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HONG KONG URBAN COUNCIL

as the

Discussions have been conducted on the current and projected financial position of the Council, using the 5-Year Forecast 1984/85 to 1988/89 base, between CUC, VCUC, DUS and the Government (FS, DFS). To date no firm conclusions have been reached and negotiations are continuing.

With regard to expenditure the department is carrying out, on an on-going basis, cost-effective measures to reduce expenditure and improve efficiency.

Mr. Chairman, I now second your motion.

MR. HOWARD YOUNG (in Cantonese):—Mr. Chairman, every year we discuss our budget for the coming year, but this year I think we have a different setting. We have some points in common with that of past years. This year as usual, all the Councillors, if they have been responsible Councillors, must have raised issues concerning the budget in their own select committee. In the select committee meetings, we have already raised various questions concerning our budget.

First of all, when we talked about the capital works projects more than one year ago, we have already tried to allocate priorities to our projects. In the past one year, many district boards have even criticized us for deleting worthwhile projects. When we look at our services, most of them are services in environmental hygiene, improvement in management of hawkers, markets, recreational and cultural activities, etc. and the greatest expenditure is the cost of salaries of our staff. If you look at the services provided by the Urban Council, or our markets and recreational facilities, you will agree with me that the increase in the number of these facilities has been remarkable and if we compare the Urban Council with other Government departments, you will also agree with me that we have not had a very sharp increase in the number of staff employed and recruited. I think I can say that all Councillors have tried their very best in making the best use of our resources and providing the best services to the public.

We have paid great attention to environmental hygiene and about 20% of our expenditure is spent in this area. We have been trying to include more areas and we hope that we can extend our scheme of private contracting of cleansing services. We hope that we can save money by this new introduction.

As for control of hawkers, we have also spent a lot of money in hawker control. The Working Party to Review Hawker and Related Policies, I am sure, will give us valuable recommendations for the future and we hope that our policy will be able to save more money for citizens.

All in all, many district boards members and residents have been pressing the Urban Council to provide better recreation and cultural services and we have spent 11% and 7% of our expenditure respectively for such services. I do not think we should decrease that percentage and I think we have already exercised constraint.

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Just now, Mr. Chairman, you have mentioned one fact which we must face: we have done so much to scrutinize the budget, we still have a deficit of although over $180 million. We can meet some of our deficit from our reserve fund. But you have just told us that if we do not spend our money carefully, then we will not be able to meet our expenditure about 6 months from now, so I think we must face that we have this $180 million deficit. If we compare that to our rates income, this deficit is equal to 14.8% of our rates. If we look at this $180 million and then look at the services in hawkers control and recreational facilities etc., we will see that this $180 million is about 40% of our expenditure in these two areas. To ask the Government to give us money is pretty difficult because the Government also has a large deficit. I must point out here that although we can still make ends meet for the time being, I think in the next financial year we must think of more constructive means of saving money otherwise there will be doubts in the survival of the Urban Council.

MR. EDMUND CHOW (in Cantonese):—Mr. Chairman, talking about the budget of the Urban Council for the next financial year, I do not think we should allow the appearance of a deficit. Of course I am not objecting to any budget with estimated deficit, I remember about six or seven years ago, when I talked about the budget we also faced a deficit and we agreed that a healthier budget should allow a small deficit. But now, the time have changed, in the past we can rely on rates because we have the boom of the real estate market and in the past we had also been allocated funds from the Government, because the Government did not face such a high deficit. Now I think the time have changed we do not have the same optimistic environment. The Urban Council has been trying to save money and some Urban Councillors think that we should increase the rates and to provide less services. Although we have different views, if we do not have resources we simply cannot provide any service, so the question is should we keep on providing so many services or to place our hope on miracles? I think we must be realistic these days and we should not spend more than we have. The most important thing is to look at our resources and to spend probably, I think we should not allow deficit, we hope that we can have a balance if we do not want to increase rates and if we do not scrape any of our facilities or services, then we must use our reserve fund, and if we are going to use the reserve fund, then by 31 March 1986, as you pointed out, we will only have about $77 million. Mr. Young told us that if we are not going to spend our money carefully, then we cannot survive more than 15 days 8 hours after 6 months from now. We have been saving our reserve fund for future uses and I do not think we should spend this sum without careful consideration, other parties will object to our suggestion of increasing the rates, then perhaps we should think of other ways of finding more income. Now we have a lot of deficit in our projects and I think that the Government also has a very high deficit, and I think the Government would extend its tax net and I think, of course, the consumers will have to pay more tax for consumers' items. I think the Urban Council should consider discussing this with the Central Government and to see whether it is possible for