Page 121 of 135
204
HONG KONG URBAN COUNCIL
It is reckoned that the Council has more than 500 projects either under construction, being planned or just approved by the various select committees. All this vast undertaking needs to be carefully controlled and progress gauged frequently to avoid inordinate delays by design, out of habit, because of staff shortage, or through indifference or perhaps even incompetence.
Rate
Much has been said recently about the rate. And more is still likely to be said about the excessive revaluations. Naturally, the people are worried. Consequently, the Council must assess the impact on the life of the community as a whole but also in particular how this new crisis will affect the lower income groups, and then decide what it ought to do for its part to mitigate any consequential hardship.
The money the Council gets from rates is used to pay for vital community services for the direct benefit of the people. If costs of service rise, more money must be found or Hong Kong must face deterioration of the quality of life. So long as increases are reasonable, nobody sensible would object. But, the people strongly protest, and rightly so, when increases are high and sudden, without adequate time to adjust their family budgets. The people must also have confidence that the new funds accruing to the public purse will be used here for their own good. In any case, it would do well to examine in public what the actual situation is, because willy-nilly there is much to confuse the issue in the public mind. Thus, it would be fair and proper for the Council to discuss the position in public, even if only in broad terms. Nothing should ever be hidden from the people.
When the Council's financial arrangements were discussed in preparation for its change of status on 1st April, 1973, it was agreed that it would have its own independent rate revenue. It is the practice for local authorities in the British system to collect rates, so it is nothing unusual for the Council likewise to count on the rate-payer. On the contrary, the rate is the proper major source of revenue for the Council because it renders basic services directly of benefit to the whole urban population. At that time, it was reckoned that the Council would need 6% based on the rateable values then in force. No allowance was made for inflation and nothing for recession. Even so, the Council has maintained this rate percentage without change since 1973 in spite of the fact that in the meantime there has been no upward adjustment of rateable value while staff costs have increased by 68% in four short years for virtually the same numbers of people.
HONG KONG URBAN COUNCIL
205
Due emphasis should be put on the fact that the Council derives 80% of its income from rates and, equally important, about 90% of its rate revenue is applied to the payment of salaries to its staff. Thus, there is hardly any surplus from the rates for the Council to use in actual practice.
When the old 15% rate in the urban areas was separated into two parts between the Government (the General Rate) and the Council in the proportion of 3 to 2, that is to say, 9% for the Government and 6% for the Council, the Government's share was said to amount to only 7% of its total revenue while the Council depended heavily on its 6% rate to the extent of nearly 80% of its own total income, right from the start. The reassessment of tenancies for rating purposes has now been accomplished, so the declared reason for the Government's jump from 9 to 12%, to offset loss of revenue pending this revaluation, no longer holds good, and so it should be automatically cut back to the original 9% from which point the Government's intended net reduction of 11% to 74% should be viewed. Perhaps, by reverting to the previous ratio, the right step would be taken to conform to the symmetry in attitude that is desirable to maintain in the relations between the Government and the Council. Be that as it may, in both cases, to determine the extent of any concession in real terms, it should still be measured by the additional amount that the remaining rate percentage will yield in 1977-78, first, according to rate revenue in the current financial year and then it should also be seen against next year's projected expenditure which the Council can do now because its budget has been drawn up and accepted. In this discussion, percentages have no meaning unless they are translated into dollars and cents and the actual revenue which results is related to total requirements.
The Council's rate revenue has not kept pace with the ordinary increment in staff salaries together with regular governmental adjustment in salary scales without consultation. Indeed, in the last four years, rate revenue has gone up by $56m while salaries alone have risen by $76m. And, the Council forbore to ask for any increase in the recession. So its rate percentage has not changed at all.
Let me also say, here and now, the Council neither asked for nor took part in the fixing of the new rateable values of tenancies. There appears to be some doubt among the public on this score so let the Council make it clear once and for all.
If it has some surplus money just now, it is kept in our own currency in Hong Kong to pay for hundreds of vital projects directly of benefit to the people many of which they can already see in all
Page 121 of 135
Page 121 of 135
204
HONG KONG URBAN COUNCIL
It is reckoned that the Council has more than 500 projects either under construction, being planned or just approved by the various select committees. All this vast undertaking needs to be carefully controlled and progress gauged frequently to avoid inordinate delays by design, out of habit, because of staff shortage, or through indiffer- ence or perhaps even incompetence.
Rate
Much has been said recently about the rate. And more is still likely to be said about the excessive revaluations. Naturally, the people are worried. Consequently, the Council must assess the impact on the life of the community as a whole but also in particular how this new crisis will affect the lower income groups, and then decide what it ought to do for its part to mitigate any consequential hardship.
The money the Council gets from rates is used to pay for vital community services for the direct benefit of the people. If costs of service rise, more money must be found or Hong Kong must face de- terioration of the quality of life. So long as increases are reasonable, nobody sensible would object. But, the people strongly protest, and rightly so, when increases are high and sudden, without adequate time to adjust their family budgets. The people must also have confidence that the new funds accruing to the public purse will be used here for their own good. In any case, it would do well to examine in public what the actual situation is, because willy-nilly there is much to con- fuse the issue in the public mind. Thus, it would be fair and proper for the Council to discuss the position in public, even if only in broad terms. Nothing should ever be hidden from the people.
When the Council's financial arrangements were discussed in prep- aration for its change of status on 1st April, 1973, it was agreed that it would have its own independent rate revenue. It is the practice for local authorities in the British system to collect rates, so it is nothing unusual for the Council likewise to count on the rate-payer. On the contrary, the rate is the proper major source of revenue for the Council because it renders basic services directly of benefit to the whole urban population. At that time, it was reckoned that the Council would need 6% based on the rateable values then in force. No allowance was made for inflation and nothing for recession. Even so, the Council has maintained this rate percentage without change since 1973 in spite of the fact that in the meantime there has been no upward adjustment of rateable value while staff costs have increased by 68% in four short years for virtually the same numbers of people.
HONG KONG URBAN COUNCIL
205
Due emphasis should be put on the fact that the Council derives 80% of its income from rates and, equally important, about 90% of its rate revenue is applied to the payment of salaries to its staff. Thus, there is hardly any surplus from the rates for the Council to use in actual practice.
When the old 15% rate in the urban areas was separated into two parts between the Government (the General Rate) and the Council in the proportion of 3 to 2, that is to say, 9% for the Government and 6% for the Council, the Government's share was said to amount to only 7% of its total revenue while the Council depended heavily on its 6% rate to the extent of nearly 80% of its own total income, right from the start. The reassessment of tenancies for rating pur- poses has now been accomplished, so the declared reason for the Government's jump from 9 to 12%, to offset loss of revenue pending this revaluation, no longer holds good, and so it should be automatically cut back to the original 9% from which point the Government's in- tended net reduction of 11% to 74% should be viewed. Perhaps, by reverting to the previous ratio, the right step would be taken to conform to the symmetry in attitude that is desirable to maintain in the relations between the Government and the Council. Be that as it may, in both cases, to determine the extent of any concession in real terms, it should still be measured by the additional amount that the remaining rate percentage will yield in 1977-78, first, according to rate revenue in the current financial year and then it should also be seen against next year's projected expenditure which the Council can do now because its budget has been drawn up and accepted. In this discussion, percent- ages have no meaning unless they are translated into dollars and cents and the actual revenue which results is related to total requirements.
The Council's rate revenue has not kept pace with the ordinary increment in staff salaries together with regular governmental adjust- ment in salary scales without consultation. Indeed, in the last four years, rate revenue has gone up by $56m while salaries alone have risen by $76m. And, the Council forbore to ask for any increase in the recession. So its rate percentage has not changed at all.
Let me also say, here and now, the Council neither asked for nor took part in the fixing of the new rateable values of tenancies. There appears to be some doubt among the public on this score so let the Council make it clear once and for all.
If it has some surplus money just now, it is kept in our own currency in Hong Kong to pay for hundreds of vital projects directly of benefit to the people many of which they can already see in all
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