IT seemed like an epidemic of the seven-year itch and possibly something terminal. Director of the Academy for Performing Arts, John Hosier, was leaving. So were the Dean of Dance and the heads of Acting (English) and Technical Arts (Theatre), while all that remained of the Dean of Music was the pungent whiff of scandal. Was the ivory tower crumbling? Not a sign of it as the APA celebrated its seventh birthday and geared itself for a new era. Looking remarkably serene was John Hosier. After four years in the stylish grey building in Gloucester Road, he was satisfied the academy was firmly on course and confident about handing over the reins to Lo King-man, currently deputy director of the Hongkong Polytechnic. Finally, he could also enjoy a long-overdue private life. ''I'll be 65 in November and felt it was about time I retired. Perhaps it's the musician in me - that feeling of things coming to end. ''I'm here till August, then getting married to Biddy. Probably the only way for us to resolve things, was for me to retire. We've both been so busy in our jobs.'' The romance between John Hosier, CBE, and Biddy Baxter of Blue Peter fame - ''she shaped it and made it the most popular children's TV programme in Europe'' - has been an open secret for years, though news of the impending nuptials astounded at least one close friend this week. Thousands of miles away, different shock waves were being felt as Queensland learned of its impending loss: director of the State's Conservatorium, Anthony Camden, was leaving to join the APA in September as Dean of Music. Undoubtedly, the invitation came directly from Dr Hosier whose previous post was principal of London's Guildhall School of Music and Drama. It was during his time there that Camden was head of oboe studies. Indeed the same Anthony Camden was Principal Oboe with the London Symphony Orchestra for 17 years and chairman of the LSO board for 13 years. In May, Camden will appear as soloist with the Hongkong Philharmonic, giving the APA's music staff and students a chance to size up their new dean - at least on stage. He is said to be innovative, visionary and very likeable. His predecessor, Danish-born pianist John Winther who is now in Australia trying to resurrect his career, also had his fans. John Hosier continues to be one. ''A superb musician with a wealth of performance experience,'' he says of Winther. ''Unfortunately, other things couldn't be overlooked and in the end I had to make a very difficult decision.'' The main thing that couldn't be overlooked was that Professor Winther, married and a father, was having an indiscreet affair with a female student. It wasn't the only scandal of '92. Last May, Dr Hosier found himself in a sticky situation when one of the APA's star opera students, mainland soprano Yang Ruiqi, went to San Francisco for the Pacific Singers Competition - apparently without formal approval from the mainland authorities. Dr Hosier agrees there was some confusion though ''we had been assured by China's Ministry of Culture that Ruiqi's visa was in order.'' It was all for nothing. Ms Yang, who made such a poignant Mimi in the APA's triumphant production of La Boheme, failed to move the San Francisco judges and bombed out. Worse, she decided to stay in the States and added insult to defection by trashing the APA in an interview with the Chinese-language press. John Hosier, who introduced the academy's opera course and made it his pet project, felt hurt but not for long: a trivial matter when weighed against the progress achieved during his four years with the APA. BASIL Deane could barely contain his excitement when the $370 million complex was officially opened in February 1986. ''As far as I know, no other institution in the world has dance, drama, music and technical arts under one roof,'' enthused the APA's first director. ''I believe there will be some marvellous talents in the future as a result of all that creative cross-fertilisation.'' A year later, a tight-lipped Dr Deane resigned in an atmosphere verging on mutiny as staff and students went public with accusations of incompetence and insensitivity, though he certainly got the ball rolling. ''We had the most fantastic response to our first student intake - almost 1,000 applications for 25 places in drama alone,'' recalls Head of Acting (English) Colin George, who has finally decided to return to Britain and his great love, acting. After the honeymoon came some niggling questions. Should Hongkong's taxpayers be asked to cough up $53 million a year for an elitist institution catering for a maximum of 600 students? Would there be jobs for them at the end of the day? Today the APA's annual subvention stands at $94 million and once again it must be asked: is Hongkong getting its money's worth? If academic status counts - and it does to an inordinate degree in this qualifications-obsessed society - the answer is yes. ''Each school had an international panel validating its suitability to grant degrees and the experts were tremendously impressed by our standards,'' says Dr Hosier. As a result, the APA now has its first Bachelor of Fine Arts undergraduates and plans to offer MFA courses, and eventually doctorates, are well under way. ''What counts in the end, of course, is how well you do at an audition,'' says Dr Hosier, who stresses that whether a student chooses to take a degree or a diploma, the bottom line is performance. Seven years on, the impact of the APA on the professional scene is undeniable. The Hongkong Repertory Theatre Company, Chung Ying, the Hongkong Ballet, the City Contemporary Dance Company, the rapidly developing Hongkong Sinfonietta - at least 30 per cent of places in all of them are now filled by APA graduates and even the Hongkong Philharmonic, with its stringent standards, has not been immune. ''About six of our graduates are now with the Phil, and I expect there will be more in the future,'' Dr Hosier says. ''Things always take longer with music because the best students go abroad for advanced studies. ''For faster results, look at technical arts graduates. Some fantastic talents. People like Leo Chung and Kim Lee are transforming the lighting design scene in Hongkong.'' Could this be the same School of Technical Arts which called foul back in 1986 - chief accusation was that its students were intended as cheap labour to service the other schools - and created an uproar in 1989-90 by closing the door to Television Arts applicants? ''It was regrettable, but it had to be done so we could re-write the course and upgrade it academically,'' a senior staff member says. ''Sensibly, Technical Arts is now divided into two schools - one for film (headed by Pat Elliot), the other for theatre (new dean with America's Aubrey Wilson) - and degree accreditation will soon be in place. ''Things have changed so much. Two years ago, I could have walked out without a regret. Now I have no plans to go. Tremendous to be working with such high-calibre students and feel you're at the beginning of something really exciting.'' With Hongkong's broadcasting and movie industries booming, the academy's TV and film graduates are in clover and those following them will be even luckier. ''Next year,'' Dr Hosier reveals, ''we will be building a new TV studio on one the roof areas.'' WHAT a rosy picture. Now cop the bad news, starting with Benny Chia's blunt warning that unless the Government gets its act together, a lot of the APA's talent might as well pack up and go home. ''It's a bizarre situation,'' says the Fringe director. ''On the one hand, the APA is getting almost $100 million a year. On the other, the Government's annual arts budget is about $36 million of which the bulk goes to the subvented companies, while the rest - about $3.5 million - has to be shared by everybody else. ''The point is, why keep turning out all those fine products at the APA, when they're only going to drop off the assembly line and shatter? With places so limited in the established companies, they should be starting their own, but how can they without help? ''None of it makes sense, especially when you consider that massive Government surplus. My feeling is that the Council for the Performing Arts (the Government's arts-funding arm) isn't up to scratch.'' That scathing view may well be reflected in a Government report on the arts due to be made public next month. It will be watched with interest by Chung Ying's artistic director Chris Johnson. ''I've just learned that for the third year in a row, our grant has been frozen - that is, reduced. The first two years, I could juggle things. Not any more. I'm starting to cut heads right now. ''With retrenchment in the air, local actors are going to need all their survival skills - which is why she is worried about the APA,'' says Mrs Johnson. She doesn't mind explaining why. The problem she has found with the academy's drama graduates, says the Chung Ying boss, is that their glamorous training is a handicap in the no-frills world of real theatre. ''They may have what they call out-reach programmes at the APA, but that's not the same as working in the community. You don't see APA students performing on the streets. ''Another missing link is English. I can't understand why it's not being taught as a performance medium in the Drama School when almost their entire repertoire is drawn from it, but I can give you an excellent example why it should be. ''For the first time ever, Chung Ying has been invited to present a play in the prestigious Vancouver Children's Festival and tour Canada with it, and one of the conditions is that we must do 70 per cent of our shows in English.'' Jean Wong, head of Hongkong's largest classical ballet school chain and an international examiner for Britain's Royal Academy of Dancing, also wonders if the APA has its priorities right. ''I'm desperate for teachers,'' says Ms Wong, ''but I can't work out what style of ballet is being taught at the APA. It certainly isn't RAD, which is very odd considering it's so popular in Hongkong and is recognised worldwide. ''My experience with the APA's ballet graduates is that they're neither fish nor fowl. They say they have a diploma, but it's of little use to me.'' Dean of Dance Carl Wolz, who is moving to Tokyo to head the World Dance Alliance - ''it grew out of our International Festival of Dance Academies'' - will be leaving that problem for his successor. The successful candidate should find happier tidings in the school's modern dance department. Under American head Tom Brown, it has yielded some notable talents including exciting young choreographer Jacky Yu, and Brown enjoys an excellent relationship with Willy Tsao's CCDC. And the big job? Benny Chia is among the optimists. ''Lo King-man knows the Hongkong arts scene backwards. I am sure that politically, he will also prove extremely skilled and clever.'' In his office at the Hongkong Poly, the man chosen to guide the APA during the territory's most crucial transition this century, shed a little light on his style. ''People always think of me in connection with opera, but first and foremost, I'm an education administrator,'' said Lo King-man. If Carl Wolz is right, the new APA boss will need every ounce of expertise. ''My prediction,'' says the dance man, ''is that post-1997, the Academy will become the main arts training centre in southern China.''