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# HONG KONG URBAN COUNCIL
who will constitute this Council from April 1986 onwards, because I am sure there is still a lot of fat in these estimates of expenditure and we must do everything possible to save the rate payers money.
The reverse side of the coin is something I have talked about publicly several times and that is that Government will not let us increase our revenues. We are only allowed to recover in licence fees what we spend and the problem is that we are accountable for each type of licence fee separately so that we cannot cross fertilize, say, from Liquor and Restaurant licences to Hawker licences. On Liquor and Restaurant licences we are covering expenses and we could easily make money. On Hawker licences we are subsidizing something like HK$70 million per annum. Both Restaurant and Liquor licences are ridiculously cheap in Hong Kong when compared to other places in the world and I really reason why we should not be able to increase both in order to get back some of the subsidies we pay out on other types of licences, and I hope that when our Vice-Chairman renegotiates the terms of the M.A.A., for the third time, I think, he will make this point strongly to the Finance Branch of Central Government. These are only some instances where the Council can become more cost effective. I am sure there are many more.
see no
With these words of admonition I have pleasure in supporting the motion.
MR. LAWRENCE FUNG (in English):—Mr. Chairman, I withdraw my hand because the speech is now in our hands, so I do not want to prolong the meeting.
The question was put.
The motion was carried unanimously.
ADJOURNMENT—4.50 p.m.
CHAIRMAN (in English):—That concludes the business of today's meeting. The Council stands adjourned until Tuesday, 14 January 1986 at 2.30 p.m.
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## APPENDIX A
STATEMENT BY MR. H. M. G. FORSGATE, C.B.E., J.P., VICE-CHAIRMAN OF THE URBAN COUNCIL AND CHAIRMAN OF THE FINANCE SELECT COMMITTEE, AT THE COUNCIL'S OPEN MEETING ON TUESDAY, 17 DECEMBER 1985
Mr. Chairman,
In seconding the motion following your speech recommending adoption of next year's budget, I would like to make a few general points.
## HONG KONG URBAN COUNCIL
At the beginning of the year, the Council and the Government set up a Working Party to devise practical amendments to the Memorandum of Administrative Arrangements because under the old arrangements, which dated back to 1973, the Council was gradually but inexorably slipping into a deficit position which in a few more years would have jeopardized the excellent standard of municipal services at present provided for the 4.4 million urban dwellers of Hong Kong.
I am happy to say that, with goodwill and commonsense on both sides, a new financial package has been drawn up that will ensure that the proposed Council has a balanced budget at least for the next few years.
However, assuming that these new arrangements go through as proposed, they will only come into effect as from the new financial year starting on 1 April 1986.
Therefore, before turning to prospects for the coming financial year, may I first deal with the current financial year...
Based on the revised 1985-86 outturn forecast, the estimated deficit for the current financial year will be $83 million, an improvement of $98 million over the original budgeted deficit of $181 million. This improvement is, in the main, attributable to estimated net savings of $20 million on personal emoluments, underspending of $24 million and $81 million on operational and capital expenditure respectively offset by a net reduction in revenue of $27 million.
By contrast, the 1986-87 budget which incorporates the proposed new financial arrangements shows budgeted surplus for the year of $26 million based on an overall estimated expenditure of $2,060 million as against revenue of $2,086 million.
Concerning Personal Emoluments, the 1985-86 outturn forecast of $1,131 million shows an increase of $78 million (7.4%) over the approved budget. This increase, which is attributable to the 10% salary revision implemented with effect from April 1985, is offset by the salary grant of $98 million from the Government in accordance with paragraph 6.3 of the Memorandum of Administrative Arrangements. The salary grant which is credited to revenue is computed on the basis of the actual number of departmental staff in post as at 1 April 1985.
The estimate for 1986–87, which is based on 1985-86 salary levels, allows for incremental creep of 1.2%. The overall estimate for 1986-87 of $1,182 million, which represents 57.4% of the total budget, shows an increase of $51 million (4.5%) over the revised 1985-86 outturn forecast. The composition of the increase is $15 million (1.3%) in respect of incremental creep and salary-related allowances and $36 million (3.2%) in respect of additional posts to be created subject to the approval of the select committee.
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