Page 108 of 182
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HONG KONG URBAN COUNCIL
The bad news is that the budget we are now discussing for the next financial years shows a deficit out turn of HK$57 million.
In terms of percentages of our total budget these figures are very small and really represent a break-even situation.
Our aim for some time now has been to provide the most cost effective services to the public possible, spending our money as wisely as possible to improve the quality of life in Hong Kong for as many people as possible, and at the same time, to build a necessary three months reserve while living within our income. And the figures I have just given confirm that so far we have been on target.
However, looking at our five year forecast we find that in the financial year 1990-91 our inflation adjusted deficit will be over HK$170 million. In the following year the inflation adjusted deficit will be over HK$300 million, and in 1992–93 financial year we estimate it will be over HK$200 million. Our Capital Works programme alone in the years 1988-1993 will spend HK$2.3 billion. The budget before us forecasts a reserve of something just over HK$800 million at the 31 March 1990, and in terms of 1990-91 expenditure that will be slightly less than a three months reserve.
Mr. Chairman, in case I am not making myself clear, I am waving a warning flag. Under the circumstances, it is probably not appropriate to wave a red flag, so this is something of a yellow flag. It means, attention, the lights are just about the change from green to red. I will return to this subject in a minute. But before doing so, let me give you some figures for the current year's budget and also draw your attention to certain figures in next year's budget.
First of all, so that I won't be accused of contradicting myself, in spite of our being very careful last year in our budget, our crystal ball was partly cloudy as we are about to double the surplus we forecast, always keeping in mind that the HK$148 million surplus forecast represents only about 5% of our total budget. There are several reasons for this increase. Our rates income is so far HK$25 million higher than it was originally forecast to be by the Central Government. We also have a HK$15 million increase in interest received, because last year when we were preparing this budget interest rates were low and there was even talk of negative interest rates, and now they are very much higher than we expected them to be. Our receipts from stadia hire were HK$7 million higher than expected, which is good news, our facilities being well used, and certain special expenditure was deferred to the following year because of slippage of contracts.
We expect a total expenditure this year of HK$2.508 billion. This represents an increase of 18.3% or HK$389 million over the previous year. Our total revenue is expected to be HK$2.656 billion, which is an increase over the previous year of 9.2% or HK$223 million. As usual, the wages and salaries of our staff take the highest share being no less than 60.8% of the total expenditure, while Capital Works represents 14.35% of total expenditure.
HONG KONG URBAN COUNCIL
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Now let us go to next year's budget. In the financial year 1989-90 we expect to spend HK$3 billion, that is an increase in spending of 19.6% or HK$492 million more than this year. Total revenue is expected to be HK$2.943 billion which is an increase of 10.8% or HK$287 million over this year.
Now we have a bit of good news because the percentage of personal emoluments in next year's budget is being reduced to 55%. The reduction is mainly due to the lowering of staff oncosts, a long overdue concession we have finally managed to get out of the Central Government, which as you know has been quite a sore point with all of us. But also we have a very large Capital Works programme next year and considerable increases in special expenditure which will affect the P.E. ratios. In addition, our contracting out of services, our many value for money exercises, and our introduction of more cost effective methods for dealing with the Council's major areas of activity, and especially the introduction of modern management techniques and technology, contribute to savings in personal emoluments.
Allow me now to highlight some of the increases in expenditure. First of all, as you all know, the Central Government in its wisdom has decided to increase the size of this Council so our Council expenses are going up 45% from HK$9 million this year to HK$14 million next year. I sincerely hope that this particular increase will be cost effective!!
Our expenditure on vehicles will increase by 250% to HK$75 million. This is because our replacement cycle years ago was not properly planned, and we will now try to put this right over the next three to four years. Special expenditure connected mainly with the opening of the Cultural Centre, but also for the new Science and History Museums rises from HK$20 million this year to over HK$114 million next year. And in this connection, also, our exhibition and project promotion expenses rise by 50% to over HK$5 million. Fuel, light and power rises by 37% to HK$72 million, again, because a great many new venues are coming on stream and more and more lighting and air conditioning is required. Printing and publicity rises 53% to HK$32 million, and subventions rise 100% to HK$48 million mainly because next year we will be funding the Philharmonic, but also because the inflation is beginning to bite hard and all the deserving cultural and sporting activities we subsidize are costing more.
As you all now, we are bound by the Memorandum of Administrative Arrangements issued in 1973 to have all our service and mechanical maintenance looked after by the EMSD. The expenditure for this maintenance increases from HK$91 million this year to HK$105 million next year. Out of this HK$33.5 million this year is for vehicle maintenance. This increases to approximately HK$37 million next year, and one of my personal projects will be to take a close look at these particular expenses which I, personally, believe are far too high and cannot really be justified, and I will refer to this matter again in my Annual Debate Speech.
Page 108 of 182
Page 108 of 182
208
HONG KONG URBAN COUNCIL
The bad news is that the budget we are now discussing for the next financial years shows a deficit out turn of HK$57 million.
In terms of percentages of our total budget these figures are very small and really represent a break-even situation.
Our aim for some time now has been to provide the most cost effective services to the public possible, spending our money as wisely as possible to improve the quality of life in Hong Kong for as many people as possible, and at the same time, to build a necessary three months reserve while living within our income. And the figures I have just given confirm that so far we have been on target.
However, looking at our five year forecast we find that in the financial year 1990-91 our inflation adjusted deficit will be over HK$170 million. In the following year the inflation adjusted deficit will be over HK$300 million, and in 1992–93 financial year we estimate it will be over HK$200 million. Our Capital Works programme alone in the years 1988-1993 will spend HK$2.3 billion. The budget before us forecasts a reserve of something just over HK$800 million at the 31 March 1990, and in terms of 1990-91 expenditure that will be slightly less than a three months reserve.
Mr. Chairman, in case I am not making myself clear, I am waving a warning flag. Under the circumstances, it is probably not appropriate to wave a red flag, so this is something of a yellow flag. It means, attention, the lights are just about the change from green to red. I will return to this subject in a minute. But before doing so, let me give you some figures for the current year's budget and also draw your attention to certain figures in next year's budget.
First of all, so that I won't be accused of contradicting myself, in spite of our being very careful last year in our budget, our crystal ball was partly cloudy as we are about to double the surplus we forecast, always keeping in mind that the HK$148 million surplus forecast represents only about 5% of our total budget. There are several reasons for this increase. Our rates income is so far HK$25 million higher than it was originally forecast to be by the Central Government. We also have a HK$15 million increase in interest received, because last year when we were preparing this budget interest rates were low and there was even talk of negative interest rates, and now they are very much higher than we expected them to be. Our receipts from stadia hire were HK$7 million higher than expected, which is good news, our facilities being well used, and certain special expenditure was deferred to the following year because of slippage of
contracts.
We expect a total expenditure this year of HK$2.508 billion. This represents an increase of 18.3% or HK$389 million over the previous year. Our total revenue is expected to be HK$2.656 billion, which is an increase over the previous year of 9.2% or HK$223 million. As usual, the wages and salaries of our staff take the highest share being no less than 60.8% of the total expendi- tures, while Capital Works represents 14.35% of total expenditure.
HONG KONG URBAN COUNCIL
Page 108 of 182
209
Now let us go to next year's budget. In the financial year 1989-90 we expect to spend HK$3 billion, that is an increase in spending of 19.6% or HK$492 million more than this year. Total revenue is expected to be HK$2.943 billion which is an increase of 10.8% or HK$287 million over this year.
Now we have a bit of good news because the percentage of personal emoluments in next year's budget is being reduced to 55%. The reduction is mainly due to the lowering of staff oncosts, a long overdue concession we have finally managed to get out of the Central Government, which as you know has been quite a sore point with all of us. But also we have a very large Capital Works programme next year and considerable increases in special expenditure which will effect the P.E. ratios. In addition, our contracting out of services, our many value for money exercises, and our introduction of more cost effective methods for dealing with the Council's major areas of activity, and especially the introduction of modern management techniques and technology, contribute to savings in personal emoluments.
Allow me now to highlight some of the increases in expenditure. First of all, as you all know, the Central Government in its wisdom has decided to increase the size of this Council so our Council expenses are going up 45% from HK$9 million this year to HK$14 million next year. I sincerely hope that this particular increase will be cost effective! !
Our expenditure on vehicles will increase by 250% to HK$75 million. This is because our replacement cycle years ago was not properly planned, and we will now try to put this right over the next three to four years. Special expenditure connected mainly with the opening of the Cultural Centre, but also for the new Science and History Museums rises from HK$20 million this year to over HK$114 million next year. And in this connection, also, our exhibition and project promotion expenses rise by 50% to over HK$5 million. Fuel, light and power rises by 37% to HK$72 million, again, because a great many new venues are coming on stream and more and more lighting and air conditioning is required. Printing and publicity rises 53% to HK$32 million, and subventions rise 100% to HK$48 million mainly because next year we will be funding the Philharmonic, but also because the inflation is beginning to bite hard and all the deserving cultural and sporting activities we subsidize are costing more.
As you all now, we are bound by the Memorandum of Administrative Arrangements issued in 1973 to have all our service and mechanical mainten- ance looked after by the EMSD. The expenditure for this maintenance increases from HK$91 million this year to HK$105 million next year. Out of this HK$33.5 million this year is for vehicle maintenance. This increases to approximately HK$37 million next year, and one of my personal projects will be to take a close look at these particular expenses which I, personally, believe are far too high and cannot really be justified, and I will refer to this matter again in my Annual Debate Speech.
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