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HONG KONG URBAN COUNCIL
So much has been said in public about the Council's finances in virtually all aspects that no useful purpose can now be served by the tedious repetition of details. There are two major points that can still stand emphasis again, lest they be conveniently brushed aside.
First, the Council was made heavily dependent on the rate when its financial structure was drawn up prior to its reconstitution on 1 April 1973. Consequently, its rate revenue goes up only marginally each year unless there is a wholesale revaluation of properties. This was done only once in the span of seven years. So, instead of gradual annual increases as advocated by the Council, there was a sharp jump in 1977, which caused a public outcry. To soften the blow to householders and also to help pull the Government's fat out of the fire, the Council then cut its rate percentage from the original 6 to the present 4. The Government promised to mend its ways as it were, but has failed to do so expediently. They have other inflation-related sources of revenue to see them through which the Council does not have. Hence, their bloated surplus each year. And so, it seems, the Council, having served its purpose, is now left out in the cold.
Still on revenue, the Council has explored in a businesslike way all other sources arising in the main from licence fees and charges for services. They are intended to cover in each case the respective identifiable running costs, within reason. However, there is a substantial subsidy for hawkers, now amounting to nearly half-a-percentage point of the rates. All efforts to square the account lag behind the twin mounting costs of control and cleansing. It is essentially a vast street-marketing system, difficult to reorder permanently without using up scarce land and incurring high capital costs, and also not willing to pay its way in fairness to the community.
The second point concerns expenditure. The Council's functions are mostly labour-intensive by their very nature. The fact is that yearly pay increments and regular adjustments of salary scales are made by the Government, and the Council only foots the bill in the end without any say. There can be no retrenchment because the services are vital to the health and general well-being of the community and so must be carried out, come what may. Even so, the stage will be reached next year when, after meeting the payroll, there will be no money left over for operations, so the staff may well sit around and just twiddle their thumbs, willy-nilly. It was said pointedly at the September meeting and cannot be challenged in effect so it is worth repeating now:
'Even if the Council stopped completely all building works and allowed all its markets, toilets, playgrounds, swimming pools and numerous physical facilities to run down without maintenance, and in addition ceased all cultural, educational, recreational and entertainment activities altogether, it would still be in the red in all probability, so heavy is its commitment to staff salaries.'
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Hong Kong is a dynamic community advancing by leaps and bounds due mostly to the initiative and enterprise of the private sector. The public services can do no less than keep pace with the requirements of a vibrant city. In seven short years this Council has made Hong Kong a by-word for the high standard of its municipal services and the rapid development of its beneficial programmes for the citizens. It is respected elsewhere for its many-sided achievements and progressive approach to its responsibilities. This Council protects the cause of the common man and gratifies his aspirations for the good things of life which an affluent society owes him without doubt.
The question is simple at this point. Is the Council going to push ahead resolutely in this direction? Or, is it going to bend its knee meekly as the Government denies it the means to do its work properly even in the midst of plenty, purportedly for political reasons?
I so move.
MR. HILTON CHEONG-LEEN, VICE-CHAIRMAN, URBAN COUNCIL, seconded (in English):-The Urban Council's revised deficit for the current financial year 1980/81 is $173 million, which is lower than the deficit forecast a year ago of $205 million.
The total reserves of the Urban Council at 1 April 1980 amounted to $280 million, and these have been accumulated since financial autonomy in 1973. These reserves are insufficient to meet the budgeted deficits forecast for the current financial year and 1981/82. The deficit for 1981/82 is expected to increase to $319 million. Most of the increase in the size of the 1981/82 deficit arises from the additional cost of personal emoluments. As mentioned by the Chairman, the cost of salary revisions in 1980/81 is $106 million (which is equivalent to one percentage point of the rates), and this amount will be reimbursed by Government only for the current year of 1980/81. However, after that, no salary reimbursement from Government for these salary revisions will be received in 1981/82 and onwards.
Operational costs and the cost of capital works have also increased in line with inflation and rising construction costs. On the other hand, the major source of the Urban Council's revenue, rate income, is not inflation-linked and has only marginally increased.
Most of the increased cost of personal emoluments arises from salary revisions fixed by Government, over which the Urban Council has no control. The cost of personal emoluments will have increased by 231% since 1973/74 (the year when the Urban Council gained financial autonomy) compared with an increase in the number of staff of only 17.7% or about 2.2% every year on an average. This rate of increase in the number of staff is probably the lowest compared to any other Government department of comparable size.
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