TNAG-1415-FCO40-1896-Public-finance-in-Hong-Kong-1985 — Page 142

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a categorization of the services for funding

purposes;

the establishment of standard costs where possible;

- all income raised by the voluntary

organizations through fund raising activities or from donations is to be

disregarded for the purpose of calculating the Government support; and

Q

- voluntary organizations to provide the

services required at the standards envisaged.

The objective of the revision, as reported to the Finance Committee, was to provide maximum flexibility and freedom of action for the voluntary sector in the use of the resources at their disposal, whilst ensuring that social welfare services were provided in accordance with approved standards and targets.

78.

Under the new system, subvented social welfare services are placed into two categories for funding purposes. Included in the first category are services which are prescribed by law or clearly contribute to meeting a statutory requirement, services which ensure that a fundamental human need is met, and services which are required in order to alleviate social problems generally recognized as of primary importance. Services in this category receive a subvention at 100% of the standard cost established for those services. Services in the second category receive a subvention covering only part of the standard cost or, if standard costs cannot be established, a lump sum grant. The subventions allocated to an organization for provision of a particular service are not "topped up" or "clawed back", although they are adjusted where there is an increase in standard cost following a regular review or a salary increase. If savings from subventions do accrue for any reason, the voluntary organizations are required to keep them in a separate account and they can only be used for specific services approved by the Director of Social Welfare.

79.

Because the determination of standard costs for each service was expected to take time, the Finance Committee agreed to the adoption of interim arrangements whereby until standard costs were determined, subventions would be assessed on the basis of recognized expenditure adjusted for price increases but disregarding all income except fees. The estimated cost of disregarding income in 1982-83 was $31 million. In 1983-84 standard costs were