or most of their livelihood, but an examination of the relevant registration and investigation records indicated that only 5 of the 24 families had fulfilled this condition, and that of the total of $372,000 recorded as being the annual fishing income of the group as a whole, only 40% was in fact purportedly derived from fishing in the Kwun Mun Channel. One family with an assessed annual loss of $12,500 received cash grants totalling $364,900, the disparity arising because it was decided to determine the compensation on the basis of a fixed sum per family member rather than on the assessed loss.
51. The loss of habitation which formed the other element of the compensation criteria seems to have been satisfied by the award of the 30 houses at a cost (excluding land) of $104,000 each, but so far as I have been able to ascertain those families who lived ashore did so in parts of High Island which are unlikely to be affected by the scheme, whilst the others lived aboard their vessels which were presumably capable of being moved to anchorages other than those in the Kwun Mun Channel.
52. The 178 families now graded in "Group B" are each to be given a flat in a Government housing estate on payment of a premium of $6,000, at a total net cost to Government of $7,878,000, about $44,000 per family. It is not clear to me on what basis this level of compensation has been determined. None of the families was considered to have suffered any loss of habitation and most were assessed as having lost only a very minor portion of their income, indeed 77 of the families concerned were reported by the Agriculture and Fisheries Department to have suffered no loss whatsoever.
53. Another aspect of compensation payments in connection with the High Island water scheme which engaged my attention was the ex-gratia award of $3.5 million to the occupants of one village for the loss of a claimed 880,000 pine trees covering an area of approximately 160 acres. It is a long-standing practice when land is cleared for Government development schemes, for ex-gratia compensation to be paid to persons holding licences permitting them to grow pine trees on a non-commercial basis, the rates of compensation in accordance with the sizes of the trees being determined from time to time by the Director of Agriculture and Fisheries and the actual counting and assessment of the trees being the responsibility of the New Territories Administration. I have been informed that in this particular case the size and nature of the area did not lend itself to a detailed survey of all the plots involved and in respect of most of the plots the compensation was assessed following a count of the trees on small sub-sections, the result being applied arithmetically to the whole of the relevant plot with an addition of 10% to compensate for any miscounting. Whilst this would have constituted a reasonably sound basis if carried out on proper statistical lines by qualified officers, in the circumstances concerned I doubt the accuracy of the method, especially as the results obtained produced a total number of trees more than four times the maximum which a Forestry Officer considered could have been accommodated in the area, thus indicating an overpayment in the region of $2.7 million. No detailed records of the computations were retained, the only figures available to me being those finally agreed for each plot, which in at least a few instances would seem to owe less to mathematics than to the negotiating skills of the villagers. At no time did the District Officer concerned seek the advice or assistance of officers of the Conservation and Forests Division of the Agriculture and Fisheries Department, one of his reasons for not doing so, so he tells me, being that his staff had no reason to suppose that those officers would have any particular expertise in the matter, a view which has surprised the Director of Agriculture and Fisheries. I have suggested to the Secretary for the New Territories that the methods of counting and assessing pine trees for the purpose of paying compensation should now be reviewed in con- junction with the Director of Agriculture and Fisheries, who should be asked to advise on the contribution which his professional forestry officers could make.
54. During a visit to the site of the High Island reservoir contract in the early days of the scheme, my staff proffered advice on the form in which basic interim payment records should be maintained in order to provide a permanent and readily verifiable record of the quantum and source of all measurements and assessments for interim payment purposes. This advice was not accepted, the site staff concerned preferring to adopt their own individualistic system. On a more recent visit it was found that following a change of site staff and their preoccupa- tion with special work of an urgent nature, even this system had fallen into disuse and I have expressed the view that the lack of a clearly defined method of recording the interim measurements of work, such as I had rec- ommended, had resulted in claims for that work being inadequately verified. The situation was such that I was unable to obtain a sufficient assurance in audit that interim payments totalling over $300 million made for measured work had been fully substantiated. The Director of Water Supplies, whose attention was invited to the situation, has informed me that action is now being taken to re-establish the system of keeping measurement records so that checking of the justification of the quantities in the interim certificates will be feasible.
55. Head 81-Social Welfare Department. Subhead 101. Relief: 004 Public assistance. One of the com- ponents of the cash grants paid under the Public Assistance Scheme to certain categories of families in need, is a provision to meet their children's educational expenses. During a recent audit review it was noted that a number of the children concerned were attending private primary schools and that expenditure, possibly in the region of $1 million per annum, was charged to the Public Assistance Scheme in respect of fees paid to these schools. As free education is available in Government and aided primary schools, in which there is an overall excess ca-
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