HONG KONG LEGISLATIVE
COUNCIL 18 October 1989 香港立法局 ——————————一九八九年十月十八日
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1989. The annual statement of accounts and auditors' report are attached to the report as Appendix II.
During the year 1988-89, the fund received 3 351 applications with claims amounting to $17.5 million from employees of 239 insolvency cases. By 31 March 1989, a total of 3 091 applications were approved resulting in ex-gratia payments of $8.4 million. In most cases, the applicants were able to receive arrears of wages and wages in lieu of notice in full and much shorter span of time than was possible under the existing liquidation and bankruptcy proceedings.
As at 31 March 1989, the fund had accumulated about $159.7 million, comprising $16.5 million as income prior to 19 April 1985, and excesses of income over expenditure of $23 million in 1985-86, $28.7 million in 1986-87, $42.6 million in 1987-88 and $48.9 million in 1988-89. The fund has been able to accumulate $159.7 million due mainly to the increase in the income from levy on business registration certificates and a relatively low level of claims in a booming economy in the past few years.
During the year under review, the board met four times to examine, among others, the charging of a supervision fee by the Government, the investment of moneys not immediately required and as approved by the Financial Secretary, and a proposal to extend the scope of the fund to cover severance payments.
The question of the Government charging the fund a supervision fee for its administration has remained unresolved despite representations made to the Administration and the OMELCO since 1986. Members of the board are very disappointed that the fund should have been classified as an administrative or compensatory fund for which full administrative costs must be recovered through the charging of a supervision fee. The board has therefore urged the Administration to review this policy again, bearing in mind the uniqueness of the fund because of its tripartite nature and its objective of providing quick relief to workers in need to reduce social problem and avoid social unrest.
In the investment of moneys not immediately required, board members have taken a cautious approach in view of the stock market crash in October 1987 and the recent confidence crisis in Hong Kong.
On the basis of operating results of the fund and the past trend of insolvency cases, a review carried out by the Administration recommended that there was a case for extending the scope of the fund to cover severance payments. In view of this conclusion and the fact that the fund had been in operation for only a few years, and hence any estimate of its future financial situation on the basis of
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