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dependent management analysis to put the whole financial structure in proper perspective.
However repetitious it may be, it is always worth emphasizing here that, if the Council is to give more and better service, as a successful community rightly expects, more money must be found for staff, equipment and buildings. Surely, an affluent society will not begrudge the means for the better community life to which all aspire. Even so, public money must be seen first to be properly spent for the common good by raising performance standards all round.
Steady progress in improving statutory services and expanding programmes for civic betterment has been made without going into the red, even when the Council cut its own rate revenue by a third last year to avoid hardship for large numbers of families just then out of recession, but the same reason for sacrificing income does not exist now. Each year has ended with a surplus so far; yet the end may be in sight ominously. All that excess money has been put aside mostly to pay in due course for an essential building programme of substantial proportions, unhappily costing more all the time. In fact, there are 44 projects under construction with another 303 under planning. Thus, there are no funds to spare in reality. And, as can be surmised from the present estimates, in all likelihood more money will have to be raised in the short years ahead. For the present, the reserves the Council has prudently created, will probably be partly used up first.
This moderately favourable financial position was also secured in good part by the systematic appraisal of secondary sources of revenue for the purpose of fixing fees and charges in relation to actual service costs where warranted. Indeed, such vital income, other than the rate, nearly tripled in six years to reach $113 million in 1979-80, but it can only grow marginally from now onwards. Anyway, in practice, it pays for most operational expenditure, while rate revenue, $392 million, is largely applied to the payment of the nearly 15,000 staff calculated to cost $371 million. This is a sharp rise of $63 million in one year because of the last upward adjustment of salary scales combined with the expanded recruitment of hawker control personnel, a continuing burden unfairly imposed on the ratepayer. Thus, staff salaries and allowances take the lion's share of our rate revenue, year in, year out. Altogether, staff costs have not proved less than 70% of total audited expenditure since the Council began to keep its own books five years ago. Therefore, little is left over from the collection of rates for improvement of basic services, replacement of costly equipment, and development of essential projects. No city administration could be expected to carry on successfully with such a lopsided financial obligation without compensating adjustment.
When the sums are done for the financial year 1979-80 the answer is a substantial deficit by Council standards. It is estimated at $141.6 million equivalent approximately to an extra 14% of the rate. This Council is not however letting its ambitions to serve the people run away from financial realities. For, whatever the ultimate negative result might be, it could be covered initially by recourse to the modest capital projects reserve fund if applicable, though the fund itself would stand the risk of being wiped out with one stroke.
On the other hand, the many construction jobs now going on or soon to be put in hand will inevitably entail heavy recurrent expenditure as well. There is no comparable reserve strength to withstand a major cash overrun in this direction. By force of circumstances, then, a loss on recurrent expenditure is indicated for the year 1979-80. In the event, there is an urgent call to take a close look into the future, by projecting financial commitments well ahead of time and by considering alternative possibilities of raising revenue in line with what the community can reasonably afford. Unfortunately, the Council's revenue base is narrow. While it may be desirable to aim at a proportion of the rate to all other income of 70:30, yet this main source is now predictably the only one left that the Council can fall back on to a reliable degree. There is no other way to make a significant impact on the estimates. The Council naturally wishes to put off any move to restore in part its rate percentage for as long as it can do so without detriment to its service to the community.
A fresh and businesslike examination of revenue sources is recommended in earnest. It would avoid an unacceptable retrenchment of beneficial services or curtailment of the construction programme of much-needed civic facilities in a progressive society. Indeed, a stitch in time saves nine.
THE HON. HILTON CHEONG-LEEN (in English):-Mr Chairman, I nearly overlooked the commonplace saying with which you ended your speech in introducing this annual budget; and yet there is much truth in it. In this Council, we believe, as you are right to say, that we should not run away from financial realities, but that we should have a business-like and pragmatical approach in the management of our finances. We do have an extensive forward-looking programme. The number of projects have been outlined in your speech, Mr Chairman, and it is vital that we should not adopt any second-rate approach in providing the services, particularly the statutory services for which this Council is responsible. At the same time, I am a faithful believer in the principle of synergism which, in simple terms, is doing the mathematical calculation of two plus two equals five. I am sure that the Chairman of the Administration Select Committee is well aware of the potentiality of this principle: that would mean that the Administration Select Committee, and all other select committees for that matter, will have to constructively study how to raise our revenue resources without undue hardship to members of the public. We must also constantly strive to improve the efficiency and productivity of the Council's work and ensure that the staff of the Urban Services Department as giving the public good value for money. I believe that if we adopt this pragmatical approach, we will be able to serve the public by providing the services which we are statutorily responsible and
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Page 65
Page 66
Page 66 of 135
Page 65 of 135
i
1
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HONG KONG URBAN COUNCIL
dependent management analysis to put the whole financial structure in
proper perspective.
However repetitious it may be, it is always worth emphasizing here that, if the Council is to give more and better service, as a successful community rightly expects, more money must be found for staff, equipment and buildings. Surely, an affluent society will not begrudge the means for the better com- munity life to which all aspire. Even so, public money must be seen first to be properly spent for the common good by raising performance standards
all round.
Steady progress in improving statutory services and expanding programmes for civic betterment has been made without going into the red, even when the Council cut its own rate revenue by a third last year to avoid hardship for large numbers of families just then out of recession, but the same reason for sacrificing income does not exist now. Each year has ended with a surplus so far; yet the end may be in sight ominously. All that excess money has been put aside mostly to pay in due course for an essential building programme of substantial proportions, unhappily costing more all the time. In fact, there are 44 projects under construction with another 303 under planning. Thus, there are no funds to spare in reality. And, as can be surmised from the present estimates, in all likelihood more money will have to be raised in the short years ahead. For the present, the reserves the Council has prudently created, will probably be partly used up first.
This moderately favourable financial position was also secured in good part by the systematic appraisal of secondary sources of revenue for the purpose of fixing fees and charges in relation to actual service costs where warranted. Indeed, such vital income, other than the rate, nearly tripled in six years to reach $113 million in 1979-80, but it can only grow marginally from now onwards. Anyway, in practice, it pays for most operational expendi ture, while rate revenue, $392 million, is largely applied to the payment of the nearly 15,000 staff calculated to cost $371 million. This is a sharp rise of $63 million in one year because of the last upward adjustment of salary scales combined with the expanded recruitment of hawker control personnel, a continuing burden unfairly imposed on the ratepayer. Thus, staff salaries and allowances take the lion's share of our rate revenue, year in, year out. Altogether, staff costs have not proved less than 70% of total audited expendi- ture since the Council began to keep its own books five years ago. Therefore, little is left over from the collection of rates for improvement of basic services, replacement of costly equipment, and development of essential projects. No city administration could be expected to carry on successfully with such a lopsided financial obligation without compensating adjustment.
When the sums are done for the financial year 1979-80 the answer is a substantial deficit by Council standards. It is estimated at $141.6 million equivalent approximately to an extra 14% of the rate. This Council is not however letting its ambitions to serve the people run away from financial
HONG KONG URBAN COUNCIL
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91
realities. For, whatever the ultimate negative result might be, it could be covered initially by recourse to the modest capital projects reserve fund if applicable, though the fund itself would stand the risk of being wiped out
with one stroke.
On the other hand, the many construction jobs now going on or soon to be put in hand will inevitably entail heavy recurrent expenditure as well. There is no comparable reserve strength to withstand a major cash overrun in this direction. By force of circumstances, then, a loss on recurrent expendi- ture is indicated for the year 1979-80. In the event, there is an urgent call to take a close look into the future, by projecting financial commitments well ahead of time and by considering alternative possibilities of raising revenue in line with what the community can reasonably afford. Unfortunately, the Council's revenue base is narrow. While it may be desirable to aim at a proportion of the rate to all other income of 70:30, yet this main source is now predictably the only one left that the Council can fall back on to a reliable degree. There is no other way to make a significant impact on the estimates. The Council naturally wishes to put off any move to restore in part its rate percentage for as long as it can do so without detriment to its service to the community.
A fresh and businesslike examination of revenue sources is recommended in earnest. It would avoid an unacceptable retrenchment of beneficial services or curtailment of the construction programme of much-needed civic facilities in a progressive society. Indeed, a stitch in time saves nine.
THE HON. HILTON CHEONG-LEEN (in English):-Mr Chairman, I nearly over- looked the commonplace saying with which you ended your speech in introducing this annual budget; and yet there is much truth in it. In this Council, we believe, as you are right to say, that we should not run away from financial realities, but that we should have a business-like and pragmatical approach in the management of our finances. We do have an extensive forward-looking programme. The number of projects have been outlined in your speech, Mr Chairman, and it is vital that we should not adopt any second-rate approach in providing the services, particularly the statutory services for which this Council is responsible. At the same time, I am a faithful believer in the principle of synergism which, in simple terms, is doing the mathematical calculation of two plus two equals five. I am sure that the Chairman of the Administration Select Committee is well aware of the potentiality of this principle: that would mean that the Administration Select Committee, and all other select committees for that matter, will have to constructively study how to raise our revenue resources without undue hardship to members of the public. We must also constantly strive to improve the efficiency and productivity of the Council's work and ensure that the staff of the Urban Services Department as giving the public good value for money. I believe that if we adopt this pragmatical approach, we will be able to serve the public by providing the services which we are statutorily responsible and
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