welfare purposes to educational activities may have led to the necessity for this assistance, with the result that contrary to its wishes in the matter, the Government has contributed indirectly and unintentionally to the free educational services. In response to my observations on this question I have been informed that the Board of Directors has initiated plans to amend the Group's arrangements to bring them more into line with those of the Government, in order that the funds thus saved may be diverted to meet more pressing demands.
93 Head 81 Subventions: Miscellaneous. Subhead 116. Hong Kong Society for the Prevention of Cruelty to Animals. In the year under review the Hong Kong Society for the Prevention of Cruelty to Animals received a subvention from the Government of $125,000, the purpose of which was described in the relevant Memorandum Note to the 1976-77 Estimates as being to assist the Society towards the expenses of catching and collecting stray cats and dogs. As the Annual Report of the Society for 1975-76 specifically stated that it did not have a cat-catching or dog-catching unit and that only reported stray, sick animals were collected, and as funds were also provided under Head 22 for the collection of stray animals by the Agriculture and Fisheries Department, I suggested that it might be desirable to review the subvention to ascertain if there was justification for its continuance for the purpose for which it had officially been granted. The Secretary for Economic Services accepted that the Society did not use the subvention exclusively in accordance with the terms on which it was voted, but considered that there were nevertheless grounds for continuing to provide aid to the Society. He has proposed that in future years the ambit of the subvention should be varied to to reflect more accurately the use to which the grant is put, that care should be taken to ensure that only appropriate activities of the Society are subsidised, and that the subvention should be limited to the amount which it would cost the Government to undertake similar activities.
94 Head 85 – Universities and Polytechnic. The Criteria for the Establishment of University Academic and Administra- tive Salaries, which were approved in 1971, consist of first determining the percentage relativity of the salary of a Principal in the United Kingdom Civil Service and the average salary of a Professor in a United Kingdom university and then applying that percentage to the salary of a Senior Administrative Officer in the Hong Kong Civil Service, in order to determine the average salary which should be paid to a Professor in Hong Kong. The salaries of other grades of post at the universities are fixed by relating them to the salary of a Professor, after applying the percentages relative to the equivalent grades in United Kingdom universities. In providing for future revisions of university salaries the Criteria require that significant changes in the general trend of the percentage relativities should be applied in Hong Kong at the time of a salaries revision, after consultation between the Government and the Universities Joint Salaries Committee. In July 1976 I invited the attention of the Deputy Financial Secretary to the fact that there had been a significant change in the general trend of the relationship between university and civil service administrative grade salaries in the United Kingdom, which would have the effect in Hong Kong of reducing the percentage relativity between the salary of a Professor and that of a Senior Administrative Officer from approximately 144% to 125%. The Deputy Financial Secretary accepted that there had been a change in the general trend, but expressed the view that before adjusting university salaries in line with that trend it would be necessary to establish Criteria for the establishment of salaries at the Hong Kong Polytechnic. The matter is still under consideration.
95 As part of the system of control over the release of capital grants to subvented agencies, Government procedures normally require the submission of receipted bills or architects' certificates before the grants are paid to the organisa- tions. The universities and the Polytechnic are treated somewhat differently, being allowed to claim the grants in advance, but even so procedures have been designed with the object of ensuring that funds are not released too far in advance of their requirement. In examining the timing of payments of non-recurrent grants to the universities and the Polytechnic during 1975-76 and 1976–77, I noted that large sums were released towards the end of each financial year, long before the money was needed or even requested. In March 1976, $5 million was paid to the University of Hong Kong to meet the construction costs of a new students' amenities building and hall of residence, although the money was not required until about a year later when the first contract for the project was awarded. Similarly in the period January to March 1976, a total of $44 million was paid to the Polytechnic as a grant towards Phase I of its Capital Development Plan, but by the end of July 1976 some $15 million of this amount was still unused and it was not until January 1977 that any further grants were required in respect of the project. Again, between December 1976 and March 1977 grants totalling $19.4 million, representing 80% of the cost of another project, were released even though the project was not due for completion until over a year later. I have suggested to the Secretary, University and Polytechnic Grants Committee, that in the interests of conservation of the use of public funds, future releases of grants should be more closely geared to the needs of the institutions.
96 It is pleasing to report that an inspection audit visit made to the University of Hong Kong indicated a high standard of expenditure control and a general appreciation of the need for economy in the use of the public funds placed at the disposal of the institution. I have made proposals which I estimate could produce savings of approximately $200,000 per annum in the University's expenditure on overseas passages, without reducing the passage entitlements of the University staff, and the comments of the University are awaited.
GENERAL
97 Losses of Cash, Stamps and Stores. Net losses of cash and stamps reported to me during the last twelve months totalled $66,680, of which $50,120 represented the loss of cash exhibits in a completed court case, held in safe custody pending their disposal by the Police. Excluding minor losses of equipment, fixtures, etc. on charge to various depart-
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