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if that department cannot meet the need for construction of facilities for the public.
There were under-estimates of expenditure, too, almost all concerned with pay. More than eighty per cent of our staff, for example, are entitled to cost of living allowances. During the year so far the allowance has risen from $60 a month to $90 and now to $135. The figure for the last three months of the financial year has not yet been announced, but we must be prepared for it to be even higher. Urban Council costs have not been affected this year by other pay and salary increases to civil servants, but I shall mention the implications of these increases when I come to the budget for next year.
The Council's revenue will be bigger than expected this year mainly because of the increased income from rates. This accounts for $8.3 million of the $14.6 million difference between the original and the revised estimates. Bank interest is $2.9 million more than estimated and Licence Income $2.2 million more.
Next year we are budgeting for a deficit of $10.75 million instead of this year's surplus. We estimate expenditure at $297,300,800 and revenue at $286,544,900.
The change reflects the pattern of Council expenditure on public services on the one hand, and on the other hand it reflects factors outside the Council's control which affect our revenue.
At present about 75 per cent of our money is spent on the pay and allowances of the men and women who carry out the various public services controlled by the Council. We spend another 18 per cent on other annually recurrent charges to maintain and support those services.
This year we shall spend 5 per cent of our budget on special items, mostly new equipment for our various services such as books for libraries, beach equipment, vehicles, playground and park furniture and so on.
Finally, this year, capital expenditure accounts for less than 1 per cent of our budget.
This pattern changes next year. Pay and salaries will go up a lot, by more than 25 per cent in fact. But as a proportion of the total budget it will go down: next year we propose to spend 70 per cent of our budget on pay and allowances for our staff, 17 per cent on other annually recurrent charges and 9 per cent on special items.
HONG KONG URBAN COUNCIL
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The big change will be on capital works which go up from less than 1 per cent this year to about 5 per cent.
Under the arrangements by which the Urban Council was reconstituted in its present form the Government remains responsible for planning, financing and building abattoirs, cemeteries and crematoria, civic centres, museums, art galleries and stadiums, although the Council must then pay for their upkeep. All other capital works must be paid for by the Council. We have, for example, a programme for completing next year the Games Halls which are so badly needed at Morse Park, Cheung Sha Wan and Fa Hui Park, and these alone account for about $7 million.
As I mentioned earlier, we are concerned about progress on many building projects which have been in the pipeline for a long time. We are determined to make progress on all the construction projects for which we are responsible. Most of them are not grand affairs. They are things like markets and latrines and bath-houses but although they are not glamorous they are urgently needed.
It can be seen, then, that to some extent the increase in the emphasis on capital expenditure reflects the Council's new responsibilities and intentions. The increase in the much larger item for pay and allowances is a different matter. The increase from $165.7 million this year to $207.6 million next year is more than 25%. These civil servants are not our employees. They remain civil servants and we have no say in their terms and conditions. We know about the inflationary trend and we whole-heartedly support realistic pay increases to meet it. But we have to take account of a situation in which the major element of our expenditure is determined outside the Council, while at the same time the major source of our revenue is also affected by factors over which we do not have control.
Before I deal with the main features of our revenue expectations I should mention one simple fact which accounts for a significant part of the change in our fortunes from an estimated surplus to an estimated deficit. For this, our first year, we received a $20 million grant. We shall not receive that next year and it makes a big difference to our budget situation.
We estimate next year that more than 82 per cent of our revenue will come from our 6 per cent rate. We anticipate an increase in the yield compared with this year as well as additional rates from certain housing estates. But we cannot ignore for the future the fact that
1!
196
HONG KONG URBAN COUNCIL
if that department cannot meet the need for construction of facilities for the public.
There were under-estimates of expenditure, too, almost all con- cerned with pay. More than eighty per cent of our staff, for example, are entitled to cost of living allowances. During the year so far the allowance has risen from $60 a month to $90 and now to $135. The figure for the last three months of the financial year has not yet been announced, but we must be prepared for it to be even higher. Urban Council costs have not been affected this year by other pay and salary increases to civil servants, but I shall mention the implications of these increases when I come to the budget for next year.
The Council's revenue will be bigger than expected this year mainly because of the increased income from rates. This accounts for $8.3 million of the $14.6 million difference between the original and the revised estimates. Bank interest is $2.9 million more than estimated and Licence Income $2.2 million more.
Next year we are budgetting for a deficit of $10.75 million instead of this year's surplus. We estimate expenditure at $297,300,800 and revenue at $286,544,900.
The change reflects the pattern of Council expenditure on public services on the one hand, and on the other hand it reflects factors outside the Council's control which affect our revenue.
At present about 75 per cent of our money is spent on the pay and allowances of the men and women who carry out the various public services controlled by the Council. We spend another 18 per cent on other annually recurrent charges to maintain and support those services.
This year we shall spend 5 per cent of our budget on special items, mostly new equipment for our various services such as books for libraries, beach equipment, vehicles, playground and park furniture and so on.
Finally, this year, capital expenditure accounts for less than 1 per cent of our budget.
This pattern changes next year. Pay and salaries will go up a lot, by more than 25 per cent in fact. But as a proportion of the total budget it will go down: next year we propose to spend 70 per cent of our budget on pay and allowances for our staff, 17 per cent on other annually recurrent charges and 9 per cent on special items.
HONG KONG URBAN COUNCIL
Page 133 of 212
197
The big change will be on capital works which go up from less than 1 per cent this year to about 5 per cent.
Under the arrangements by which the Urban Council was recon- stituted in its present form the Government remains responsible for planning, financing and building abattoirs, cemeteries and crematoria, civic centres, museums, art galleries and stadiums, although the Council must then pay for their upkeep. All other capital works must be paid for by the Council. We have for example a programme_for_com- pleting next year the Games Halls which are so badly needed at Morse Park, Cheung Sha Wan and Fa Hui Park, and these alone account for about $7 million.
As I mentioned earlier, we are concerned about progress on many building projects which have been in the pipeline for a long time. We are determined to make progress on all the construction projects for which we are responsible. Most of them are not grand affairs. They are things like markets and latrines and bath-houses but although they are not glamorous they are urgently needed.
It can be seen, then, that to some extent the increase in the em- phasis on capital expenditure reflects the Council's new responsibilities and intentions. The increase in the much larger item for pay and allowances is a different matter. The increase from $165.7 million this year to $207.6 million next year is more than 25%. These civil servants are not our employees. They remain civil servants and we have no say in their terms and conditions. We know about the inflationary trend and we whole-heartedly support realistic pay in- creases to meet it. But we have to take account of a situation in which the major element of our expenditure is determined outside the Council, while at the same time the major source of our revenue is also affected by factors over which we do not have control.
Before I deal with the main features of our revenue expectations I should mention one simple fact which accounts for a significant part of the change in our fortunes from an estimated surplus to an estimated deficit. For this, our first year, we received a $20 million grant. We shall not receive that next year and it makes a big difference to our budget situation.
We estimate next year that more than 82 per cent of our revenue will come from our 6 per cent rate. We anticipate an increase in the yield compared with this year as well as additional rates from certain housing estates. But we cannot ignore for the future the fact that
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