************************************************************
Following is a speech delivered by the Secretary for Housing, Planning and Lands, Mr. Michael Suen today (May 25) at the Special Meeting of the LegCo Panel on Housing (English translation):
Introduction
Since the publication of the Consultation Paper on Review of Domestic Rent Policy on March 9, there has been animated discussion in the community on the various proposals set out in the paper for improving the current domestic rent policy. During the past two months, we have been collecting views and comments of the community through the Legislative Council, District Councils and various public forums. Representatives of the Ad Hoc Committee and Housing Department have attended more than 50 local consultation forums to listen to the views of the public.
At the LegCo Panel on Housing's meetings on April 19 and May 16 2006, many deputations and concerned groups expressed their views on the consultation. On behalf of the Housing Authority, I would like to thank them for their valuable comments. As requested by the panel, we have set out in the paper submitted to the panel our detailed responses to the comments raised by the deputations. I wish to share with you my views on a number of issues, which are of particular concern to the community.
Review will not lead to rent increase
I note that quite a few concern groups are worried that the current review, especially the proposed measures to improve the compilation of the median rent-to-income ratio, is a means to pave the way for the Housing Authority to increase rents. Let me make it absolutely clear that the review is not intended in any way for that purpose.
In fact, the Court of Final Appeal ruled last year that the Housing Authority is not under any statutory requirement to ensure that the median rent-to-income ratio does not exceed 10% at any time. The concerned statutory provisions only require that when a decision to increase rents is made by the Housing Authority, the overall median rent-to-income ratio shall not exceed 10% following such increase. Nor is the 10% median rent-to-income ratio a statutory definition of affordability. The major issue we have to address and the dilemma we are facing now is that under the existing legislation, the Housing Authority cannot adjust the rents of its housing estates in a timely manner in accordance with the actual circumstances and needs of the tenants and the community as a whole. The current situation is extremely unsatisfactory. It is pointless to continue to harp on whether rents should be adjusted according to the median rent-to-income ratio. We should look forward and put in place a new rent adjustment mechanism that is more objective, clear, viable and reflects more closely what tenants can afford so that rents can be adjusted both upwards or downwards. It is with this objective in mind that the Ad Hoc Committee responsible for the review proposes a rent adjustment mechanism based on the movements in either consumer price or tenants' household income to determine when a rent adjustment is warranted and, if so, the extent of such an adjustment.
Rent adjustment mechanism and rent level
Many deputations consider that the Housing Authority should first reduce rents before reviewing the rent adjustment mechanism. As I pointed out at the meeting on May 16, the issue should be considered in a comprehensive and holistic manner. The Ad Hoc Committee remains of the view that we should look into the establishment of a rent adjustment mechanism alongside the issue of how the current rents should be adjusted to a level that is considered suitable and acceptable to the community. The revised rent level should then form a new basis upon which the future rent adjustment mechanism would operate fairly and effectively. It is now an opportune time to explore what should be the suitable rent levels upon which the new mechanism should operate. We welcome views from Members and different sectors of the community.
Legislative amendment
I understand that because of the lack of an express indication in the consultation paper of the need to amend the Housing Ordinance, some quarters of the community harbour a suspicion that Government would bypass LegCo and the existing legislation and introduce a rent increase through administrative means. Again, let me state beyond all doubt that we do not have the slightest intention of bypassing LegCo. We believe implementation of any proposals must proceed on a sound and fair basis. It should also be stressed that the consultation paper only sets out the initial findings of the Ad Hoc Committee for the purpose of public consultation.
In fact, the existing statutory requirement that the median rent-to-income ratio should not exceed 10% following any rent increase effectively means that rents can only be adjusted downwards. And that is certainly not practicable in the long run. In order to establish a rational and sustainable rent adjustment mechanism that allows both upward and downward rent adjustments in accordance with the actual circumstances of the society and tenants, it is apparent that suitable amendments to the relevant statutory provisions are warranted.
Differential rents
During the consultation period, we have received many views on the issue of differential rents. Views are rather divided. As mentioned in the consultation paper, the main purpose of putting forward the proposal is to provide more choices and flexibility for tenants. It is neither our objective to introduce market principles into the public housing programme nor increase the Housing Authority's income through differential rents. I notice there are grave reservations on differential rents among some quarters of the community. Yet I am also aware of some suggestion that for those units in "unpopular" locations or vacated for a long time, their rents should be reduced so as to reflect their proper rental values and to improve the letting rate. I believe that the Ad Hoc Committee and the Housing Authority will study these suggestions with great prudence.
Public consultation period
There have been quite a number of requests for extension of the consultation period. Over the past two months, different sectors of the community, especially public housing tenants and various resident groups, have already made known their views and positions through various consultation activities held by the Housing Department. Taking account of the progress of the consultation exercise thus far, we believe there would be little material gain from extending the consultation period.
Conclusion
Members of the Ad Hoc Committee and representatives of the Housing Department will continue with the consultation work. I would also like to take this opportunity to listen to Members' views on the review.
In the coming months, the Ad Hoc Committee will analyse carefully the opinions collected, and put together recommendations to the Housing Authority. We will then brief Members of this panel further.
Ends/Thursday, May 25, 2006
Issued at HKT 15:51
NNNN