486
HONG KONG URBAN COUNCIL
The latest drastic reduction of the allocation to this Council by the Finance Branch reflects that central government considers our resources have not been properly utilized. One of the points to base on is the continual rise of this Council's reserve fund. The rise in property value in recent years is actually one of the main causes, resulting in actual rates gone higher than expected. Upon receipt of notice that the Finance Branch would reduce our budget drastically, this Council, before conducting a further detailed review, agreed to cut back by $2.45 billion. It gave the Finance Branch a hasty impression and made them feel that this Council did not contemplate on the budget well. That act effected the loss of a well-based support to this Council's request for additional allocation from central government.
The Democratic Party tried to ask the Department how that sum to be cut back from the budget was arrived at. The Department failed to pinpoint the nature of services to be cut back.
The above shows that the Department was rash in devising the budget. The drastic reduction suggested by the Finance Branch came as no surprise. But then, we feel that in handling the budget of this Council, the Finance Branch overacted and was rather hasty.
Firstly, with this reduction, we get only $18.7 billion for the next three years representing $3.8 billion short to fully implement our plans. Even if we make use of our reserves, we will see a deficit of $2.1 billion by the year 1999/2000. This reduction signals the probable delay in implementing Five-Year Plans of our Select Committees as well as the lowering of service qualities. At the same time, to increase income and make up for the shortage of funds, this Council will inevitably enlarge the fee collection base and make annual revision of fees. The burden of our deficit will then be on our citizens who will have to pay more. This is something we don't want to see.
On the other hand, the Secretary for the Treasury has pointed out there was an annual increase of 12% on actual expenditure over the past six years. It seems to be a hint that the Urban Council does not need an average growth rate of 15% as suggested in the budget. Does it mean that we should retain our annual growth within 12%? I am afraid I have to ask for the principle behind this financial arrangement. To go back to the annual growth of 12% as hinted at by the Secretary for the Treasury, I must say that the annual allocation proposed by the Finance Branch is not enough to meet that target. After careful calculations, it is found that if we keep our annual growth within 12%, we will not be able to keep our reserve level at two months' expenditure (or $1.6 billion as suggested by the Treasury) in three years' time. What is more, we will meet with a deficit of $1.25 billion. As such, it is hard for us to see the basis of the proposal by the Finance Branch to cut our annual allocation.
The Democratic Party believes such a way of handling the matter will affect the income of the Urban Council. At the same time, it will make the Council's financial operation lack flexibility and independence. We therefore think the
142 of 498
486
HONG KONG URBAN COUNCIL
The latest drastic reduction of the allocation to this Council by the Financ Branch reflects that central government considers our resources have not bee: properly utilized. One of the points to base on is the continual rise of thi Council's reserve fund. The rise in property value in recent years is actually on: of the main causes, resulting in actual rates gone higher than expected. Upor receipt of notice that the Finance Branch would reduce our budget drastically. this Council, before conducting a further detailed review, agreed to cut back by $2..45 billion. It gave the Finance Branch a hasty impression and made them feel that this Council did not contemplate on the budget well. That act effected the loss of a well-based support to this Council's request for additional allocation from central government.
The Democratic Party tried to ask the Department how that sum to be cut back from the budget was arrived at. The Department failed to pinpoint at the nature of services to be cut back.
The above shows that the Department was rash in devising the budget. The drastic reduction suggested by the Finance Branch came as no surprise. But then, we feel that in handling the budget of this Council, the Finance Branch overacted and was rather hasty.
Firstly, with this reduction, we get only $18.7 billion for the next three years representing $3.8 billion short to fully implement our plans. Even if we make use of our reserves, we will see a deficit of $2.1 billion by the year 1999/2000. This reduction signals the probable delay in implementing Five-Year Plans of our Select Committees as well as the lowering of service qualities. At the same time, to increase income and make up for the shortage of funds, this Council will inevitably enlarge the fee collection base and make annual revision of fees. The burden of our deficit will then be on our citizens who will have to pay more. This is something we don't want to see.
On the other hand, the Secretary for the Treasury has pointed out there was an annual increase of 12% on actual expenditure over the past six years. It seems to be a hint that the Urban Council does not need an average growth rate of 15% as suggested in the budget. Does it mean that we should retain our annual growth within 12%? I am afraid I have to ask for the principle behind this financial arrangement. To go back to the annual growth of 12% as hinted at by the Secretary for the Treasury, I must say that the annual allocation proposed by the Finance Branch is not enough to meet that target. After careful calculations, it is found that if we keep our annual growth within 12%. we will not be able to keep our reserve level at two months' expenditure (or $1.6 billion as suggested by the Treasury) in three years' time. What is more, we will meet with a deficit of $1.25 billion. As such, it is hard for us to see the basis of the proposal by the Finance Branch to cut our annual allocation.
The Democratic Party believes such a way of handling the matter will affect the income of the Urban Council. At the same time, it will make the Council's financial operation lack of flexibility and independence. We therefore think the
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