(less a ch but this
for statistical services). Initially a further subvention of $5 million was also made from the general revenue phased out over the period 1979 to 1982.
166. With the growth in Hong Kong's trade, the ad valorem charge on import and export declarations has grown very rapidly since its imposition, from $6 million in 1966–67 to $161 million in 1983–84 and $216 million in 1984–85, and the linking of the amount of subvention to the yield from the ad valorem charge has resulted over the past few years in the subvention being in excess of the guidelines for the containment of public expenditure in other sectors and has allowed the Trade Development Council to build up reserves of $82 million as at 31 March 1985. The guidelines are that over a period of years the growth rate in real terms should not exceed the growth rate of the gross domestic product and, where the budgetary situation so dictates, the growth rate should be less.
167. The linking of the amount of subvention to the yield from the ad valorem charge has also enabled the Trade Development Council to tailor its annual expenditure budget to the expected higher income instead of its actual expenditure requirements. For example, in its five-year forecast made in July 1984, the Trade Development Council originally estimated its expenditure for 1985-86 to be $174 million. However, in November 1984 in its formal estimates submission the figure was revised to $213 million (including estimated expenditure of $5 million on the Exhibition Centre which was an additional commitment) to coincide roughly with the estimated yield from the ad valorem charge.
168. In order to contain the large annual increases in the Trade Development Council's expenditure and the building up of excessive reserves, the Government recently put a number of proposals to the Council for its consideration with a view to reducing the level of the annual subvention to the Council. No formal agreement has yet been reached with the Council but for as long as the subvention is linked to the yield from the ad valorem charge the subvention, and the expenditure budget, will still be based on expected income rather than an assessment of actual expenditure requirements based on need.
169. An expenditure budget which is not based on an assessment of actual expenditure requirements based on need does not provide the incentive to economize, and in my report for the year ended 31 March 1979, I pointed out that certain expenditure of the Council had not always been subject to the degree of control which was desirable in a body receiving finance from public funds. In particular I mentioned that the Council had been paying much higher salaries to its staff than those payable to the equivalent grades in the civil service, that there was a need to devise a better system to ensure that only the official expenses of delegates on overseas missions were charged to the funds of the Council, and that there was an apparent overexuberance in the fitting out and furnishing of the Council's offices and residential accommodation provided for a senior staff member. I have recently conducted a further study of selected areas of the Council's expenditure and my findings are set out below.
170. Since 1978, the Council has budgetted its expenditure in accordance with the Council's guideline that 50% of the subvention should be spent on staff, not less than 30% on promotional activities, and about 20% on office expenditure.
171. The largest element of the budget is expenditure on staff to which I made reference in my report for the year ended 31 March 1979. In paragraph 4.37 of their Second Report issued in January 1980, the Public Accounts Committee noted the view I expressed in my report that the Trade Development Council were in breach of the Government's and (to some extent) the Council's own policy, which provides that the salaries and benefits received by staff of subvented bodies should be no greater than those paid to officers of equivalent rank in the civil service and recommended that the Government should examine the matter in detail, in order to ensure that any breach of the policy which might exist, was immediately corrected. The Public Accounts Committee also recommended that as part of the annual examination by the Economic Services Branch of the Council's estimates, detailed checks should be applied to the level of salaries paid in relation to those paid by the Government, to ensure that breaches of the policy did not arise in future. The Government Minute of March 1981, in response to the recommendations made by the Public Accounts Committee, stated that the examination of the level of the Council's staff salaries would be done annually as part of the consideration of the Council's budget as a whole. In reply to my enquiries, the Secretary for Trade and Industry has advised me that, in examining the Council's annual estimates, he has satisfied himself that general salary increases to the Council's staff are broadly in line with those for the civil service. However, no detailed examination of the Council's salaries and benefits as recommended by the Public Accounts Committee has been undertaken, and in the absence of such an examination, the risk of staff in the Council receiving salaries and benefits much higher than those received by their counterparts in the Government to which I referred six years ago, still exists today. The Secretary for Trade and Industry has recently informed me that he is proposing to invite the Council to consider engaging a consultant to carry out a pay level study of the total package of salaries and benefits paid to the Council's staff.
172. The second major item of the Trade Development Council's expenditure is promotional activities. The main services provided by the Council in this regard are:
-direct mailing of research publications and regular press releases to create export awareness on the part of traders
who are unfamiliar about their potential;
-a Trade Enquiries Division which puts buyers and sellers of particular products together through the use of a computer data bank containing data of over 20 000 local manufacturers and exporters and more than 90 000 overseas importers and buyers;
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