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HONG KONG URBAN COUNCIL
house in order, no more would have been achieved under the new dispensation than could not have been done before.
The Council believes that the ratepayer should not subsidise any commercial activity for private gain. The cost of such service should be reflected in the fees or rents that are charged. Straightforward indexation could well be the ultimate answer in this related exercise. On the other hand, general municipal services, such as cleansing operations, together with projects to enrich the life of the community are a just claim on public resources.
Unfortunately, the Council inherited certain complicated situations from the time when separate costings were not done. There was then heavy cross-subsidization in government financial practice without even realizing the extent. This should not now continue. It would be grossly unfair to the community and in particular gravely unjust to the ratepayer. But it is not easy for a public authority to extricate itself from such a mess although it is being done with finesse as circumstances permit.
Anyway, to get down to brass tacks, the rate revenue in 1980-81 is expected to reach $420m. At the same time, the payroll of 16,544 will amount to $407m. Thus, there will only be a meagre balance of $13m. to meet recurrent expenditure of $159m. and special commitments of $57m. Indeed, that would have been all the money that would be in hand to do the work were it not for rising secondary income from many relatively small sources adding up to $145m.
In sum, total revenue is estimated at $565m. while salaries and operations combined will cost $623m. There is additionally a capital works commitment estimated at $148m. at current prices. This means in effect that $206m. has to be found. This is the size of the deficit on paper.
The forecast is not as bleak as it might sound. There will be something left of the present reserves of $260m. after the current financial year ends. Much depends on the rate of completion of capital projects under construction. While there may be an initial depletion of reserves, enough will be left in the kitty to tide the Council over until 31 March 1981. It is curious incidentally for a major city to pay cash for everything and to have no debts at all, but wise in the peculiar circumstances here to be in such an enviable position.
All this recital of figures means simply that there is no need for the Council to put up its rate percentage in the coming year. There will be no direct demand on the ratepayer for more money.
There is nevertheless a disconcerting five-year financial projection. But it can best serve only as a guide to the shape of things to come without real meaning as costs escalate inexorably. However, in the years ahead, a selective application of resources would have to be contemplated. Of course, there could be no retrenchment of services. Neither would an affluent city tolerate the cutting down of standards to which it would be easy to resort in a labour-intensive administration when money ran short. Other cities do so without qualms. The Council is pledged to the sensible course it has taken resolutely all these recent years: to give the people a richer life and to better living conditions here progressively. So, let the reserves be used up first if required. This is what the community expects.
The Council pins its hopes on many massive building constructions due to be completed by the private sector. When it happens, additional rates will be raised without pain. The next re-assessment of property values for taxation purposes will change the picture altogether. It will catch up with the swiftly rising cost of expanding services aggravated by inflation. This optimism looks beyond 1980-81 and is predicated upon factors outside the Council's control but predictable all the same.
While this Council soldiers on with the rate at 4%, the Government collects 74% from householders in the urban areas. The Government has many other revenue sources and commands a huge accumulation of annual surpluses. In the circumstances, should the Council be driven to the wall, there would be a good case to argue for an internal adjustment of the rate percentage between the Government and the Council. A simple transfer of a small part of the Government's general rate, as it is termed, to the Council would not upset governmental finances but would obviate the need of any overall percentage increase. This would seem to be fair and reasonable to the ratepayer. It has, moreover, the merit of being a direct and symmetrical application of the financial principle of 'rough justice' newly advocated in high places here. And, the urban ratepayer would applaud such a fine example of co-operation for the common good as he would not have to dip into his pocket.
To reassure the man-in-the-street in these inflationary times, let me say without mincing words, the Council rate will stay put at 4%.
MR. HILTON CHEONG-LEEN, VICE-CHAIRMAN, URBAN COUNCIL (in English):- Mr. Chairman, I rise to second.
CHAIRMAN (in English):--Does any Member wish to speak? Mr. FORSGATE, Mr. Howard YOUNG, Miss Cecilia YEUNG in that order please.
MR. FORSGATE (in English):-I yield the floor to the lady.
CHAIRMAN (in English): --Does Mr. YOUNG also yield the floor to the lady member?
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