discussion of that item. If the Chief Executive decides that the Executive Council Member concerned should so withdraw, the relevant Executive Council memorandum and minutes will be withheld from the Member. Details of the Member's declaration and withdrawal will be recorded in the minutes. The Executive Council discussion held on 26 October on the proposal to raise the Special Stamp Duty and introduce the new Buyer's Stamp Duty was conducted in full compliance with the rules mentioned by me just now. Since


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Mr LAM was not in Hong Kong on the day when the Executive Council discussed the proposal, he did not participate in the meeting, and the discussion papers were not issued to him. Some Members have expressed concern or conjectured whether Mr LAM had obtained market-sensitive information on stamp duties owing to his membership in the Executive Council. The Financial Secretary has already openly stated that with regard to such sensitive issues relating to taxes, there would not be any prior discussion with the Non-official Members of the Executive Council. During the whole formulation of the stamp duty measures, only those officials who are directly related participated in the process. Regarding Mr Franklin LAM's leave of absence, Mr LAM applied to the Chief Executive on 2 November 2012 for a leave of absence, which was accepted by the Chief Executive. On 3 November, we issued a press release to announce this matter. During his absence, Mr Lam will not attend the meetings and briefings of the Executive Council. Neither will he attend any other activities of the Executive Council in his capacity as an Executive Council Member. The Government has ceased to send him relevant documents and pay his remuneration as Non-official Member of the Executive Council. As the Chief Executive has explained in public, Mr LAM's reason for taking leave is that he needs to concentrate on addressing the queries arising from the sale of his residential properties. No time limit has been set on Mr LAM's leave of absence. In the past there were also cases where Non-official Members of the Executive Council temporarily stopped performing their duties, but since the actual situations were not entirely the same, we will not make any comparison. President, I wish to emphasize again that the Executive Council has adopted a rigorous system for declaration of interests with a high degree of transparency. The Members' declarations are all recorded on file. Besides, the Executive Council has put in place a stringent confidentiality system and measure. This confidentiality system and the system for declaration of interests help to maintain the smooth operations of the Executive Council and retain public confidence in the Executive Council. Thank you, President.


PRESIDENT (in Cantonese): I now put the question to you and that is: That this Council do now adjourn. Will those in favour please raise their hands? (Members raised their hands) PRESIDENT (in Cantonese): Those against please raise their hands. (No hands raised) PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively of each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections, who are present. I declare the motion passed. NEXT MEETING PRESIDENT (in Cantonese): I now adjourn the Council until 11 am on Wednesday, 5 December 2012. Adjourned accordingly at five minutes to One o'clock.

OFFICIAL RECORD OF PROCEEDINGS Thursday, 29 November … · telecommunications industry, which is...

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