1980 I noted that arising from a miscalculation of unit costs, out of the total subvention of $18 million paid to non-pro aking 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 actually paid, would be required to meet the difference between the actual fee income and the fee income arising from 100% enrolment. Taking into account overpayments under the system of subvention prior to September 1982, the day nurseries had accumulated surpluses amounting to nearly $10 million as at 31 March 1984.
87. The subvention is paid as a lump sum and there is no provision for the recovery of any surplus. The Director of Social Welfare has endeavoured to minimize the level of accumulated surpluses by authorizing lower levels of fee increases when such applications are made by the day nurseries, but this does not appear to be a proper course of action to take as the lower level of fees provides unintended subsidies to the parents of children attending those nurseries who are not eligible for fee assistance. In my opinion, since the 5% subvention is the cause of the surpluses and is paid for the sole purpose of catering for cash-flow problems, it should be paid only when genuine cash-flow problems are encountered. I have therefore suggested to the Director of Social Welfare that, in view of the high demand for day nursery places, consideration should be given to withdrawing the existing subvention and replacing it by an advance of the same amount which would be replenished in case of shortfalls in enrolment after taking into account the day nurseries' own resources. This would cater for any cash-flow problems encountered by the day nurseries and avoid public funds being spent unnecessarily.
88. Social welfare grants to voluntary organizations and trusts for the fitting out of welfare premises in public housing estates (financed from the Lotteries Fund). With an increasing proportion of the population living in public housing estates, there has been a corresponding increase in the demand in these estates for the provision of social welfare services of which the more important ones are children and youth centres, nurseries, social centres for the elderly and hostels for the elderly. To provide such services, the Housing Authority normally sets aside a number of units in each estate for allocation to voluntary social welfare organizations. Funds for the fitting out of these premises are provided from the Lotteries Fund and, with certain exceptions, authority to approve allocations from the fund has been delegated to the Director of Social Welfare acting on the advice of the Subventions and Lotteries Fund Advisory Committee.
89. In recent years, there have been increasing delays in the fitting out of premises in public housing estates and the bringing into operation of the welfare services concerned. The target of the Director of Social Welfare is to have the services operating no later than six months after the completion of an estate, but this target has rarely been achieved. In 1981 it was reported that a large number of premises were left vacant, some for over 20 months. The situation has steadily deteriorated since then. The number of projects behind target at 31 March 1984 was 55 and had increased to 68 by 31 March 1985. Most of the projects were over one year behind target, and some were three years behind.
90. The consequences of the delay in occupation are twofold:
--the provision of essential welfare services to residents of the estates is held up giving rise to complaints from the
residents and the voluntary organizations; and
-nugatory expenditure on rental for the vacant periods is incurred by the Social Welfare Department by way of
subvention to the voluntary organizations.
91. The Government has been concerned about the delays for some time and following discussions between the Director of Social Welfare and the Director of Housing, a Working Group was set up in May 1984 comprising members
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