INTRODUCTION

This paper invites Members' views on the proposed revision of administrative fees and charges for environmental services provided by Government.

BACKGROUND

2. The fees payable under the Air Pollution Control Ordinance (Cap. 311), the Waste Disposal Ordinance (Cap. 354), the Water Pollution Control Ordinance (Cap. 358), the Noise Control Ordinance (Cap. 400), the Ozone Layer Protection Ordinance (Cap. 403) and the Dumping at Sea Ordinance (Cap. 466) were last revised in January 1998. The fees payable under the Environmental Impact Assessment (EIA) Ordinance (Cap. 499) were introduced on 1 April 1998 based on full cost at 1997/98 prices.
   
   
3. It is Government policy that fees should in general be set at levels sufficient to recover the full cost of providing the services. Most Government fees and charges have been frozen since February 1998 as an exceptional measure to ease the burden on the community at a time of economic setback. The Financial Secretary decided in June 1999 to continue the fee revision moratorium until the year-on-year quarterly GDP growth rate turned firmly positive.
   
   
4. In view of the current state of economic recovery, we propose to revise the administrative fees for various environmental services. The latest costing results at 2000-01 prices show that some existing fees fall short of full cost recovery. It is acknowledged that it would cause some difficulties if fees were increased rapidly to achieve 100% cost recovery. We therefore propose to revise the fees along the following lines -
   
   
1. Achieve full-cost recovery within seven years for fees with an existing cost recovery rate of less than 40%.
   
   
2. Achieve full-cost recovery within three to seven years for those fees with existing cost recovery rates of between 40% and 70%.
   
   
3. Achieve full-cost recovery within one to three years for those fees with existing cost recovery rates of over 70%.
   
   
4. Reduce those fees with existing cost recovery rate of over 100% to their full-cost levels.

5. Details of the fee proposal are set out at the Annex. The proposed revisions are summarized below:
   
   
1. The fees associated with specified process licences under the Air Pollution Control Ordinance will be increased by 10% to 15%. Full cost recovery will be phased in over the next 3 years.
   
   
2. The licence fees for discharge or deposit from domestic premises and for discharge or deposit from industrial, institutional or commercial premises of domestic sewage under the Water Pollution Control Ordinance will be maintained at subsidized levels and will be decreased by 64% due to cost savings brought about by extensive computerisation in the licence application process.
   
   
3. The licence fees for discharge or deposit from certain industrial, institutional or commercial premises under the Water Pollution Control Ordinance -
   
   
1. for discharges of low flow rate will be increased by 10% to 15% with full cost recovery phased in over to 3 years;
   
   
2. for discharges of medium flow rate will be increased by 5% and full cost recovery phased in over 2 years (for new applications) or decreased by 9% (renewal applications) based on the full cost 2000/01 prices; and
   
   
3. for discharges of high flow rate decreased by 40% to 44% based on the full cost at 2000/01 prices. (Again, this is due to cost savings brought about by extensive computerisation in the licence application process.)
   
   
4. The licence fees for discharge or deposit from domestic sewage treatment plants under the Water Pollution Control Ordinance will be decreased by 26% to 32% based on the full cost at 2000/01 prices.
   
   
5. The fees for construction noise permits and noise emission labels under the Noise Control Ordinance will be increased by 16% to 20%. Full cost recovery will be phased in over the next 2 or 4 years respectively.
   
   
6. The application fees under the Environmental Impact Assessment Ordinance will be increased by 6%. Full cost recovery will be achieved in the subsequent year.
   
   
7. Other fees, including those under the Waste Disposal Ordinance and the Ozone Layer Protection Ordinance, will be increased or decreased to achieve full cost recovery at 2000/01 prices.
   
   These fees can be effected by amendment to the respective legislation following consultation with the Advisory Council on the Environment.
   
   
6. For members' information, the fees payable under the Dumping at Sea Ordinance were last revised in January 1998. A costing review in early 2000 showed that with the introduction of efficiency improvement measures, the cost recovery rate of the fees was over 100% and the fees should be decreased by 27% to 64%. Suitable adjustment in the fee levels will be made by the Director of Environmental Protection separately.
   
   
7. As a result of these revisions, there will be a net reduction in revenue of around $350,675 per annum. These proposed revisions were presented to the Legislative Council Panel on Environmental Affairs on 2 June 2000. Members of the Panel did not raise any objection to the fee proposals.

8. Subject to the views of members, we plan to introduce the fee adjustments to the Legislative Council in November 2000 with a view to bringing the new charges into effect by the end of this year.
   
   

ADVICE SOUGHT

9. Members' advice is sought as to whether the proposed fee revisions as set out in paragraph 5 above should be made. The revised fees would to take effect in December 2000.