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ADDRESS BY CHAIRMAN
CHAIRMAN (in English):- Ladies and gentlemen, may I call the meeting to order.
MINUTES
The minutes of meeting held on 13 December 1994 were confirmed.
PAPER
The following paper was laid on the table:-
(1) Report to the Urban Council by the Secretary, Urban Council for the month of December 1994.
MOTIONS
(1) DR. RONALD LEUNG DING-BONG, THE CHAIRMAN, URBAN COUNCIL, moved the following motion (in English):-"That the Estimates of Revenue and Expenditure for 1995/1996 and the list of works which the council proposes to undertake during the next financial year be approved for transmission to the Governor in accordance with Section 39 of the Urban Council Ordinance.'
He said (in English):-'I hereby move the adoption of today's motion on the Urban Council's budget otherwise known as the 'Estimates of Revenue and Expenditure', with the accompanying list of capital works for the 1995/1996 financial year beginning on 1 April 1995.'
The budget before Members is the sum total of all budget papers which have been agreed by the Council's respective functional Select Committees and approved by the Standing Committee of the Whole Council on 3 January 1995,
The Council's budgetary strategy has due regard to the following three factors. First, the financial resources required to maintain the existing level of services and activities. Secondly, the resources required to increase or improve existing level of services or activities and the introduction of new services or activities in accordance with approved policies. Thirdly, introduction of new or additional services or activities arising from completion of capital projects.
Based on current projections, the Council's finances look at present quite healthy. The reserve is expected to be in the order of 20 weeks' expenditure as at 31 March 1996. I understand Mr. PAO, Chairman of Finance Select Committee will second the motion and I will therefore leave it to him to spell out the more salient features contained in the Budget.
Fellow Councillors, I move the motion standing in my name.
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MR. PAO PING-WING, CHAIRMAN OF THE FINANCE SELECT COMMITTEE (in Cantonese):- Mr. Chairman, when you moved the motion 12 months ago for the adoption of the Estimates of Revenue and Expenditure for 1994/1995, you said prophetically that and I quote, "The Council has already begun preliminary negotiations with the Government on ways to increase the Council's revenue base and hopefully, additional income will be forthcoming to help achieve a balanced Budget.'
Indeed, and I am most happy to report, those negotiations were successful and has resulted in additional rates income which in the current year will amount to around $330 million and will increase by a further $700 million in the year 1995/1996.
The Budget placed before Members today show that the Council is projecting a surplus of $213 million for the current year, 1994/1995 and a surplus of $105 million for the fiscal year 1995/1996. This in turn means the Council's reserves are expected to be in the order $2.35 billion as at 31 March 1995, rising to $2.455 billion as at 31 March 1996. The latter figure is equivalent to approximately 20 weeks' Council expenditure.
The projected surplus of $213 million in the current fiscal year shows a net turnaround of $637 million over the deficit of $424 million projected this time last year. This is attributable to two main factors:
(a) an increase in revenue of $405 million largely from additional rates income of $330 million; and
(b) a net reduction in expenditure of $232 million, arising primarily from under spending on capital work projects due to delayed billings from contractors and some re-scheduling of completion dates due to inclement weather during summer months. It is certainly not due to a reduction in capital work projects. In the coming fiscal year, expenditure is expected to rise to $6.31 billion, an increase of $805 million or 15% and revenue to $6.41 billion, an increase of $697 million or 12% over the current year.
As regards expenditure, it is anticipated that approximately 56% of our budget will be spent on staff costs, 24% on operational expenditure, 13% on capital works and 7% to meet special expenditure and other contingencies. In the light of this breakdown and as labour intensive organisations, we shall continue, as far as possible to exercise tight control on staffing levels in order to maximise productivity and operational efficiency. In this respect, Mr. Chairman, we shall continue, carefully, to contract out more of our services to the private sector and at the same time, to introduce more modern management techniques and technology to our services. I trust these measures will lead to further savings in real terms.
Mr. Chairman, as Members are aware, the main source of this Council's revenue is rates. Secondary sources include fees, charges, rental, bank interest, etc. Revenue from rates and secondary sources are estimated to be in the ratio of 82% to 18% respectively. The projected rates income is $5.29 billion and secondary sources of revenue $1.12 billion. These are derived mainly from 5 different sources.
(a) Fees and charges (b) Rentals
$127 million. $306 million.
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