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1. Housing Authority To Consider Select Committee Report on Building Problems of Public Housing Units

2. LD inspecting construction sites to check scaffolding safety

3. Statement by SHPL on LegCo Select Committee's Report on Building Problems

4. Report's recommendations in line with Gov't actions

5. Cash delay for big projects

6. Tenders call for $2.12b highway given a bumpy ride

7. Developer expects $600m from sales

8. Short-piling probe blames trio

9. Piling punishment is left to the bureaucrats

10. Analysts welcome MTR extension plan, but voice fears over funding

1. Housing Authority To Consider Select Committee Report on Building Problems of Public Housing Units
Hong Kong Government, 22 January 2003

The following is issued on behalf of the Housing Authority:

The Housing Authority will study the Legislative Council Select Committee's First Report on building problems of public housing units very carefully with a view to making further improvements on the building quality.

The Chairman of the Authority, Dr Cheng Hon-kwan said he has just received the report published today by the Legislative Council's Select Committee, and that the Authority will seriously consider the findings and recommendations of the report and take appropriate follow-up action.

The Authority is committed to the building quality reform and has undertaken comprehensive and effective measures to address past problems, said Dr Cheng. "I am pleased with the effectiveness of the initiatives introduced over two years ago, and look forward to continuing cooperation with the construction industry for the provision of quality housing in Hong Kong," he added.

2. LD inspecting construction sites to check scaffolding safety
Hong Kong Government, 22 January 2003

The Labour Department is conducting a territory-wide blitz operation to check scaffolding safety in all construction sites.

Addressing the Forum on Work Safety of Bamboo Scaffold organised by the Occupational Safety and Health Council today (January 22), the Permanent Secretary for Economic Development and Labour (Labour), Mr Matthew Cheung Kin-chung, said the operation began in mid-December following the collapse of a bamboo scaffold at a hotel in Tsim Sha Tsui which claimed one life and injured 16 workers.

"Our safety officers are working full steam, even after office hours and on general holidays, in order to complete the operation next month. Some 1,830 sites have been inspected so far and prosecution has been taken out on 63 offences. Seven suspension notices and 54 improvement notices have been issued," he added.

"The Government attaches great importance to the safety performance of the construction industry which is one of the pillars of Hong Kong's economy. We enhance the occupational safety and health of the trade by education, training and large-scale publicity," Mr Cheung said.

"The Labour Department has all along been working closely with the Occupational Safety and Health Council and concerned parties to raise the industry's safety standard through various activities such as the forum today," he noted.

"The department will continue to inspect workplaces and take enforcement actions. If hazards that may seriously harm employees are identified, we will issue suspension notices to employers or contractors, requiring them to stop work immediately and adopt appropriate safety measures. We will initiate prosecution whenever necessary and will not tolerate any violation of the law in order to protect workers' safety," he continued.

Despite this, the safety performance of the trade has significantly improved in recent years as a result of concerted efforts of all parties including employers and employees, Government, concerned organisations, safety professionals and site managers.

"There has been a downward trend in the accident toll of the industry in the past few years. A total of 4 900 accidents was recorded in the first three quarters of 2002, representing a significant drop of 32 percent when compared with 7 200 in the same period of 2001. The accident rate per thousand workers also plummeted substantially by 27 per cent from 118 to 86," Mr Cheung said.

"However, the accident toll of working-at-height is still high and we are very concerned about the situation," he said.

"According to provisional figures, there were 24 fatal accidents in the industry in 2002. Of them, 15 were caused by falling from height, with six involving bamboo scaffolding work. This is the highest in recent years," he said.

"Serious accidents may lead to permanent incapacity or even death of employees. This is a no-win situation. The family of the employee will suffer a heavy blow while the employer will be faced with continuous increase of insurance premium," he stressed.

Mr Cheung therefore urged employers and contractors in the industry to take all precautionary measures and monitor work safety closely to prevent industrial accidents. They should be determined to take effective actions to implement safety designs and management. At the same time, workers should not take work safety lightly. All should work together to establish a new safety culture and correct work practices.

3. Statement by SHPL on LegCo Select Committee's Report on Building Problems
Hong Kong Government, 22 January 2003

Following is a statement issued by the Secretary for Housing, Planning and Lands, Mr Michael Suen, on the publication of the Legislative Council Select Committee's Report on Building Problems of Public Housing Units today (January 22):

The Select Committee of the Legislative Council published its report on the investigations over the building problems of public housing units today. The report is thorough and comprehensive. I would like to thank the Select Committee for its hard work in the past two years.

The Government is committed to providing for the housing needs of those families in need. Through sustained efforts in the past decades, we have built up an enormous public housing programme providing affordable and quality homes for half of the population in Hong Kong, which deserves the community's recognition. We regret that the building quality problems discovered three years ago have to some extent tarnished the achievements of our public housing programme.

While the individual incidents were caused by criminal acts of dishonest staff members of contractors and consultants at the expense of building quality, they also reflected the then shortcomings in the Housing Department's project management systems and malpractices in the construction industry. On discovery of these incidents, the Government and the Housing Authority have promptly reviewed the systems for public housing production and introduced comprehensive and effective follow-up measures, primarily in the following four areas:

(a) dishonest staff members of contractors and consultants have been prosecuted. Disciplinary actions have been initiated against Housing Department staff who were considered to be negligent in discharging their duties;

(b) the Housing Authority has implemented a series of reform measures to strengthen project management and enhance the built quality of public housing, such as forging partnership with stakeholders, strengthening site supervision and works control, and adopting quality-oriented procurement strategy, etc.;

(c) the institutional framework for the delivery of public housing has been streamlined, with clearer definition of the roles and responsibilities of various housing-related organisations and better integration of policy formulation and implementation; and

(d) we have worked together with the construction industry to eradicate malpractices and foster a quality culture.

We are pleased to note that these reform measures are broadly in line with the Select Committee's recommendations. This confirms that the steps we are taking are in the right direction. We will learn lessons from these unfortunate incidents and consider the Select Committee's findings carefully. We will continue to ensure satisfactory built quality for public housing and streamline the organisational structure and procedures. The reform measures undertaken by the Government and the Housing Authority should lay a solid foundation for quality public housing, thereby enabling us to move ahead.

4. Report's recommendations in line with Gov't actions
news.gov.hk, 22 January 2003

The Secretary for Housing, Planning & Lands says the Government's measures following an investigation into the building problems of public-housing units are in line with the recommendations in a Legislative Council's Select Committee report.

In LegCo, Michael Suen thanked the Committee for its hard work in the past two years and described its report - published today - as "thorough and comprehensive."

He also noted that the Government and the Housing Authority have taken follow-up measures to prevent a recurrence of the short-piling scandal which forced the 1999 demolition of two newly built public housing blocks and the ongoing foundation strengthening works at two other blocks.

"The Government is committed to providing for the housing needs of those families in need. Through sustained efforts in the past decades, we have built up an enormous public housing programme providing affordable and quality homes for half of the population in Hong Kong, which deserves the community's recognition," he said.

"We regret that the building quality problems discovered three years ago have to some extent tarnished the achievements of our public housing programme."

While the individual incidents were caused by criminal acts of contractors' and consultants' dishonest staff members, they also reflected the then shortcomings in the Housing Department's project-management systems and malpractices in the construction industry, Mr Suen said.

When these incidents were discovered, the Government and the Housing Authority promptly reviewed public-housing production systems and introduced comprehensive and effective follow-up measures, primarily in four areas.

* Contractors' and consultants' dishonest staff members were prosecuted and disciplinary actions have been started against Housing Department staff who were considered to be negligent in discharging their duties.

* The Housing Authority implemented a series of reform measures to strengthen project management and enhance the quality of public housing, such as forging partnership with stakeholders, strengthening site supervision and works control, and adopting quality-oriented procurement strategies.

* The institutional framework for the delivery of public housing has been streamlined, with clearer definition of the roles and responsibilities of various housing-related organisations and better integration of policy formulation and implementation.

* Government and Housing Authority representatives now work with the construction industry to end malpractices and foster a quality culture.

These reform measures are broadly in line with the Select Committee's recommendations, Mr Suen said. "This confirms that the steps we are taking are in the right direction."

The Housing Authority will also study the Committee's report carefully with a view to improving construction quality.

Authority Chairman Dr Cheng Hon-kwan - who just received the report - said the Authority will seriously consider its findings and recommendations and take appropriate follow-up action.

The Authority is committed to building-quality reform and has undertaken comprehensive and effective measures to address past problems, said Dr Cheng.

"I am pleased with the effectiveness of the initiatives introduced over two years ago, and look forward to continuing cooperation with the construction industry for the provision of quality housing in Hong Kong."

5. Cash delay for big projects
Keith Wallis, The Standard 23 January 2003

Lawmakers yesterday deferred decisions on whether to support funding for more than HK$9 billion worth of highway works, including the Shenzhen western corridor bridge.

Members of the public works subcommittee agreed to postpone decisions until next Wednesday after most of the 2hour meeting was taken up with discussion about noise barriers.

Independent legislator Albert Chan said the delay was ridiculous given that members of the transport panel were due to discuss the noise barriers issue today and tomorrow.

But the week-long hold-up in deciding whether to back the government's request for cash is unlikely to delay the projects.

The Highways Department had asked construction contractors to indicate by last Friday whether they were interested in tendering for the Hong Kong section of the Shenzhen bridge.

A similar invitation is expected soon for two other projects affected by yesterday's decision. These are the Deep Bay link road and the widening of the Yuen Long highway. All are inter-related because traffic using the Shenzhen western corridor will use the Deep Bay link to reach Yuen Long highway which is being widened to handle increased traffic volumes.

Work on the HK$3.14 billion, 3.2-kilometre Hong Kong segment of the Shenzhen western bridge is due to start in August for completion in December 2005.

Plans call for the building of a 3-kilometre causeway-type concrete bridge together with a 460-metre cable-stayed steel bridge spanning the southern navigation channel. The bridge will be built from its landfall at Ngau Hom Shek to the edge of Hong Kong's territorial waters where it will connect to the section being built from the mainland near Shekou.

The scheme includes facilities, estimated to cost HK$100 million, to enable traffic to switch from driving on the left to driving on the right.

The largest of the three schemes is the HK$4.6 billion, 5.4-kilometre Deep Bay link that will run from Ngau Hom Shek to the Yuen Long highway at Lam Tei. The Environmental, Transport and Works Bureau said 3.4 kilometres of the highway would be built on viaduct.

The government also needs HK$944.5 million to widen a 6.8-kilometre stretch of the Yuen Long highway between Lam Tei and the Shap Pat Heung interchange.

Also deferred until next week was a government request for HK$656.6 million to cover the cost of additional cross-boundary passenger links as part of the Sheung Shui-Lok Ma Chau railway.

This includes fit-out works at the Lok Ma Chau terminus, including 112 immigration and 40 customs counters and the construction of a bridge between the terminus and Huanggang station.

But public works subcommittee members did agree to support one project, a HK$72.5 million scheme to upgrade the water supply to Ngong Ping on Lantau Island.

The Water Supplies Department said the scheme was necessary because existing facilities would not cope with the increased demand expected as a result of extra tourists using the MTR Corp's planned cable-car to the area.

6. Tenders call for $2.12b highway given a bumpy ride
Keith Wallis, the Standard 23 January 2003

Moves to invite tenders for a HK$2.12 billion highway project in Sha Tin before legislators had discussed the scheme were criticised by a legislator yesterday.

Transport functional constituency representative Miriam Lau said although the government was entitled to call for bids, a better option would be to wait until lawmakers had discussed the scheme.

``Government should keep an open eye on views suggested by legislators,'' she said.
Lau was speaking after a heated discussion over the installation of more than 6.4 kilometres of noise barriers along the highway, which will run from Sha Tin Heights to Lion Rock Tunnel Road.

It will help provide access to the new Route 9 Tsing Yi-Sha Tin expressway.

Funding for the project was eventually approved but only after what became a failed attempt to remove construction of the noise barriers from the scheme.

Instead, some lawmakers, including Lau, wanted officials to consider smaller less obtrusive alternatives possibly embracing ideas from Australia and Europe.

Responding, Director of Territory Development Wong Hung-kin said the barriers ``have been incorporated in the tender document. I don't see any benefit [in taking them out of the contract]''.

Permanent Secretary for the Environment, Transport and Works Lo Yiu-ching added that construction of the barriers involved piling and foundations which ``is interwoven'' with the erection of the noise barriers.

Secretary for the Environment, Transport and Works Sarah Liao said smaller barriers were used elsewhere to meet local conditions.

She said taller noise barriers were necessary in Hong Kong because of the large number of tall buildings built close to roads.

But she did agree that barriers would only be erected where there were existing buildings.
Construction of barriers in areas marked for future development would be deferred until work on these schemes went ahead.

7. Developer expects $600m from sales
Dennis Ng, The Standard 23 January 2003

Kowloon Development expects to raise nearly HK$600 million in revenue this year by selling three residential projects, senior executives say.

The listed developer would sell Bonham Mansion in the Mid-Levels, La Maison Du Nord in Kennedy Town and a project at 377 Prince Edward Road West in Kowloon City, executive director Dickson Lai said.

Lai said he expected Bonham Mansion to raise about HK$200 million, La Maison Du Nord more than HK$100 million and the Kowloon City project more than HK$200 million.

La Maison Du Nord is a 25-storey single tower with 75 flats.

Lai said the timing of the sale of the Prince Edward Road West project - a single-tower project with 240 flats - would depend on market conditions.

Formerly known as Ever Rise Mansion, Bonham Mansion is a single-tower development of about 105 flats, most of which are either 567 square feet or 639 sq ft.

Refurbishing of the residential tower was expected to be completed in March, Lai said, and the company hoped the Bonham Mansion flats would fetch HK$3,000 to HK$3,500 a square foot.

Market sources said the company bought the building from Bank of China (Hong Kong) in November for about HK$165 million or about HK$2,640 psf on average.

As Ever Rise Mansion, it was developed nine years ago by Henderson Land and bought by Sin Hua Bank's Hong Kong branch as staff quarters.

Kowloon Development registered a 93.5 per cent drop in net profit to HK$81.5 million for the first half of last year. Half-year turnover decreased 11.8 per cent to HK$210 million.

Lai said the management hoped revenue from flat sales and rental income from its investment properties would contribute equally to the group's results in the next few years.

It planned to sell a new project at 31 Robinson Road in the Mid-Levels next year, a joint-venture project at 33 Ka Wai Man Road, Kennedy Town, in 2005, and its Ngau Chi Wan project near Choi Hung MTR station in 2006.

The Ngau Chi Wan project - the group's flagship - is expected to have a gross floor area of at least 1.8 million sq ft, including 1.2 million sq ft for residential development and commercial space making up the rest.

8. Short-piling probe blames trio
Matthew Lee, The Standard 23 January 2003

A Legislative Council select committee has found the three top housing officials of the day accountable for the short-piling fiasco that struck public housing projects two years ago.

But the first report of the committee's inquiry into the scandal also said huge demand for public housing - with which the various agencies had been unable to cope - was an indirect cause.

Without naming anyone, it found:

The secretary for housing - then Dominic Wong - as policy setter had failed to ensure that the production target was realistic;

The Housing Authority chairwoman - then Rosanna Wong - as policy implementer had not given enough attention to the capability and resources of its executive arm, the Housing Department; and

The director of housing - then Tony Miller - did not deal sufficiently with the increased risks brought about by the bunching of production.

Committee members rejected suggestions that former governor Chris Patten, under whom the huge demand accumulated, and Chief Executive Tung Chee-hwa, who ordered construction to be boosted in 1997, were also responsible.

``Other than criminal activities that were discovered, we found that huge demand for public housing units, insufficient, and mismanagement of, manpower were the common causes of the problem,'' committee chairwoman Miriam Lau said.

The government's plan to boost public housing construction in 1997-1998 increased demand, which had already stood at high levels before 1997, further, it said.

The report said the Housing Department, struggling with the ``unrealistic housing production target'', had failed to properly monitor projects tendered to subcontractors, while staff over-emphasised cost and timing rather than quality.

``The four housing projects hit by piling problems were included in production targets from 1999 to 2001, of about 70,000 units,'' the report said, which was almost double the number which department staff ``could normally produce in a year''.

Committee vice-chairman Albert Ho said that whether the accountable officials should be penalised was outside the committee's scope. ``But I expect the government to carry out appropriate penalties against the trio.''

Rosanna Wong - who quit the Housing Authority amid the piling scandal in June 2000 and is now Education Commission chairwoman - said only that she hoped building quality would keep improving.

Miller, now Permanent Secretary for Financial Services and the Treasury, said the industry had learned from the experience.

Dominic Wong, who retired in April, did not comment.

Committee member Chan Kam-lam said it would be unfair to blame the Chief Executive.

The public had generally supported Tung's policy of building 85,000 flats a year when it was implemented because supply had been tight.

``But the problems within the authority, the department and the construction industry were not resolvable by the government,'' Chan, a Democratic Alliance for the Betterment of Hong Kong legislator, said.

Committee member Lau Ping-cheung said he looked forward to a Legco debate on February 12 when government officials were expected to respond. ``If the government opts not to follow up, the Legco housing panel will. We may look at reforming the system, or the Building Department's monitoring of public housing,'' he said.

The report focused on projects at Sha Tin, Kwai Chung and Tung Chung. A second report will deal with Tin Chung Court in Tin Shui Wai after related criminal trials end.

The report cost HK$14 million.

9. Piling punishment is left to the bureaucrats
AMBROSE LEUNG, SCMP 23 January 2003

Major political parties have agreed to leave the decision about punishment for officials responsible for the short-piling construction scandal to the government.

The parties reached this conclusion after a Legco select committee published its investigation report yesterday.

But they warned the government should learn a lesson from the experience and improve the formulation and implementation of housing policy, which they said was vital to maintain the reputation of Hong Kong's construction industry.

Speaking after the report was published, the chairman of the Democratic Party, Yeung Sum, said the government should learn from the experience and stop rushing to conclusions.

"This is a big lesson for the government to learn from and I hope in the future it will not blindly head for some targets they have set themselves. This is especially the case with problems like solving the budget deficit," he said.

His colleague, Albert Ho Chun-yan, a member of the select committee, said he believed officials should not protect their colleagues and that those found responsible in the report would be punished by the government.

Chan Kam-lam, of the Democratic Alliance for Betterment of Hong Kong, said the Civil Service Bureau should look at what penalties should be imposed against officials criticised in the report.

Committee chairwoman Miriam Lau Kin-yee, of the Liberal Party, said the committee's job was to seek the truth and hold officials involved responsible. The legislature would debate how to take follow-up action in a motion on February 12.

While slow to demand punishment, lawmakers called for speedy improvement in housing policy-making and implementation procedures.

Among its 13 recommendations, the committee called for a revamp of the Housing Authority's responsibility in monitoring the construction and management of public housing.

The Housing Department's internal management culture should also change, the report said.

The committee called for a clearer division of areas of responsibility between the authority and the Housing, Planning and Lands Bureau.

It recommended stepped up monitoring and tightening of related laws, and said an improved partnership with the construction trade would help raise quality.

Both Secretary for Housing, Planning and Lands Michael Suen Ming-yeung and Housing Authority chairman Cheng Hon-kwan said improvement measures had already been made in the aftermath of the scandal. The government also announced last year it would turn the authority into a consultative body, effectively taking over its power to make policy.

But Tam King-leung, vice-president of the Hong Kong Institute of Construction Managers, said the root cause of the problem of low-quality construction products was the low price offered in government tenders.

"If you want good products, you need to give more jobs to the trade. In this bad economy, only those firms with low prices can win government contracts," he said.

"Tightening controls is no use in raising quality - raising the price is the solution."

10. Analysts welcome MTR extension plan, but voice fears over funding
DENISE TSANG, SCMP 23 January 2003

Hi-tech link: The Cyberport project at Pokfulam which will be linked by the proposed $10 billion South Island line. SCMP photo

Analysts and market watchers have welcomed a plan to approve MTR extensions on the western and southern sides of Hong Kong Island but said a delay to a rail link in the north was bad news.

However, it was widely agreed that the Mass Transit Railway Corporation (MTRC) would face a problem in obtaining government funding to achieve the viable return promised to its 460,000 shareholders when going public in 2000.

In addition to the funding problem is the government's reluctance to offer direct financial aid. On Tuesday, the MTRC was given approval to carry out further planning on the $5 billion first stage of the West Island rail line and the $10 billion South Island line.

The West Island rail line will run between Sheung Wan and The Belchers housing estate while the South Island line will be a mono-rail loop connecting The Belchers, Cyberport, South Horizons, Wong Chuk Hang, Ocean Park, Happy Valley and Wan Chai.

Planning for the southern link has led to a proposed 7.5km highway project between Kennedy Town and Aberdeen - the controversial Route 7 - being placed under review. The government said the rail proposal would bring a better return at 16 per cent annually, serve a bigger population and boost tourism.

However, the government's decision to postpone the North Island rail link, which would run between Fortress Hill, Tamar and Hong Kong station in Central, until after 2016 was seen as a blow to the corporation.

JP Morgan analyst Edmond Lee said: "This is clearly negative news for the MTRC, but news that is not totally unexpected."

The MTRC's share price fell 1.74 per cent to $8.45 yesterday.

The government said slower anticipated growth in jobs and excess rail capacity on Hong Kong Island did not warrant the extension until after 2016. An analyst for a US brokerage said: "Shelving the North Island link may not necessarily be a bad thing. If the project doesn't generate a viable return and still goes ahead, it will be very worrying for MTRC shareholders."

Analysts said a huge question mark was hanging over the economic viability of the South and West Island lines as the government had dragged its feet on funding new rail projects.

In Legco papers to be discussed tomorrow, the government says there is still an unspecified shortage of funding for the West Island line even after taking into consideration granting the MTRC property development rights in Kennedy Town.

It is understood that the South Island line requires $4 billion in government aid. Without it, the rail projects will not be able to meet a return rate of between 1 per cent and 3 per cent above the corporation's average borrowing costs. The return was promised at MTRC's listing in 2000. "We are waiting for a number of promises made at the MTRC's listing to come true," a fund manager for a European fund house said.