Page 21 of 120
HONG KONG URBAN COUNCIL
11
HONG KONG URBAN COUNCIL
ADDRESS BY CHAIRMAN
CHAIRMAN (in English):-It's 4 o'clock, Ladies and Gentlemen. I call the meeting to order.
MINUTES
The minutes of the meeting held on 15 April 1980 were confirmed.
STATEMENT BY CHAIRMAN
CHAIRMAN (in English):-The Council had a surplus of $20.3 m. at the end of the financial year on 31 March 1980 subject to audit. This worked out to only 3.4% of gross revenue. This is a satisfactory ending to a difficult year. Inflationary pressures took their toll all along the line. The consequent rise in expenditure outpaced higher revenue but completion of building projects fell short of target once more. Still, there is a heavy commitment to pay for a huge backlog of essential major works bound to fall due sooner or later.
Re-structuring the Financial Position
No sooner had the Council become directly responsible for its finances within the limits of its jurisdiction than a start was made at once to put its position on a sound and businesslike footing in fairness to the ratepayer. This has been achieved to an impressive extent but an objective review has to be kept up realistically.
The Rate
Contrary to the general trend in major cities, the rate percentage was cut by a third three years ago from 6 to 4% when property values were reassessed for rating purposes. This was intended in the main to benefit householders just emerging from recession. Meanwhile, heavy inflation in building costs and staff salaries has cramped the Council's position. At the same time, new buildings coming on the market have not made a strong impact on overall rate revenue.
Revaluation
The revaluation the Government proposed to carry out regularly did not come about inspite of the steep increase in rents. In the event, a case could be made for an outright grant from the Government at the estimated difference due to the Council had the revaluation exercise been undertaken. This would be a one-off bridging operation fair to both parties.
Other Revenues
On its own the Council has explored every other possible revenue source. Fees and charges have been marked up steadily to cover the increased costs of a whole range of services. But they lag behind inexorably rising costs no sooner done.
Rate Dependence
Still, the Council depends on rates to the extent of three-quarters of its total income normally. Some upward revision of the percentage has been suggested but it goes against the grain of those who want to see fair treatment for all with no hidden subsidy from the ratepayer to what are actually business enterprises.
Staff Costs
The Council had a complement of 15,228 staff last year. It increased on an annual average of 1.77% over the past seven years though there were numerous new activities and a rapid expansion of standard services. This compares well with 5% for the civil service as a whole averaged over a decade. Yet, staff emoluments came up to 65.24% of total expenditure. Not enough money is left over every year for sustained growth to meet the demands of an increasing population and for continuing development to reach the point that a progressive community expects in short order.
Rate Cover
The initial cover of rate revenue to personal emoluments has fallen alarmingly. It was originally in the ratio of 1.29:1; it was down to 1.03:1 in 1979-80. This is a grave situation. Evidently some essential aspects of the Council's work will give way if corrective measures are not taken in good time. This has still to be done though the alert was sounded a long while ago.
Using Reserves
All in all, then, if nothing were done, the Council would go into the red in the new financial year and would have to draw heavily on its capital reserve funds. Doing so would also cause the bank interest accruing from this source to drop substantially, further aggravated by the money market trend. A predictable consequence of using up the reserve funds then is a wholesale weakening of the Council's financial ability to serve the people.
Bank Interest
Indeed, the $48.4 m. interest received last year saved the day for the Council. Also, to put this sum in perspective, it was equal to nearly half a point in the rate percentage. By any standard it is an impressive savings for the householder. Altogether $104.87 m. has been earned as bank interest since 1973. Thus, this source of income paid for a good part of the capital expenditure in that period amounting to $180.25 m. for 267 completed major projects.
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Page 21 of 120
HONG KONG URBAN COUNCIL
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10
HONG KONG URBAN COUNCIL
ADDRESS BY CHAIRMAN
CHAIRMAN (in English):-It's 4 o'clock, Ladies and Gentlemen. I call the meeting to order.
MINUTES
The minutes of the meeting held on 15 April 1980 were confirmed.
STATEMENT BY CHAIRMAN
CHAIRMAN (in English):-The Council had a surplus of $20.3 m. at the end of the financial year on 31 March 1980 subject to audit. This worked out to only 3.4% of gross revenue. This is a satisfactory ending to a difficult year. Inflationary pressures took their toll all along the line. The consequent rise in expenditure outpaced higher revenue but completion of building projects fell short of target once more. Still, there is a heavy commitment to pay for a huge backlog of essential major works bound to fall due sooner or later.
Re-structuring the Financial Position
No sooner had the Council become directly responsible for its finances within the limits of its jurisdiction than a start was made at once to put its position on a sound and businesslike footing in fairness to the ratepayer. This has been achieved to an impressive extent but an objective review has to be kept up realistically.
The Rate
Contrary to the general trend in major cities, the rate percentage was cut by a third three years ago from 6 to 4% when property values were reassessed for rating purposes. This was intended in the main to benefit householders just emerging from recession. Meanwhile, heavy inflation in building costs and staff salaries has cramped the Council's position. At the same time, new buildings coming on the market have not made a strong impact on overall rate revenue.
Revaluation
The revaluation the Government proposed to carry out regularly did not come about inspite of the steep increase in rents. In the event, a case could be made for an outright grant from the Government at the estimated difference due to the Council had the revaluation exercise been undertaken. This would be a one-off bridging operation fair to both parties.
Other Revenues
On its own the Council has explored every other possible revenue source. Fees and charges have been marked up steadily to cover the increased costs of a whole range of services. But they lag behind inexorably rising costs no sooner done.
Rate Dependence
Still, the Council depends on rates to the extent of three-quarters of its total income normally. Some upward revision of the percentage has been suggested but it goes against the grain of those who want to see fair treatment for all with no hidden subsidy from the ratepayer to what are actually business enterprises.
Staff Costs
The Council had a complement of 15,228 staff last year. It increased on an annual average of 1.77% over the past seven years though there were numerous new activities and a rapid expansion of standard services. This compares well with 5% for the civil service as a whole averaged over a decade. Yet, staff emoluments came up to 65.24% of total expenditure. Not enough money is left over every year for sustained growth to meet the demands of an increasing population and for continuing development to reach the point that a progressive community expects in short order.
Rate Cover
The initial cover of rate revenue to personal emoluments has fallen alarm- ingly. It was originally in the ratio of 1.29:1; it was down to 1.03:1 in 1979-80. This is a grave situation. Evidently some essential aspects of the Council's work will give way if corrective measures are not taken in good time. This has still to be done though the alert was sounded a long while ago.
Using Reserves
All in all, then, if nothing were done, the Council would go into the red in the new financial year and would have to draw heavily on its capital reserve funds. Doing so would also cause the bank interest accruing from this source to drop substantially, further aggravated by the money market trend. A predictable consequence of using up the reserve funds then is a wholesale weakening of the Council's financial ability to serve the people.
Bank Interest
Indeed, the $48.4 m. interest received last year saved the day for the Council. Also, to put this sum in perspective, it was equal to nearly half a point in the rate percentage. By any standard it is an impressive savings for the householder. Altogether $104.87 m. has been earned as bank interest since 1973. Thus, this source of income paid for a good part of the capital ex- penditure in that period amounting to $180.25 m. for 267 completed major projects.
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