five years up to 31 March 1976, a total of nearly $250,000 derived from this source was paid to members of the staff instead of being credited to the Group.
86 It was explained to me that the keeping of large cash balances stemmed from the payment procedures and traditional practices of the Tung Wah Group, but it was admitted that insufficient attention had been paid to the level which those balances had now reached and it was agreed that early action should be taken to secure the optimum return from them. It was also agreed that with immediate effect, all income from the sale of swill would be credited to the medical income account of the respective hospitals.
87 An inadequate regard for economic management also seems to have been a feature of the Group in respect of certain of its hospitals' operational procedures. For example, in examining the performance of the laundry at Kwong Wah Hospital I noted that although eight years earlier 72 workers had processed an average of 21,500 items per day, in 1975-76, 83 workers processed only 19,900 items, a drop in productivity of nearly 20%. This could be attributed at least in part to the loss of efficiency of the laundry equipment, the deterioration of which was no doubt accelerated by the absence of any system of routine maintenance and overhaul of the machinery, a machine normally receiving no attention until it broke down. The Group is now considering the purchase of new equipment and I have suggested that they should introduce a system of regular inspection and maintenance to preserve the life of the machines and to increase the operating efficiency of the laundry. Taking the age of the present machines into account, the Group's view was that the output of the laundry was satisfactory, but it has been agreed that efforts will be made to improve the maintenance service provided by the Engineering Department.
88 The Tung Wah Group has the tradition of providing hospital accommodation free of charge for all those who wish to avail themselves of this facility. Whilst a number of private beds are available for others who wish to pay, the Directors have for many years strongly opposed proposals that the Group should bring its fee policy into line with that at Government hospitals, where a charge of $5 per day for third-class beds is made to help meet the cost of food and other services, but where this fee may be remitted in cases of hardship. The Group has long since ceased to provide its services exclusively to the poor and needy, and the situation thus exists that as the Tung Wah hospitals are financed so extensively from public funds, persons attending those hospitals receive an advantage at public expense not enjoyed by those of similar means who attend Government hospitals. The situation is even more anomalous in the light of the Government's proposals to regionalise hospital services, for it would seem that the Tung Wah Group will be unique within this scheme in failing to standardise charges with those of other hospitals, both Government and subvented.
89 Although the Directors recently agreed to increase the number of fee paying beds, thereby raising the potential annual income from fees to $2.3 million, about twice that which the Group has collected hitherto, this sum is still some $5 million below the fee revenue which it is anticipated could be produced if the Tung Wah Group came into line with other hospitals, an amount which at present has to be made good by the Government through the deficiency grant. I proposed therefore that the circumstances were such as to merit reconsideration of the issue.
90 In reply I was informed that the Group would do its best to ensure that there was no open conflict with Govern- ment policies, and to provide free services only for patients who were in genuine need, less needy patients being admitted to fee-paying wards. Nevertheless, approximately 69% of beds in all Tung Wah hospitals are still free and the Directors consider that by tradition they must continue to maintain a substantial number of such beds. Whilst acknowledging the valuable work done by the Tung Wah Group over many years, I have suggested that the time may now be opportune to temper the dictates of tradition with the consideration of the need for equity in the applica- tion of public funds.
91 Opposition to Government policy on the charging of fees was also evident in certain areas of the Tung Wah Group's educational activities, in connection with which the Group operates 4 secondary, 6 primary and 3 night primary schools, over 90% of their running costs being met by a Government subvention. Government policy, as applied to Government schools and those of other subvented organisations, is that apart from a contribution from pupils towards the cost of textbooks and stationery, primary education is free, but that fees should be charged in secondary schools. In 1973 the Tung Wah Group decided to pioneer a system of free secondary education, under which pupils in Forms I to III would not be charged any fee and those in Forms IV and V would be charged only half the normal fee. The Group also decided to provide free textbooks and stationery to primary school pupils.
92 The Government expressed its concern at the Group's providing these additional free services on the grounds that they might be financed directly or indirectly from the Government subvention, but on receiving assurances that the cost would be met from the Group's own resources, including personal contributions from the Directors, the introduc- tion of the scheme was not opposed. The management consultants' report has now questioned the scheme's desirability, both in terms of its social need and, in the overall context of the Group's social activities, its educational value for the money spent. My own examination of the financing of the free facilities for 1975-76, when they cost nearly $840,000, showed no evidence that the Directors had in fact made any personal contributions towards them, although they had made generous payments totalling $920,000 to other projects. The facilities appeared to have been financed mainly from the General Chinese Charities Fund and receipts from flag days, with a residual balance of $330,000, to be met from property income which had previously been used in support of the Group's social welfare activities. I noted that the Tung Wah Group started to receive a social welfare subvention only when the scheme for additional free educational services was introduced, and it seems not unlikely that the diversion of property income from social
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