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the total expenditure to above $2.1 billion. In order to implement these projects and other measures to improve our services, it is estimated that the Urban Council's expenditure will be increased by about 7% in real terms annually in the next 3 years.
If the Finance Branch's proposal of offering the Urban Council $18.7 billion from the rates in the next 3 years is approved by the Legco, we may have difficulties in carrying through the various UC projects. If the funding is cut as proposed, our reserve will be exhausted by 1999/2000 and we will also get into a debt of $2.1 billion. The Urban Council's 1997/98 Estimates of Revenue and Expenditure indicates that in the past two years, the expenditure of the Council had grown at a rate of $1 billion annually. In the coming 1997/98 financial year, our expenditure will increase to $1.8 billion resulting in a projected deficit of $1 billion, as against the estimated deficit of about $53 million for the current 1996/97 financial year.
Nevertheless, since we adopted prudent financial measures when circumstances were more favourable in the past, we have accumulated a reserve of $3 billion. This will help us through the time of deficit and by the end of 1997/98 financial year, we will still have a reserve of about $1.9 billion which will enable us to meet the unexpected expenditure. However, if we take into account the inflation rate of 8% in formulating our budget for the next three years, the total expenditure of the Council will amount to $28.3 billion. Although the Council can set aside $4.4 billion from the other sources of revenue such as admission charges and licence fees etc. and use $1.4 billion from our reserve to cover part of the operation costs in the coming 3 years, we still need to have $22.5 billion from the rates if we are to go ahead with the various projects and maintain a sound reserve. If the Finance Branch's proposal of providing the Urban Council with only $18.7 billion from the rates is approved, we will have to cut our total expenditure for the next 3 years by $3.8 billion. Therefore, I really hope that the Government would look again at our 5-year forecast and increase the rates allocation for us so as to meet our needs in various aspects. In fact, if we raise the licence fees and admission charges by 100% and thereby increase our revenue from the budgeted $4.4 billion to $8.8 billion in the next 3 years, the above problem can be solved. But I believe that the public do not wish to see this because it would increase their burden. Nevertheless, it is our hope to increase the sources of income and reduce expenditure, to make good use of our existing resources and also to cut unnecessary expenses.
Lastly, I hope that we can continue to handle the financial matters of the Council and approve the expenditure proposals prudently so as to ensure, as always, that in undertaking anything we will continue to have our prime considerations of service to the public, value-for-money and cost-effectiveness.
Mr. Chairman, with these remarks, I support the motion.
Page 389 of 498
Page 389 of 498
Page 389 of 498
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the total expenditure to above $2.1 billion. In order to implement these projects and other measures to improve our services, it is estimated that the Urban Council's expenditure will be increased by about 7% in real terms annually in the next 3 years.
If the Finance Branch's proposal of offering the Urban Council $18.7 billion from the rates in the next 3 years is approved by the Legco, we may have difficulties in carrying through the various UC projects. If the funding is cut as proposed, our reserve will be exhausted by 1999/2000 and we will also get into a debt of $2.1 billion. The Urban Council's 1997/98 Estimates of Revenue and Expenditure indicates that in the past two years, the expenditure of the Council had grown at a rate of $1 billion annually. In the coming 1997/98 financial year, our expenditure will increase to 58 billion resulting in a projected deficit of $1 billion, as against the estimated deficit of about $53 million for the current 1996/97 financial year.
Nevertheless, since we adopted prudent financial measures when circumstances were more favourable in the past, we have accumulated a reserve of 3 billion. This will help us through the time of deficit and by the end of 1997/98 financial year, we will still have a reserve of about 1.9 billion which will enable us to meet the unexpected expenditure. However, if we take into account the inflation rate of 8% in formulating our budget for the next three years, the total expenditure of the Council will amount to $28.3 billion. Although the Council can set aside $4.4 billion from the other sources of revenue such as admission charges and licence fees etc. and use $1.4 billion from our reserve to cover part of the operation costs in the coming 3 years, we still need to have $22.5 billion from the rates if we are to go ahead with the various projects and maintain a sound reserve. If the Finance Branch's proposal of providing the Urban Council with only $18.7 billion from the rates is approved, we will have to cut our total expenditure for the next 3 years by $3.8 billion. Therefore, I really hope that the Government would look again at our 5-year forecast and increase the rates allocation for us so as to meet our needs in various aspects. In fact, if we raise the licence fees and admission charges by 100% and thereby increase our revenue from the bugeted $4.4 billion to $8.8 billion in the next 3 years, the above problem can be solved. But I believe that the public do not wish to see this because it would increase their burden. Nevertheless, it is our hope to increase the sources of income and reduce expenditure, to make good use of our existing resources and also to cut unnecessary expenses.
Lastly, I hope that we can continue to handle the financial matters of the Council and approve the expenditure proposals prudently so as to ensure, as always, that in undertaking anything we will continue to have our prime considerations of service to the public, value-for-money and cost-effectiveness.
Mr. Chairman, with thesc remarks, I support the motion.
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Page 389 of 498
Page 389 of 498
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