TNAG-1415-FCO40-1896-Public-finance-in-Hong-Kong-1985 — Page 117

8.

The $7.2 million incorrectly credited to the Police Welfare Fund relates to the hire of members of the Auxiliary Police Force who, according to a Legal Department opinion given in 1963, are not police officers as defined in the Police Force Ordinance and therefore the fees received from the hire of members of the Auxiliary Police Force should not have been credited to the Police Welfare Fund. The legal opinion meant that all such fees would have to be credited to the general revenue but in 1967 it was decided to use only police officers for the contractual services previously undertaken by members of the Auxiliary Police Force and so it became correct to continue crediting the fees to the Police Welfare Fund. However, in 1976 the use of members of the Auxiliary Police Force for contractual services was resumed but, as the previous legal opinion had been forgotten, the fees for their services were again incorrectly credited to the Police Welfare Fund. In response to my report on the audit review, the Commissioner of Police recently informed the Secretary for Security that he did not accept that the revenue derived from the hire of members of the Auxiliary Police Force should legally go to the general revenue but considered that if there were any shortcomings in the existing legislation then the law should be examined with a view to amendment.

9.

The appropriateness of the legal provision for the fees from the hire of police officers to be credited to the Police Welfare Fund was questioned on a number of occasions, over many years, on the principle that if the cost of providing a service was charged to the general revenue then the fees collected in payment for such services should also be credited to the general revenue. The matter was last discussed in 1968 and 1969 between the Deputy Financial Secretary and the Commissioner of Police and a proposal was made that fees from the hire of police officers should be credited to the general revenue and that the Legislative Council should instead vote an annual grant to the Police Welfare Fund. This proposal was accepted reluctantly by the Commissioner of Police on the understanding that the grant voted would provide the same level of income as received from the hire of police officers over the previous few years. Unfortunately, the proposal was not pursued and meanwhile the fees credited to the Police Welfare Fund from the hire of police officers have risen from $230,000 in 1967-68 to $2.8 million in 1983-84, which in real terms represents a threefold increase. The Commissioner of Police, in his recent response to the Secretary for Security, has expressed his concern that if the Police Welfare Fund depended on an annual grant voted by the Legislative Council it would stifle the growth of welfare benefits which often depended upon opportunity and initiative rather than a predicted planned course of action.