the operators to adjust the level of their claims to allow for such under-use and the considerable administrative work by the schoo processing the applications from their students, by the operators, in checking the applications and issuing the passes, by the Education Department, in checking the registers maintained by the schools, and by the Transport Department, in checking the operators' claims. The scheme was considered to be unsatisfactory because it benefited students regardless of financial needs and encouraged students to make unnecessary journeys. It was also considered unfair because it applied to only three transport operators. However, I consider that the decisive argument supporting the working party's recommendation to discontinue the student travel scheme altogether, subject to certain provisions being made for low income families, was the Director of Education's advice that the scheme did not contribute towards educational objectives, contrary to what the Executive Council had been advised in 1971.
189. It took some three years of discussions within the Government Secretariat before any proposal was submitted to the Executive Council. The discussions centred around how and when the student travel scheme should be withdrawn and what, if anything, should replace it. The well considered proposal put to the Executive Council in July 1979 had transport instead of education policy objectives and would have required the transport operators to provide concessionary fares to students with the cost being absorbed in their fare structures. However, in submitting its proposals to the Executive Council, the Government made its second serious mistake. The Executive Council Memorandum explained that the working party had recommended the abolition of the scheme and gave a number of the reasons for so doing, but it failed to mention what I consider to have been the main reason for the working party's recommendation, namely, that the student travel scheme contributed little to educational objectives, and failed to draw attention to the fact that the educational justification for the scheme given to the Executive Council in 1971 had been incorrect. Consequently, the Executive Council did not have all the necessary information on which to base their subsequent advice. The decision of the Governor in Council was that the proposals in the Executive Council Memorandum should be rejected and that the student travel scheme should be continued as an educational measure, recognizing that it might need to be extended to other public transport operators not then subsidized. The scheme was later extended as part of the 1981 revision to a total of eight transport operators which greatly increased its cost, but it was a logical development if the matter was to be regarded as one of education policy.
190. In the two years from the rejection of the 1979 proposals until the revised scheme was approved, a number of alternative proposals were submitted to the Executive Council. However, the decision to regard the student travel scheme as necessary for the achievement of educational objectives seems to have led to the further extension of the scheme to cover first degree university students and to include journeys on holidays and journeys outside school hours on any day of the week. When the Government Secretariat was instructed by the Governor in Council in early 1981 to consider these two additional extensions, there was again a failure to fully consider the merits of the policy objectives of the proposals and to work out the various alternative options for their achievement. Firstly, account was not taken of the fact that university student travelling expenses were already taken into account in the student finance scheme operated by the Secretary, University and Polytechnic Grants Committee. Secondly, the Governor in Council's instruction was that the Chief Secretary should do no more than to explore and report back on the possibility of extending the scheme to cover recreational travel and university students, but the Government Secretariat interpreted this as an instruction to draw up proposals for the further extension of the scheme which it did without acting on its earlier judgment that subsidies for recreational travel should be examined separately from the student travel scheme in conjunction with the Commissioner for Recreation and Culture. Both proposals were implemented as part of the revised scheme.
191. The revised student travel scheme came into effect on 1 September 1981 but it has had similar administrative problems to the previous scheme and costs about 21⁄2 times more. Despite the surveys of student travel carried out to establish the travel patterns on which the grants to transport operators could be fixed, it was found that there were so many variables and uncertainties in the figures that interminable negotiations with the operators ensued. It was impossible to establish the extent of any overpayment, as claimed by the Government, or underpayment, as claimed by the operators. The administrative problems and the increasing cost of the scheme has again caused members of the Finance Committee of the Legislative Council to raise doubts and express their concern on the merits of the student travel scheme. Accordingly, an inter-departmental working group, appointed by the Secretary for Transport, was established in July 1985 to review the policy of subsidizing student travel and to consider alternative forms of assistance.
192. The Secretary for Transport has pointed out in his reply to the audit review that the student travel scheme involved a number of branches and departments and because the responsibility for the matter did not rest entirely with his branch he had found it necessary to prepare a consolidated submission based on the comments from the various branches and departments. The Secretary for Transport was unable to explain satisfactorily why, in 1979 when the decision was made to continue the scheme as an educational measure, the Executive Council was not clearly advised that the previous treat- ment of the scheme as an education policy matter was incorrect. However, he mentioned that in a Memorandum for the Executive Council in December 1980, it was stated that the general feeling of the Board of Education was that the pro- blem of student travel subsidy was not fundamentally an educational one. The Secretary stated that it was then up to the Governor in Council to decide whether the Board of Education's feelings should be accepted. The Secretary added that the policy had been recently reaffirmed by the Secretary for Education and Manpower and that the objective of the student travel scheme was to provide an educational facility, but he agreed that the present scheme was far from being perfect and that the magnitude of the expenditure had always been the subject of concern. The Secretary concluded by saying that the Government was under intense political pressure over the matter of student travel subsidies and such pressure was taken into account by the highest level in the Government in arriving at the present policy.
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