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HONG KONG URBAN COUNCIL
call or fixed deposits. This practice is in accordance with section 43(a) of the Urban Council Ordinance (Cap.101).
These funds are placed at the best available interest rates, with the funds being spread amongst a number of licensed banks to minimize risks.
The final part asks about the investment of funds and the use of private fund management. The Council's primary source of revenue is from the rates which represent about 81% of the Council's total annual revenue. The interest generated from surplus funds was around 3.1% of total revenue for the financial year ended 31 March 1996.
The Investment Panel of the Urban Council has over the years considered whether funds of the Council not immediately required should be invested in such forms other than interest from bank deposits. However, the view taken has always been that a cautious approach should be adopted, since these reserves are public money and the Municipal Council should not be involved in speculative business with such public money. The reserves are therefore placed solely on call or fixed deposits with licensed banks in Hong Kong, which has yielded substantial interests for the Urban Council over the years.
Miss Ada Wong YING-KAY (in Cantonese):-Mr. Chairman, I have 3 follow-up questions. Paragraph 4 of the reply mentioned the General Reserve Fund. From the appendix, we can see there is some cash surplus for the Stadium. Mr. Chairman, I wonder if this cash surplus for the Stadium should be included in the General Reserve Fund. Last year, the Council allocated an extra sum of over $8 million. I feel it is inappropriate to lump those figures together. So, may I suggest to Mr. CHIANG that perhaps we can make the surplus for the Stadium a separate item?
My second question. Regarding the Capital Projects Reserve Fund, we can see that there was no transfer of any kind for 13 years. After the transfer in 1983, the fund has stood at $280 million. I want to know if that amount is our ceiling? Why is it that there was no transfer from the General Reserve Balance to the Capital Projects Reserve Fund for 13 years?
My third question. In paragraph 18 of the reply, I can see that we have a lot of reserve funds generating a lot of interests and that the interests amounted to around 3% of our revenue. Indeed, that is a substantial amount. However, I can also see that the interest rate given was below the inflation rate so that there was no real growth on our reserve. Pursuant to Section 43(b) of the Urban Council Ordinance (Cap.101), we can consider applying to the Financial Secretary for investments in forms other than bank deposits. I am not talking about speculative activities but investments. Will the Council consider in detail other investment options under section 43(b) of the Urban Council Ordinance (Cap.101)?
Mr. Chiang Sai-CHEONG (in Cantonese):—Thank you for your questions, Miss WONG. Your first question has to do with the General Reserve Balance.
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