introduced for the first batch of eight services, namely neighbourhood level community development projects, family life education, family casework, small group homes, foster care, school social work, pool bus for the elderly, and outreaching social work. (The outreaching social work was later taken off the list because of problems of under- staffing.) It was found however, when preparing the 1983-84 estimates for these eight services on a standard cost basis, that estimated additional expenditure of $10 million was required. This was more than envisaged by the Finance Branch of the Government Secretariat and it was found that it was largely accounted for by the use in the calculation of the standard costs of the mid-point of approved salary scales whereas the majority of salaries actually paid were below mid-point. The additional costs however were accepted. The following year the Director of Social Welfare proposed the extension of the use of standard costs to an additional thirteen services, which would increase the expenditure in 1984-85 by a further $45 million, 26% more than what it would have been based on the interim arrangements of calculating the subvention. In view of the likelihood of further large surpluses in the voluntary organizations' accounts, the request was not approved pending a full review of the implementation of standard costs for the original eight services.
80.
The Director of Social Welfare completed a review in October 1984 of the implementation of standard costs covering the full year 1983-84. The objective of the review was to see whether the use of mid-point salaries was a realistic yardstick for the calculation of standard costs, whether the "no clawback" provision should be rescinded and, as a corollary to rescinding the "no clawback" provision, whether the voluntary organizations should be allowed to keep only a portion of the surpluses. The results indicated that for the seven services still using standard costs, the standard costs adopted were on average 17% more than the actual expenditure by the voluntary organizations on these services. The main reason for this was the use of mid-point salaries, and the effect of the use of mid-point salaries was found to be most pronounced in the graduate rank of Assistant Social Welfare Officer which had a salary scale of eighteen points. With rapid staff turnover and expansion of services few of the Assistant Social Welfare Officers reached the mid-point of their salary scale. For these seven services the Director of Social Welfare estimated there was a surplus of $6.7 million during 1983-84. The Director felt that whilst it was undesirable for the voluntary organizations to accumulate large surpluses year after year, she considered it premature and impolitic to make radical changes to the system at that stage. To contain the high level of
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