84.
Subventions to non-profit-making day nurseries. One of the services which is not subvented under the standard cost subvention system is the provision of day nurseries. In paragraphs 97 to 101 of my report for the year ended 31 March 1980 I noted that arising from a miscalculation of unit costs, out of the total subvention of $18 million paid to non-profit-making day nurseries in 1978-79, an estimated $3 million had been overpaid. I also noted that whilst the Government policy was to provide subvented places in day nurseries only for those families in social and economic need, in some cases subvented places were used to benefit members of the community who did not qualify for that assistance, and that the Director of Social Welfare was then considering the introduction of a new scheme of fee assisted places more sensitive to the needs of families.
85.
The new scheme of fee assistance came into operation with effect from September 1982, following the publication of the White Paper on Primary Education and Pre-primary Services. Under the new scheme, the operating cost of non-profit-making day nurseries would no longer be fully subvented. Instead, fee assistance would be given to parents of low-income families who had a social need for their children to attend day nurseries. An element of direct financial assistance to the nurseries was to be retained by means of a subvention equivalent to 5% of the approved fee based on the approved capacity, as it was envisaged in the proposals submitted to the Finance Committee of the Legislative Council that the complete withdrawal of the former subvention arrangements when the fee assistance scheme started would create cash-flow problems for the nurseries in the meeting of recurrent costs. The 5% subvention was therefore intended to provide the nurseries with a contingency to cover the effect on fee income of fluctuations in enrolment during the year.
86.
The cash-flow problems envisaged in the proposals submitted to the Finance Committee did not arise to any great extent. A study by the Social Welfare Department in early 1984 indicated that as at 31 December 1983, 16 months after the scheme had started, there were 12,562 children attending subvented day nurseries with a further 6,627 children on waiting lists. Excluding five newly registered day nurseries, the average enrolment was 99%. My own study of enrolment figures for the period April to November 1984 indicated that the high rate of enrolment had persisted and that over 60% of the day nurseries had full enrolment. I have estimated that even if the day nurseries were subvented fully to meet shortfalls in fee income arising from enrolment fluctuations, of the total subventions of $7.8 million paid for the period September 1982 to November 1984, only about $3.8 million, or less than half the subventions
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