XN000022-1996-02-14 — Page 15

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Most of the fees were last revised in November 1994. We propose to revise them generally in line with the increase in costs due to inflation. This is measured at 9.2% as calculated by the movement of the Government Consumption Expenditure Deflator. The actual fee revisions will sometimes differ slightly from the inflation rate due to the need to round fees up or down so as to facilitate collection.

Where a fee has not been revised since 1988, the increase has been confined to 25% even though inflation since then has been 104.5%. This is to reduce the impact of the revision to a reasonable level. We propose to revise these fees each year by up to a maximum of 25% until they have reached the same level, in real terms, as in 1988. In relation to the costs of summoning a meeting of creditors, provision is also made for an additional charge for room hire. This is to reflect properly the extra costs that are incurred when it is necessary to hire rooms for meetings attended by numbers of creditors that are too large to be accommodated in the Official Receiver's Office.

The expected revenue from the fee being revised represents only around 11% of the Official Receiver's total revenue. This is because the majority of his revenue is derived from fees which are calculated according to fixed percentages, based on the realisation of assets, dividends paid out and interest on bank deposits.

Due to the nature of insolvencies, the amount of fees and charges collected presently falls far short of the costs incurred by the Official Receiver's Office. In the current financial year, the total revenue is estimated to be $88.3 million, representing only 52% of the total expenditure. The low cost recovery rate is due mainly to the fact that approximately 83% of insolvency cases have realisable assets of less than $50,000, an amount insufficient to meet the Official Receiver's costs. The increases in fees and charges being proposed in relation to personal bankruptcies and company windings-up, are estimated to produce a total additional income of around $215,000 per annum. As a consequence, the cost recovery rate would increase only marginally to 52.12%.

The level of fee increases proposed takes careful account of the ability of those who are required to pay the fees to bear additional charges. For this reason, I am not recommending more substantial revisions which might otherwise be justified.

The Bankruptcy (Fees and Percentage) (Amendment) Order 1996 deals with the 14 fees and charges under bankruptcy. The total amount of additional income from the proposed increases in bankruptcy fees and charges is estimated to be about $105,000 per annum. This represents an average increase of just 0.8% when expressed as a percentage of the total bankruptcy income, estimated to be $12.8 million for the year

95 and 96.

End

Thank you. Mr President.