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HONG KONG URBAN COUNCIL

$376 million shows a reduction of $24 million (-6%) over the approved budget.

Turning to operational expenditure, the revised 1985-86 outturn forecast of $400 million shows an increase of $36 million (9.8%) over the revised 1985-86 outturn forecast.

The 1986-87 estimate of $412 million shows an increase of $36 million (9.8%) over the revised 1985-86 outturn forecast.

On the subject of special expenditure, the revised 1985-86 outturn forecast of $48 million shows a reduction of $52 million (-52%) over the approved provision inclusive of revotes of $50 million carried forward from 1984-85.

The 1986-87 estimate of $48 million does not include the anticipated unspent balances of special expenditure items which may need to be revoted from 1985-86. It is estimated that $45 million will remain unspent at the end of the current financial year, and may need to be revoted to 1986-87.

This year, for the first time, a provision is included in the budget for additional commitments. The 1986-87 provision of $115 million is to meet unavoidable recurrent expenditure which, it is anticipated, will be required throughout the year in excess of the amounts provided under other individual subheads of the estimates, but which cannot at present be determined with precision and specifically allocated. When, from time to time during the year, additional provision is approved, an equivalent amount under this subhead will be deleted unless savings can be identified elsewhere.

Turning to capital expenditure, the revised 1985-86 outturn forecast of $251 million shows a reduction of $81 million (-24.4%) over the approved budget. This reduction is, in the main, attributable to anticipated lower than expected expenditure on capital projects, many of which are in various stages of construction and which of course remain financial commitments for the future. However, may I emphasize that this underspending will in no way affect the high standard of municipal services and facilities presently provided.

The 1986-87 estimate of $303 million shows an increase of $52 million (20.7%) over the revised 1985-86 outturn forecast. This increase is, in the main, attributable to anticipated additional expenditure of $50 million (20%) on capital projects.

Now let us look at revenue projections. The revised 1985-86 outturn forecast of $1,723 million shows an increase of $71 million over the approved provision. The increase of 4.3% is attributable to the salary grant of $98 million from the Government in respect of the 1985-86 salary revision offset by a reduction of $27 million in secondary sources of revenue.

The 1986-87 estimate of $2,086 million shows an increase of $363 million over the revised 1985-86 outturn forecast. This increase of 21.1% is, in the main, attributable to an adjustment of $423 million in rate income offset by the deletion of any provision for a salary grant. In this regard, it should be noted it is proposed that Council would receive its rate income on the basis of rates actually collected (inclusive of penalties and surcharges) rather than the present arrangement of receiving a share of rates lawfully demanded.

HONG KONG URBAN COUNCIL

Now, to look at our dwindling reserves, the Urban Council's total reserves as at 1 April 1985 stood at $322 million. Based on the revised 1985-86 outturn forecast, the estimated deficit of $83 million will reduce the reserves to $239 million as at 31 March 1986.

Based on the budgeted surplus of $26 million for the year 1986-87, the Urban Council's reserves as at 31 March 1987 will stand at $265 million, or the equivalent of 7 weeks' expenditure.

To conclude Members can rest assured that the Finance Select Committee, of which I am the Chairman, will continue to exercise extreme vigilance and stringent financial control over the Council's financial resources.

With this lengthy but necessary preamble, I second the motion.

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