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Department has set up a Working Party, in order to maximize saving on fuel, light and power.
After today's Debate on the 1982-83 Budget, I propose that the Council initiate discussions with the Government as to the best means of overcoming the deficit of $547 million.
For the current year, it will be recalled that Government awarded a grant of $280 million against an estimated deficit of $319 million.
I do not wish to jump to any conclusions at this stage as to how our negotiations with the Government will develop, and whether we will end up with another grant from Government, or whether Government will assign to us part of its share of the rates, or whether there will emerge another mutually acceptable formula.
I can only give an assurance to Councillors that progress on the negotiations with Government will be reported to the Standing Committee of the Whole Council as soon as possible.
I so move.
MR. H. M. G. FORSGATE, VICE-CHAIRMAN, URBAN COUNCIL seconded (in English): Rising to second your motion, and as Chairman of the Finance Select Committee, I wish to re-emphasize the point you made in your speech proposing this motion, that all items of expenditure have been subjected to close scrutiny by all the various Select Committees.
The two largest items in the expenditure estimates for 1982–83 are Personal Emoluments at some $682 million and Capital Expenditure at $228 million. This Council is very conscious that every effort must be made to control costs, balancing our rapidly expanding services to the community in line with demand, to the need to ensure that money is spent wisely and under control. At the same time, it must be remembered that every additional facility we build requires more staff, and this is where most of the money is spent.
In order to keep a close eye on expenditure in the Urban Council Personal Emolument Estimates, the Urban Services Department set up a Departmental Estimates Committee in 1980. This examines all proposals for increases in establishment and submits recommendations for any new proposals to the Administration & Finance Select Committees.
It should be noted that in the 1982-83 estimates, a provision of some $11.5 million is included for new posts and this represents 1.8% of the 1982-83 salary costs. This is the same amount approved for the current financial year and illustrates the tight and effective control by the Administration & Finance Select Committees and the Department on administration and personnel costs.
A Departmental Capital Works Committee monitors the progress of our 5-year capital works programme and keeps that Select Committee fully in the picture regarding progress. This programme rolls over from one year to another and the 5-year approved programme envisages total expenditure of some $1,450 million with over $210 million estimated to be spent next year. This amount is considered realistic in terms of both the capacity of the Public Works Department and our finances.
Returning to the revised estimates, while it is expected that a surplus of some $78 million will occur this year, members should be aware that the current year's figures are distorted by the special Government grant of $280 million. Without the assistance of this grant, a deficit of about $200 million would have been incurred.
Next year's expenditure at $1,263 million is estimated to exceed revenue by $547 million, the deficit you referred to, Mr. Chairman. During the year, our accumulated reserves of some $293 million will vanish, unless some of the measures you have indicated, Mr. Chairman, are negotiated to replenish our income.
It cannot be over-emphasized that the largest increase relates to the cost of personal emoluments, i.e., paying the staff of the Urban Services Department who carry out the work of the Council. $517 million this year will increase by some 32% to $682 million next. This increase arises from salary revisions awarded by Government, over which we have no control. On the other hand, rate income, which is by far the Council's largest source of revenue, is estimated to increase by only 5.5% from $436 million to $460 million.
It should be noted that when this Council became financially autonomous seven years ago, the income from rates covered salaries 1.25 times, but next year this ratio will fall to 0.67.
You, sir, have indicated the various alternatives on which you recommend opening negotiations with Government, from whom I am sure we will receive a sympathetic and positive response in order that this Council may continue its progress so vital to the health and well-being of the urban community in those areas of activity for which we are responsible.
In conclusion, I would like to thank the Department and the Chief Treasury Accountant and his staff in particular for their attention to detail in drawing up the budget and their ability to present financial matters in a digestible form. I have much pleasure in seconding the motion.
MR. YOUNG (in English): Mr. Chairman, the deficit of $547 million, to say the least, is glaring. It does not take a financial consultant or mathematician to work out that even if we doubled our Urban Council rate percentage from 4% to 8%, it would still not fill the gap. However, I feel that this gap is not brought about by any mismanagement on behalf of the Urban Council, and all members here know, through the Committees whose work they attend to, how we go through any request for additional expenditure. This gap is merely because inflation has caught up on the Council. On the other side of the coin
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98
HONG KONG URBAN COUNCIL
Department has set up a Working Party, in order to maximize saving on fuel, light and power.
After today's Debate on the 1982-83 Budget, I propose that the Council initiate discussions with the Government as to the best means of overcoming the deficit of $547 million.
For the current year, it will be recalled that Government awarded a grant of $280 million against an estimated deficit of $319 million.
I do not wish to jump to any conclusions at this stage as to how our negotiations with the Government will develop, and whether we will end up with another grant from Government, or whether Government will assign to us part of its share of the rates, or whether there will emerge another mutually acceptable formula.
I can only give an assurance to Councillors that progress on the negotiations with Government will be reported to the Standing Committee of the Whole Council as soon as possible.
I so move.
MR. H. M. G. FORSGATE, VICE-CHAIRMAN, URBAN COUNCIL seconded (in English): Rising to second your motion, and as Chairman of the Finance Select Committee, I wish to re-emphasize the point you made in your specch proposing this motion, that all items of expenditure have been subjected to close scrutiny by all the various Select Committees.
The two largest items in the expenditure estimates for 1982–83 are Personal Emoluments at some $682 million and Capital Expenditure at $228 million. This Council is very conscious that every effort must be made to control costs, balancing our rapidly expanding services to the community in line with demand, to the need to ensure that money is spent wisely and under control. At the same time, it must be remembered that every additional facility we build requires more staff, and this is where most of the money spent.
In order to keep a close eye on expenditure in the Urban Council Personal Emolument Estimates, the Urban Services Department set up a Departmental Estimates Committee in 1980. This examines all proposals for increases in establishment and submits recommendations for any new proposals to the Administration & Finance Select Committees.
It should be noted that in the 1982-83 estimates, a provision of some $11.5 million is included for new posts and this represents 1.8% of the 1982-83 salary costs. This is the same amount approved for the current financial year and illustrates the tight and effective control by the Administration & Finance Select Committees and the Department on administration and personnel costs.
A Departmental Capital Works Committee, monitors the progress of our 5 years capital works programme and keeps that Select Committee fully in the
HONG KONG URBAN COUNCIL
picture regarding progress. This programme rolls over from one year to another and the 5 year approved programme envisages total expenditure of some $1,450 million with over $210 million estimated to be spent next year. This amount is considered realistic in terms of both the capacity of the Public Works Department and our finances.
Returning to the revised estimates, while it is expected that a surplus of some $78 million will occur this year, members should be aware that the current year's figures are distorted by the special Government grant of $280 million. Without the assistance of this grant, a deficit of about $200 million would have been incurred.
Next year's expenditure at $1,263 million is estimated to exceed revenue by $547 million deficit you referred to, Mr. Chairman. During the year, our accumulated reserves of some $293 million will vanish, unless some of the measures you have indicated, Mr. Chairman, are negotiated to replenish our income.
It cannot be over-emphasized that the largest increase relates to the cost of personal emoluments i.e. paying the staff of the Urban Services Department who carry out the work of the Council. $517 million this year will increase by some 32% to $682 million next. This increase arises from salary revisions awarded by Government, over which we have no control. On the other hand, rate income which is by far the Council's largest source of revenue is estimated to increase by only 51% from $436 million to $460 million.
It should be noted that when this Council became financially autonomous seven years ago, the income from rates covered salaries 1.25 times but next year this ratio will fall to 0.67%.
You, sir, have indicated the various alternatives on which you recommend opening negotiations with Government from whom I am sure we will receive a sympathetic and positive response in order that this Council may continue its progress so vital to the health and well being of the urban community in those areas of activity for which we are responsible.
In conclusion, I would like to thank the Department and the Chief Treasury Accountant and his staff in particular for their attention to detail in drawing up the budget and their ability to present financial matters in a digestible form. I have much pleasure in seconding the motion.
MR. YOUNG (in English):-Mr. Chairman, the deficit of $547 million, to say the least is glaring. It does not take a financial consultant or mathematician to work out that even if we doubled our Urban Council rate percentage from 4% to 8%, it would still not fill the gap. However, I feel that this gap is not brought about by any mismanagement on behalf of the Urban Council, and all members here know, through the Committees whose work they attend to, how we go through any request for additional expenditure. This gap is merely because inflation has caught up on the Council. On the other side of the coin
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