7.92 The Committee note that action has been taken to draw up a three-year rolling programme for fitting-out projects in new housing estates. The Committee wish to be informed of the progress in the matter.
7.93 The Committee wish to be informed when it is expected to complete the fitting out of the remainder of the vacant premises in housing estate that have already been constructed.
UNIVERSITY AND POLYTECHNIC GRANTS COMMITTEE
7.94 Paragraphs 107–123. The need to carry out periodic reviews to see if the universities and polytechnics student finance scheme is being administered as economically as possible whilst meeting the policy objective. The Chairman referred to the Government Paper tabled in the Legislative Council on 20 November 1985 in answer to certain policy matters which had been commented on in the Director of Audit's report and asked the Secretary, University and Polytechnic Grants Committee (UPGC) whether he had anything to add to the Paper. (A copy of the Government Paper is at Appendix B to this report). The Secretary, UPGC stated that the policy decided by the Executive Council in 1969 was that financial assistance to students should be given on the basis of need, that it should be a combination of grants and interest-free loans, and that the proportion of grants to loans should be left to the decision of the Joint Universities Committee (now the Joint Committee on Student Finance). The Secretary, UPGC submitted that that policy had been followed precisely since 1969 and that it remained in force to-day. The Secretary, UPGC stated that he had made this clear to the Audit Department and to the extent that the Director of Audit's report did not mention this matter, the report did not present a balanced view. Secretary, UPGC entirely rejected any suggestion that there had been a failure on the part of the Secretary, UPGC to carry out a policy review and that this constituted a failure of management as stated in the Director of Audit's report. He considered that if the policy was to be reviewed, it would be the responsibility of the Education and Manpower Branch as the policy branch concerned, and any proposals for a change would then have to be submitted to the Executive Council.
7.95 The Committee did not think that there was any disagreement over the policy objective that no student should be unable to accept a place for lack of means. But it was essential to consider the most economical means of achieving the objective bearing in mind that government resources as a whole are limited. The Committee asked the Secretary, UPGC what he considered to be the most economical means of achieving this objective. The Secretary acknowledged that it would be cheaper to have an all loans scheme and cheaper still to make it a concessionary loan. He maintained however that that was not the policy. Whether or not the policy should be reviewed was of course another matter.
7.96 In response to the Committee's enquiry the Secretary explained that the significance of the change in the split of a student's disposable income between academic and living expenses from 100:0 to 70:30 and then 50:50 was to reduce the amount of the student's disposable income which was set off against academic expenses. In turn this increased the amount of assistance the student received by way of grant.
7.97 In response to an enquiry from the Committee the Secretary said that, in the execution of the basic policy, he had not done any financial studies between an all grants scheme at the one extreme and an all loans scheme at the other extreme to ascertain what the most appropriate balance was and would not do so unless instructed by his policy branch. He stated that the Executive Council had considered and rejected an all grants scheme on the one hand and an all loans scheme on the other. The Secretary also stated that paragraph 123 of the Director of Audit's report was inaccurate in that the Secretary, UPGC was not currently reviewing the matter in conjunction with the Secretary for Education and Manpower but he confirmed that the Secretary for Education and Manpower was considering whether to conduct
a review.
7.98 On the question of whether an all loans scheme would cause students serious problems of repayment upon graduation the Committee commented that it did not appear hardship would be caused, since given the average amount of assistance granted, graduates could command substantial salaries in the job market particularly after two or three years' experience. The Secretary reiterated that the policy was to have a combination of grants and loans. He added that for students attending expensive five-year courses such as architecture, and requiring the maximum assistance, the amount of repayment could be very substantial. The Secretary subsequently informed the Committee that for 1984-85 the average grant and loan assistance provided was $3,666 and $7,825 respectively. The total fees and living cost for a student taking a five-year course in architecture was $100,670 ($20,134 a year).
7.99 With regard to paragraph 121 of the Director of Audit's report concerning overpayment of assistance to students due to inaccurate and mis-stated information in applications, the Secretary assured the Committee that further improvements to the vetting procedure were being made. Nevertheless he recognized that the time could come when it would not be cost-effective to impose further checks; for a scheme of this nature there would always be an element of overpayment. On the basis of a recent experiment, he estimated that improvements to the vetting procedure would require an upgrading of vetting staff at a cost of about $200,000 per annum, with an estimated benefit to the Government, in terms of overpayments obviated, in the millions. He told the Committee that he planned to implement the improvements in full in the year 1986-87. At the Committee's request, the Secretary, UPGC also subsequently provided figures on the estimated amount of overpayments in 1984-85 which, based on a small sample, was $1.9 million in grants and $1.5 million in loans.
7.100 Conclusions and Recommendations. The Committee note the contention by the Secretary, UPGC that the Director of Audit had criticized policy decisions, but are of the view that this was not the Director's intention and that the Director was legitimately concerned with the proper implementation of the approved policy which was that no student who is offered a place in a university should be unable to accept that place because of lack of means. It seems to
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