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million for 1982-83 was after the payment of $40 million and $30 million respectively into the General Reserve Fund and Capital Projects Reserve Fund respectively. The accounts reflect the increase in our share of the rates from 4% to 8% introduced on 1.4.82, and which generated additional rate income of $46.1 million. Without this additional rate revenue, a deficit of some $38.5 million would have arisen.
In the current financial year, 1983–84, the rate percentage remains at 8%. After taking into account likely underspendings and additional income from fee revisions introduced after the estimates were prepared, a deficit of about $11.3 million is expected. This sum can be met from our accumulated reserves which stood at $377 million on 1.4.83. These reserves have been steadily built up since we gained financial autonomy in 1973.
Based on the recently completed revised Five Year Forecast, a deficit of not less than $125 million is, however, forecast for 1984–85. This deficit will have to be met from the Urban Council's reserves estimated to be $264 million by 1.4.84. Members will be aware that the Financial Secretary has stated in his Budget Speech that properties will be revalued for rating purposes this year. The forecast deficit for 1984-85 is on the basis of a provisional rate yield as advised by the Government, but it is emphasized that this is subject to the approval by the Legislative Council. A more accurate figure of the deficit for next financial year will be available once our Budget exercise is completed in early November. Having large deficits are expected in 1985-86 and thereafter, it will be necessary for us to obtain a substantial increase in revenue in 1985-86 to avoid fully depleting our reserves and falling into deficit.
The very substantial capital works programme which we would have liked to achieve to meet public and district aspirations was estimated to cost $2,700 million. A very significant factor in relation to these deficits. But because of financial constraints, consideration had to be given to reducing this figure and the Urban Council to stretch its capital expenditure programme. The Capital Works Select Committee has recently been examining all the projects submitted for functional Select Committees, and only the cost of committed and ready projects are included in our forecast expenditure until 1985-86; a further injection of new projects is planned for the year after that. Hence, the revised estimate of capital expenditure given by Mr. Lawrence FUNG and answered to Mr. PAO's question today.
The Urban Services Department is actively pursuing management services studies with a view to improving cost effectiveness and efficiency, and is also exploring, as a continual exercise, the introduction of more modern techniques to keep pace with changing circumstances.
May I second the motion.
MISS CECILIA YEUNG (in Cantonese): Mr. Chairman, of course, we all understand that we have to cater for the expenditure, but at the same time, we
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have to understand the current financial situation especially when rates have to be revalued. I believe such an action would have a detrimental effect on the property market. As everyone of us has to pay rates, and in such an economical climate when we are facing great difficulties in employment, I believe we are now facing a real crisis. So I doubt very much the actual value of reviewing our rates. I am not going to support the motion.
CHAIRMAN (in Cantonese): Of course, it is not our responsibility to review the rates.
MISS CECILIA YEUNG (in Cantonese): But I hope the Urban Council will not initiate such an action because we have to realize that Hong Kong is now in an economical crisis, and I will not support the motion.
MR. HOWARD YOUNG (in Cantonese): Mr. Chairman, I understand that we are now concerned with the approval of the audited account and not the revaluation of rates. It is correct that revaluation of rates is not raised by the Urban Council. As a matter of fact, when we first came to realize that there would be a deficit, we had already mentioned that we are not going to ask for an increase in the percentage of rates. In fact, we have asked the Central Government to give us a bigger share of the rates rather than to increase the overall rate, so that shows how concerned we are in this respect. We had also decided that we should rely on our reserves rather than to ask for a general increase of rates. Anyway, it has nothing to do with the current motion.
MR. EDMUND CHOW (in Cantonese): Mr. Chairman, as to Miss YEUNG's point, Mr. FORSGATE had mentioned in his speech that Hong Kong Government revalued properties and increase our rate income but not the rate percentage. I think such an exercise would be carried out every certain number of years, and if such an exercise has any effect on the option of the rate, it would not be the Urban Council's request, but rather a general Government exercise. Of course, the property market is not very good at the moment, and I think it would be helpful if the revaluation of property is to be carried out according to the present situation.
CHAIRMAN (in English): The motion has to do with the audited Statement of Assets and Liabilities and Statement of Receipts and Payments of the Urban Council for the year ended 31 March 1983, and not with rates.
CHAIRMAN (in Cantonese): I am now putting it to a vote.
MRS. E. ELLIOTT (in English): Mr. Chairman, just a point of clarification. Could you or Mr. Forsgate clarify that if we vote in favour of this motion today, it doesn't mean that we are supporting a rise in rates because that would influence my vote for one.
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