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HONG KONG URBAN COUNCIL

ADDRESS BY CHAIRMAN

CHAIRMAN (in English):- Ladies and Gentlemen, the meeting is called to order. Before taking the first item on the agenda, I would like to congratulate Dr. Kim CHAN on his appointment to the Legislative Council with effect from 1 September 1984. (applause)

MINUTES

The minutes of the meeting held on 10 July 1984 were confirmed.

PAPER

The following paper was laid on the table:

(1) Report to the Urban Council by the Director of Urban Services and Secretary, Urban Council, for the month of July 1984.

MOTIONS

1. MR. HILTON CHEONG-LEEN, CHAIRMAN, URBAN COUNCIL, moved the following motion:-

'RESOLVED that the audited Statement of Assets and Liabilities and Statement of Receipts and Payments of the Urban Council for the year ended 31 March 1984, be adopted.'

He said (in English):—In accordance with Section 36(4)(c) of the Urban Council Ordinance, I move the adoption of the audited Statement of Assets and Liabilities and Statement of Receipts and Payments of the Urban Council for the year ended 31 March 1984.

Members will be pleased to note that, once again, the Director of Audit's Report and Certificate on the Statements is not qualified by any observation on the manner in which the Council's accounts have been kept and rendered.

Also in accordance with Section 40(4) of the Urban Council Ordinance, one copy of the certified statements will be forwarded to His Excellency the Governor.

MR. H. M. G. FORSGATE, VICE-CHAIRMAN, URBAN COUNCIL, seconded (in English)-Mr. Chairman, I rise to second your motion.

HONG KONG URBAN COUNCIL

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I would like to elaborate further on the accounts and comment on the overall financial position of the Urban Council. A deficit of $87 million arose in 1983-84, only the second time since the Urban Council became financially autonomous in 1973 that a deficit has been incurred. In 1983-84, the Urban Council held its share of the rate to 8% (the same level as in 1982-83) and the additional income from revised fees and charges that were introduced in 1983-84 fell far short of the additional cost of salaries and operational expenditure. The deficit necessitated a transfer of $85 million from the General Reserve Fund, thereby reducing the Urban Council's reserves to $289 million.

With effect from 1 April 1984, properties were re-valued for rating purposes and the Urban Council reduced its rate percentage from 8% to 2%. The Urban Council's yield from rates this year is expected to increase by 18% to $1,175 million. After taking into account likely underspendings and additional income from fee revisions introduced after the estimates were prepared, the deficit is expected to fall to $30 million. Although this is an improvement when compared with 1983–84, it will further reduce our reserves.

Based on the recently completed revised Five Year Forecast, a deficit of almost $200 million is expected in 1985-86. This increased deficit is mainly due to the additional cost of salaries arising from the 1984 Government salary revision, the cost of the Recreation and Sport Service which will become the responsibility of the Urban Council next year, and the increased expenditure on capital projects.

I mentioned one year ago when seconding the motion to adopt the 1982-83 Urban Council accounts that the Capital Works Select Committee was carefully examining all the projects submitted for functional select committees, and which were estimated to cost at that time $2,700 million for the five-year period. This review was necessary because of financial constraints. By re-scheduling projects, the approved capital works programme has been reduced to $1,800 million for the same period at current prices, and the numerous projects in the programme are being regularly reviewed.

It will again be necessary to draw on the reserves in 1985-86 to cover the forecast shortfall between revenue and expenditure. However, the cumulative effect of the deficit in 1983-84 and the expected deficits in 1984-85 and 1985-86 will reduce the reserves to their lowest level ever. Additional revenue will therefore be required in 1985-86 so as to maintain reserves at a reasonable level.

The deficits now facing the Council emphasise the importance of the regular annual reviews which the select committees conduct of the various fees and charges under their control. Even though these are recognized as being only secondary sources of revenue, in the present financial climate the Council cannot afford to overlook any revenue source no matter how small, if it is to continue to maintain the standards of its services.

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