ENG-1979 — Page 67

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FINANCE AND ECONOMY

The Lotteries Fund, established in 1965, is mainly for financing the development of social welfare services by grants and loans. The fund started with a transfer from general revenue of $7.4 million. An additional $140.3 million has been credited between 1965 to 1979 through the net proceeds of the former Government Lottery and, with effect from September, 1975, the Mark Six Lottery and the auctions of special vehicle registration numbers. At March 31, 1979, liquid assets of the fund totalled $67.8 million and grants and loans amounting to $125.4 million had been approved.

The Home Ownership Fund was established in 1977 to finance the construction of flats for sale to the public, under a scheme designed to promote home ownership among families at a specified income level. At March 31, 1979, a total of $986.5 million had been transferred to the fund from general revenue to meet land premia, building construction costs and other charges. On the same date, liquid assets of the fund totalled $243.3 million.

Audit of Public Accounts

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The audit of all the government's accounts is carried out by the Director of Audit. He also audits the accounts of the Urban Council, the Housing Authority and more than 80 statu- tory and non-statutory funds and other public bodies, as well as reviewing the operations of the multifarious government-subvented organisations working in Hong Kong. The director's appointment, tenure of office, duties and powers are prescribed in the Audit Ordinance. To ensure his independence in the exercise of his functions, the ordinance provides that he shall not be subject to the direction or control of any other person or authority. It also prescribes certain safeguards against his dismissal or premature retire- ment from office. Following an amendment to the Audit Ordinance enacted during the year, the autonomy of the Director of Audit was further secured by his ceasing to be included in the civil service establishment.

The Director of Audit's report on the annual accounts of the government is submitted to the Governor as President of the Legislative Council. It is then referred to the Public Accounts Committee, comprising a chairman and six members, all of whom are unofficial members of the Legislative Council nominated by the President. The committee is empower- ed under the Standing Orders of the Legislative Council to consider reports of the Director of Audit on the accounts of the government, on any other accounts required to be laid before the Legislative Council as the committee may think fit, and on any matter incidental to the performance of the Director of Audit's duties or the exercise of his powers. In the operation of its authority, the committee may call any public officer or other person con- cerned to give information and explanations and to produce such documents and records which it may require.

The report by the Public Accounts Committee on the Director of Audit's report relating to the accounts of the government is tabled in the Legislative Council at the same time as the Director of Audit's report. Both reports are transmitted to the Secretary of State.

Hong Kong's Fiscal Performance

A small deficit in the government's accounts was returned in the first financial year after World War II. Subsequently with the exception of 1959-60, 1965–6 and 1974-5 when there were deficits of some $45 million, $137 million and $380 million respectively - a series of surpluses, some of them substantial, have been accumulated in the years up to and including 1978-9. Such reserves are required to secure the government's contingent liabili- ties, to enable seasonal deficits to be met, and to ensure that the government is able to cope with short-lived tendencies for expenditure to exceed revenue or for revenue yields to fall below expectations.