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HONG KONG URBAN COUNCIL

I am also pleased to be able to report that Chairmen (and in the normal usage of this Council the ladies are included!) and Executive Directors of the Urban Services Department have been able to make savings, all of which are reflected in the reduction of the originally projected deficit.

All the same, I must put down a marker here: I am circulating with this statement an appendix showing the financial summary from 1973 to 1986, and you will note that in the last ten years we have forecast deficits for every year but have only had deficits in three of those years, and in each case there have been considerable differences between the forecast budget and the actual result. Now, budgets serve a dual purpose. They are a management tool and they inform the public, and especially that part of the public who pay rates and whose money we are spending, what will be happening in the coming year. For both these purposes it is very important that budgets are accurate.

As a management tool the budget allows each select committee chairman to monitor the Department's expenditure and it is important that Chairmen do this. And as far as the public is concerned, if we repeatedly state that we will have a deficit and therefore will need more money and then it turns out that we don't have a deficit, we will lose credibility. Then when we really need money we may not get it because the public's representatives in LEGCO may well then turn around and tell us that since our budgets have been over-pessimistic no doubt this time we can live with less money. Can I therefore appeal now to all Committee Chairmen and to all Department Managers to make sure that our forthcoming budget,which will have to be submitted to the Governor in December, will be much more accurate than those of the last ten years.

Let me hasten to add, lest I be struck down by a thunderbolt from my predecessor up there on the dais, that this poor forecasting was not the fault of the previous Chairmen of the Finance Committee. There are many reasons for over-budgeting. One of the major factors is that contractors working on our wide range of civic projects fall behind in their work for various reasons, often the weather. Thus projects are delayed and the budget projections are thrown out of balance. I would therefore like to suggest that, to avoid these wide fluctuations from year to year between projected and actual expenditure on Capital projects, a dedicated Capital Works fund, separate from the Council's general fund, be created later in the current financial year.

HONG KONG URBAN COUNCIL

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And in this connection, please let me make it clear that I see the function of the Finance Committee as positive, not negative. We are there to say 'Yes' to worthwhile projects and if, because of unforeseen circumstances, these arise outside the budget and there are sufficient reserves, there is no reason why the money should not be allocated. It is in this spirit that I ask the Chairmen of all Select Committees in conjunction with the Department to put greater emphasis on drawing up realistic individual budgets with attainable goals.

I think it is necessary to say that I know the Department scrutinises each and every proposal involving financial expenditure, following which the Council's Select Committees gives each financial proposal a second thorough going over to identify possible savings. We should not hide our light under a bushel: I think we do a very good job in getting value for money for the ratepayers of Hong Kong.

I want to repeat that the aim of the Finance Select Committee is not to curb spending for the sake of making cutbacks. The Council has many broad responsibilities and the Finance Select Committee wishes to see them all fulfilled so that City Services are maintained and bettered whenever possible, and more and better facilities are provided for the use and enjoyment of the people of

Hong Kong.

There is a new spirit among Councillors these days, a most welcome spirit under our new Chairman, of getting together and pulling together, and so may I appeal to all of you to also pull together as a team when it comes to the dollars and cents. This, I am sure, will be appreciated by the ratepayers of Hong Kong.

APPENDIX I

Financial Summary 1973–74 to 1985-86

Approved Budget Surplus/(Deficit)

$ Million

BENKOMS

Actual Results Surplus (Deficit)

$ Million

1973-74

41

62

1974-75

(11)

25

1975-76

(15)

33

1976-77

(47)

26

I think also, and this is a personal opinion, that another reason for inaccuracy in budget forecasting lies in the psychological attitude of hamstering. In other words, the fear that once money not spent is returned to the general reserve the Department or Select Committee concerned will never get it back.

Therefore, as an exercise, we will analyse the under spending and savings in 1985-86 broken down by Select Committees and will discuss these in a future Finance Select Committee to which all Chairmen of Select Committees will be cordially invited as such a discussion might help with the budget process for

1977-78

(22)

74

1978-79

(68)

40

1979-80

(141)

20

1980-81

(206)

(65)

1981-82

(319)

86 (Note 1)

1982-83

(547)

6 (Note 2)

1983-84

(266)

1984-85

(196)

next year.

1985-86

(180)

(88)

32 (21)