but without the high capital and recurrent costs. The decision to go ahead with the pilot stage of the scheme was made at the tim hen there was general uncertainty in the Government policy on taxis and parking facilities which resulted in these potential restraining measures being disregarded. The Government policy in these respects either, has been lost sight of, or is inconsistent with the Government's overall transport policy and I have recommended to the Secretary for Transport that before proceeding further with the Electronic Road Pricing Scheme these aspects should be reconsidered even though, having allowed the taxi fleet to grow to its present level, it may be very difficult for the Government to regain its commanding position of 1979-80.
106. In reply to my report on the audit review the Secretary for Transport said that the purpose of the pilot stage was to examine the feasibility and effectiveness of electronic road pricing as one possible method of reducing congestion and given its direct effect in controlling private car usage, it was incumbent upon the Government in 1982 to examine the feasibility of a system that did not have the disadvantages of high taxes on car ownership. He added that the restraint potential of high parking charges and high taxi fares were disregarded, not because of uncertainty in policy, but because of the previous decisions taken by the Governor in Council. He explained that he was under the political constraint of having to act in accordance with the directions given notwithstanding the fact that the Administration had given contrary advice.
107. Universities and polytechnics student finance (financed from Head 190 - Subhead 168 in respect of grants and from the Student Loan Fund in respect of loans). In concluding their deliberations on the universities and polytechnics student finance scheme in their Fourth Report issued in December 1981, the Public Accounts Committee expressed their concern about the possibility of large amounts of public money being unnecessarily paid out under the scheme as a result of the failure to take into account the individual expenditure requirements of students and the failure to limit the assistance only to those in need as laid down in the Executive Council Memorandum of 1969, noting that the Government policy on student assistance had not changed since 1969 and was still based on need only. The Committee considered that it was necessary for the Government to go back to square one and recommended that the living expenditure needs of students should be completely reassessed in the context of present day requirements and that in reassessing the levels of assistance to students on the basis of need, the Government should also take into consideration its commitments to the other needy people in Hong Kong. The Committee emphasized that assistance to students should be given only on the basis of genuine need.
108. A student expenditure survey was subsequently conducted in 1982 covering full-time students at the Hong Kong and Chinese Universities, the Polytechnic and post-advanced level students of the Baptist College. Unfortunately the survey conducted did not go back to square one and did not examine the type of assistance, whether grant or loan, which would most appropriately meet the students' needs in the most economical manner whilst meeting the basic policy objective, and thus did not meet the Public Accounts Committee's recommendation that the Government should take into consideration its commitments to the other needy people in Hong Kong.
109. The basic policy objective of the scheme, as approved in the Executive Council Memorandum of May 1969, is that assistance from public funds towards student finance should be given on the basis of need only, with the aim of ensuring that no student who is offered a place in a university should be unable to accept that place because of lack of means, and that the assistance given in each case should be adequate to meet all reasonable expenses likely to be incurred by the student taking into account his means. In setting the policy objective it was acknowledged in the Executive Council Memorandum that the extent to which it could be implemented in the short term depended upon a number of considerations the most important being the cost involved and that for this reason it might be necessary to accept a limit on the number who may qualify for assistance. The scheme replaced a former system of scholarships and bursaries which was administered by the Education Department. The scheme was originally intended to cater for the students of the two universities but was later extended to students of the two polytechnics and post-advanced level students of the Baptist College. In 1984-85, grants to a value of $32 million and interest-free loans to a value of $82 million were approved. Since the scheme started in 1969, grants totalling $166 million have been awarded and as at 31 March 1985 loans amounting to $322 million were outstanding.
110. The results of a study I have recently made indicated that, despite the considerable expenditure and resources spent on the scheme, there has been a failure of management to carry out periodic reviews to see if the policy objective of the scheme is being achieved as economically as possible.
111. To achieve the policy objective of the scheme, the 1969 Executive Council Memorandum mentioned a number of options. These included assistance entirely by grants, a combination of grants and interest-free loans, and interest-free loans only. The last option was naturally the most economical. In an address to the Legislative Council in February 1969 the Governor expressed a personal view that given the already substantial subsidies to the universities and the fact that a university education would enable a student to increase his earning power for the rest of his life, assistance to students to meet the unsubsidized part of their tuition and other expenses should take the form of loans, with grants reserved for special cases. The 1969 Executive Council Memorandum described this option as attractive noting that it had been adopted with some success in other countries. However, it was not recommended because, as stated in the Executive Council Memorandum, it would result in a young person entering his career on graduation with a considerable financial burden and this could cause serious problems, especially for a young woman envisaging marriage. Consequently, a combination of grants and loans was proposed. It was further stated that it would be
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