On December 26, 1953, a newspaper carried a moving report of a disaster that befell Hong Kong squatters. It read: "Countless people have fallen victim to the unprecedented huge fire that broke out in Pak Tin Tsuen.

"It is said that the fire, which lasted six hours, was caused by cooking flames. It swept an area of three square kilometres and spread to three squatter areas in Shek Kip Mei. 

"Shrouded in the raging blaze, residents could only run for their lives towards Sham Shui Po, holding their children tightly in their arms. There was no time to take anything with them. 

"Like swarms of ants, people fled in all directions and dared not stop until they reached Un Chau Street in the wee hours of the morning.

"The fire has destroyed the homes of more than 50,000 people. Made victims and rendered homeless in a split second, they have to sleep in the streets."

Immediately after the disaster, the Government built transient accommodation for the victims and asked the then Urban Council to set up an emergency committee to work out a comprehensive and long-term solution to the squatter problem.

In April, 1954, the emergency committee proposed in its report that the Government should involve itself directly and fund the construction of multi-storey resettlement blocks to house those victims and any clearees affected by future squatter clearance.

Resettlement led to housing programmes

With the participation of the Government, the resettlement programme went far beyond the provision of shelter to tens of thousands of victims.

It had a far deeper meaning: Housing, which could be a life and death issue to many people, must be addressed systematically and in a well-planned manner, so that changes could be made and the underprivileged could have a decent place to stay.

In the decades that followed, the many public housing blocks provided by various government departments and the Housing Authority for the people of Hong Kong actually reshaped our society. 

More specifically, public housing has provided many families with opportunities previously unavailable, and has changed the their destiny. 

Housing Authority formed in 1970s

In the mid-1960s, the Government provided accommodation in the form of resettlement blocks for 500,000 people.

The Government also put forward a new public-housing policy which, apart from tightening control over the construction of new squatter accommodation, allowed more public-rental housing to be built to provide accommodation for families living in dangerous or temporary buildings or affected by urban renewal and squatter clearance, as well as for victims of natural disasters. 

In the 1970s, the Housing Authority was officially founded. Several building departments were merged to form the Housing Department which was committed to implementing the 10-year Housing Programme, to carry out redevelopment in old districts, and to develop new towns by constructing large public rental housing estates. 

People began to realise that they could have higher aspirations for the future.

Home Ownership Scheme introduced in 1980s

In the 1980s, the Government and the Housing Authority introduced a number of schemes such as the Home Ownership Scheme, other loan schemes and large-scale redevelopment projects.

Apart from improving people's living standard, providing public housing laid a sound foundation for Hong Kong's prosperity in the ensuing years.

In the 1990s, Hong Kong took on a different look. A greater variety of public housing subsidised schemes were introduced. The design of public housing was became the focus of public attention. 

The public welcomed New Harmony blocks with improved designs and estates with enhanced facilities.

After decades of improvement in the design, supply and management of public housing in Hong Kong, we have secured a predominant position in the history of international public housing development, both in terms of quality and quantity.

Fifty years have passed with joys and hardships that have given us much food for thought. The above are just some of the memorable events in the past decades accompanying our growth.

Policies must reflect changes in society

As a policy formulator and implementer, we have to keep our policies on the right track in accordance with the constant changes of society and people's ways of life so as to complement social needs. 

By changes, I mean all kinds of changes, including variations in our population structure and family composition, the changing economic situation and wages, and the changes in the aspirations of the general public as to the types, quality and quantity of housing.

In November, 2002, the Government had undertaken a thorough review of its housing policy in terms of the policy objectives, strategies and measures it had been implementing. 

More importantly, it clarified once again the future role of the Government in the provision of housing.

The Government will centre its work around three major areas and take forward measures that have been specifically formulated. 

Sale, production of HOS ceased

The thrust of the Government's subsidised housing policy should be to assist low-income families who cannot afford private rental housing.

Apart from its pledge to continue with the production of public rental housing flats to maintain the average waiting time at around three years, the Housing Authority will also cease the sale and production of HOS flats in order to withdraw promptly from the property market.

The Government's future role should focus primarily on land supply and provision of public rental assistance.

It should also withdraw as far as possible from other housing assistance programmes to minimise intervention in the market.

The Government must maintain a fair and stable operating environment to enable a sustained and healthy development of the private property market.

The Government should ensure an adequate supply of land together with the necessary supporting infrastructure to meet market demand.

The Government will continue to provide adequate land to the Housing Authority for the construction of public rental housing.

As regards the amount of private housing production, it should be a matter for the market to decide.

In response to the development direction announced by the Government, the Housing Authority immediately conducted a review on refocusing its future direction so that the new policy can be implemented quickly. 

Areas of work modified

In the last two years, the authority has modified its work in all areas.

It stopped building Home Ownership Scheme flats and returned sites to the Government which are suitable for private housing development to allow more choices for the market. 

On the other hand, the Government will continue to provide building land to the authority. 

The authority has taken measures to meet the needs of the overall development, to explore new sources of revenue and cut expenditures, and to concentrate the resources on its major function of providing public rental housing. 

Major measures cover the following five areas:

* enhancing the cost-effectiveness in the utilisation of financial resources;

* streamlining the departmental structure so as to enhance service quality;

* striving to cut cost through adopting new public housing designs;

* divesting the authority's retail and car-parking facilities under the basic principle of withdrawing from the market as far as possible; and

* improving the living environment of public housing estates.

Owing to the cessation of sale of subsidised housing, it is obvious that the authority has to undergo financial reconstruction. Its provisional operating deficit in the year 2003/04 remained high.

As at March 31, 2004, the authority had a cash balance of $17.3 billion, representing a sharp decrease of $10.3 billion compared with the corresponding figure of last year. 

It is estimated that the situation will continue to worsen. Our financial strategy is therefore to cut costs and raise revenue. 

To support our business operation and public rental housing production, we have to optimise the use of our limited resources.

We will need to implement finance management reform and improve the budgetary process to enhance cost-effectiveness.

The "operating expenditure envelope" and "top-down" approaches adopted for certain expenditure items in the budget last year will be extended to other expenditure items in the coming year. 

In addition, reserves for contingencies established for different purposes will be kept and controlled by the unit heads to allow them greater flexibility in the deployment of resources in a more rational manner.

Authority streamlines structure

Apart from better control of our budget, another major aspect of our reform is streamlining our organisation structure. 

In this respect, we are committed to reviewing the existing work processes so that our limited resources are used on the provision of necessary services. 

Having taken into account the new housing policy announced in November, 2002, the decision to divest the authority's retail and car-parking facilities and changes in modes of service delivery, we have developed a comprehensive proposal on streamlining the housing department's organisation structure. 

The Legislative Council's Finance Committee endorsed the proposal on June 25, and we will submit a detailed proposal on the department's reorganisation to the authority's Finance Committee shortly.

We will continue with our efforts to streamline the department's organisation structure by downsizing wherever possible with a view to enhancing the efficiency and to motivate our staff so that the good quality of services provided to the public will not be compromised.

Apart from streamlining our organisation, we will follow through the concept of "functionality and cost-effectiveness" as well as simplicity in our public housing design. 

Adoption of this concept enhances cost-effectiveness in construction and enables better and more effective use of our valuable resources under the principle of maintaining the quality of public housing. 

Construction costs down by 12%

With the concerted effort of our colleagues, we have succeeded initially in bringing down the construction costs by about 12%. 

We will continue to study the development density of public housing so that we can improve the living environment and enhance cost-effectiveness while meeting the approved plot ratio.

I hope we can continue to look for opportunities to make savings in these areas of work.

Apart from the generation of funds, the divestment of HA's retail and car-parking facilities is, most importantly, a manifestation of the Government's broad principle of withdrawing from the market. 

In our opinion, the best way is to restructure these facilities, offer them for sale at an opportune time and enable the market  to manage them.

Last July, the authority agreed in principle to divest the facilities in the form of a Real Estate Investment Trust. 

This not only introduces a new investment product to the local financial market, but also broadens public participation in the property market.  

HD to launch Voluntary Exit Scheme

In advocating a healthy property market, we have made a historic step forward.

At the moment, we are full steam ahead in making preparations. We have established a new company responsible for managing the REIT.

The housing department, our global coordinators, financial adviser and other consultants, as well as the new management company are working hard to formulate the transitional plan and make listing arrangements for the successful implementation of the project. 

For civil servants in the housing department who would be affected by the divestment project, we will launch a Voluntary Exit Scheme and provide them with an alternative.

Estates' environmental hygiene beefed up

It is not an easy task to maintain the environmental hygiene of public housing estates. 

Throughout the last year, we have carried out a series of measures to achieve our objective of improving the environmental hygiene of public housing estates. 

Since the introduction in August last year of the Marking Scheme for Tenancy Enforcement in public rental housing, we have deployed additional patrol staff to take enforcement actions against tenants who have ignored the environmental hygiene rules. 

We have also appointed drainage ambassadors to carry out on-site inspections and maintenance for the drainage systems in public housing flats.

According to the figures, there has recently been a reduction in the number of households who are allotted points for committing misdeeds related to public hygiene. This suggests our measures are effective.

We will also enhance the concept of environmentally-friendly design for the overall environment of public housing estates. 

New systems to handle refuse

Specifically, some new measures will be introduced. For example, according to the size of the population of new estates, the central compactor system or the distributed compactor system will be adopted for handling refuse in public housing estates completed on or after September 1, 2005. 

The two new systems, which are more cost-effective than the previous one, can improve housing estates' environmental hygiene.

Recently, a number of Japanese encephalitis cases have been reported in the territory. The Housing Department will not relax its efforts in containing the disease. 

We have taken a positive step, comprehensively strengthened anti-mosquito measures by stepping up inspections, enhancing residents' awareness in eliminating mosquitoes and providing a complaint hotline.

Department aims to provide quick response to complaints

Housing matters, no matter big or small, can affect our living quality. That is why we must work towards our target of providing speedy responses to complaints. 

Enhancing residents' awareness of the need to protect their living environment will be an important element of our work. 

Not until all residents care about their own community can we hope to establish and nourish a quality living culture. 

Members offer useful ideas at meeting

In this year's first annual special open meeting in June, a number of Housing Authority members put forward many useful opinions and proposals on housing issues.

Some concern policy issues such as premium payment by HOS flat owners and the financial arrangements between the Housing Authority and the Government.

Some are related to the implementation of specific programmes, such as continued enhancement of the building quality of public rental housing, the need to consult commercial tenants on the divestment project and improvement of estate environmental hygiene.

We will consider your views carefully and on that basis, we will conduct reviews and make improvements. We will also study the feasibility of members' suggestions.

Plans to optimise public-housing resources use

Looking ahead, we have a lot of work to undertake. The challenge which is of paramount importance is to optimise public housing resources and help those families most in need of assistance.

The work is challenging. For example, the community has diverse views on spending public resources for the accommodation of single people. 

We need to review this issue in depth and try to come up with a solution with a view to addressing the interests of various parties while taking a stringent approach on the use of public resources.

In the long run, we should try to increase the mobility of public rental housing units by encouraging better-off households with income exceeding the income limit to move out so that the vacated units can be allocated to families in need. 

We should actively review the Housing Subsidy Policy to ensure that decent accommodation will be provided to the needy while those who can look after themselves will be taken off the safety net of public subsidies as soon as possible. 

Only in this way can we enhance the operation of "the revolving door of public rental housing" for the better use of public funds and ensure that our society will develop in an equitable manner on the basis of mutual help and support.

Director of Housing Leung Chin-man gave these remarks at the Open Meeting of the Housing Authority.