TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 139

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Economic Review Committee whose membership would include, say, four Unofficials and three officials including myself. Other officials could be in attendance as required. I suggest that, before any other form of consultative machinery is established, we should wait and see whether, in practice, the committee I have proposed does not go a long way to meeting the wish of honourable Members to be associated at an earlier stage, and in a more intimate way, with our studies of the economy and the evolution of economic policies.

14.

(b) Subvention policy

My honourable Friend, Mr. Li Fook-wo, referred to the difficulties of organisations subvented on a discretionary grant basis when salaries in the public service are raised. I dealt in detail with the rationale behind the two main forms of subvention, deficiency and discretionary, during the budget debate in 1972. I do not propose to do more now than to refer honourable Members to what I then said as recorded on pages 603 to 605 of Hansard for that year and to repeat those elements in the system of discretionary grants that make it difficult to meet my honourable Friend's point.

15.

Discretionary grants are lump sum grants which the voluntary agencies concerned may use as they please towards the recurrent costs of the activities for which they are being subvented. Whether they spend the money on staff or on other recurrent requirements is up to them. If, for one reason or another, they have savings (say they are unable to recruit staff or prices for medical supplies fall), they are not required to make refunds. In return for this freedom, they are expected to organise their affairs in such a way that they can meet unforeseen developments during the year. also expected to draw on such other sources of revenue as fees and the generosity of the community.

They are

16.

Against this background and, in particular, in the absence of any control over the staffing of the agencies, I clearly cannot accede to my honourable Friend's request that the voluntary agencies concerned (i.e. those on discretionary grants) should be provided with sufficient funds in the middle of a financial year to enable them automatically to pay salaries equivalent to those in the public service.

/But....