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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 financial year 1997-98, the total revenue is estimated to be $75.5 million at current fee levels, representing only 36.8% of the total expenditure. The estimated cost recovery rate will be increased only marginally to 37.2% even after the proposed fee increases. The low cost recovery rate is due mainly to the fact that approximately 72% of insolvency cases have realizable assets of less than $50,000, which is insufficient to meet the costs involved.

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, and, as I have already indicated, the proposed increases are mainly to prevent, in general, the current level of cost recovery from further deterioration, rather than to enhance, in any significant way, the proportion of cost recovery.

Mr President, I beg to move.

End

Companies (Fees and Percentages) (Amendment) Order 1997

Following is the speech by the Secretary for Financial Services, Mr Rafael Hui, in moving the Bankruptcy (Fees and Percentages) (Amendment) Order 1997, in the Legislative Council today (Wednesday):

Mr President,

I move the third motion standing in my name on the Order Paper.

The Companies (Fees and Percentages) (Amendment) Order 1997 deals with the 11 fees and charges applicable to company windings-up. All of them were last revised in February 1996. As with the related fees under the Bankruptcy (Fees and Percentages) (Amendment) Order 1997, we propose to increase these fees generally in line with inflation to cover increases in costs. The one exception relates to the maximum fee for payments of money out of the Companies Liquidation Account.As in the case of payments from the Bankruptcy Estates Account we propose to increase the ceiling by 20% as part of a 5-year phased programme to bring this item up to date, as prior to last year it had not been revised since 1988.