For discussion FCR(96-97)88
on 10 January 1997

ITEM FOR FINANCE COMMITTEE

HEAD 46 - GENERAL EXPENSES OF THE CIVIL SERVICE Subhead 033 Home Financing Scheme

Members are invited to approve supplementary provision of $146 million under Subhead 033 Home Financing Scheme.



PROBLEM

The approved provision for the Home Financing Scheme (HFS) under Head 46 is insufficient to meet increased expenditure in 1996-97.

PROPOSAL

2. The Secretary for the Civil Service (SCS) proposes supplementary provision of $146 million under Subhead 033 Home Financing Scheme.

JUSTIFICATION

3. The Home Financing Scheme was introduced on 1 October 1990 for officers on Master Pay Scale (MPS) point 34 or above (or equivalent) to promote home ownership among civil servants. Participants are eligible for a monthly Home Financing Allowance (HFA) for a maximum period of 120 months and a one-off downpayment loan to help them to acquire residential property in Hong Kong. Officers appointed before 1 October 1990 who qualify for the Private Tenancy Allowance (PTA) and Non-departmental Quarters (NDQs) can opt to join the HFS by forfeiting their entitlement to PTA and NDQs before the option deadline1. They will have a reduced entitlement period under the Scheme if they opt to join the HFS after the deadline. Officers appointed on or after 1 October 1990 are eligible for HFA as a condition of service but are not eligible for PTA/NDQs. The HFS will achieve long-term savings in Government expenditure on the provision of housing benefits to civil servants.

4. On the basis of the actual expenditure for the eight months from April to November 1996, SCS estimates that expenditure for the HFS in 1996-97 will exceed the approved provision by $146 million, calculated as follows -



$ million

(a)

Actual expenditure from 1 April to 30 November 1996

1,132.57

(b)

Estimated expenditure from 1 December 1996 to 31 March 1997

618.73

_________

(c)

Estimated total expenditure for 1996-97 [(a) + (b)]

1,751.30

Less

(d)

Approved provision for 1996-97

1,605.81

_________

(e)

Shortfall [(c) - (d)]

Say

145.49

$146 million
__________

5. The supplementary provision required is mainly due to -

  1. a greater than anticipated increase in the number of HFS participants in 1996-97. This accounts for $61 million of the supplementary provision required. In estimating the provision required for 1996-97, SCS allowed for a 7% increase in the number of HFS participants, from 6 860 at end March 1996 to 7 340 at end March 1997. However, the number of recipients has already increased by 9.5% during the first eight months of this financial year to 7 510. The new entrants include 166 officers who were in receipt of PTA or NDQs but who gave up their entitlement to these benefits to join HFS with a reduced entitlement period after the option deadline. Having regard to the overall trend, SCS anticipates a further increase in the number of HFS participants to 7 850 by the end of March 1997; and
  2. an increase in the average payment for existing participants. This increase accounts for $83 million of the supplementary provision required. When preparing the estimated requirement for 1996-97, SCS assumed $18,500 as the average payment for each existing participant, based on the actual expenditure and number of participants at that time. However, on the basis of the actual expenditure and number of participants over the past eight months, the average payment for each participant turns out to be $19,500.

FINANCIAL IMPLICATIONS

6. If Members approve the proposal, the supplementary provision required will be offset by deleting an equivalent amount from the following subheads -


$ million

(a) Subhead 014 Home purchase allowance

80

(b) Subhead 023 Quartering
Item 253 Private tenancies2

34

(c) Subhead 013 Personal allowances
Item 144 Overseas education allowance

20

(d) Subhead 022 Passages

12

____

Total

146

____

The surpluses in the above four subheads arise mainly because the numbers of officers drawing the above allowances/benefits are lower than originally anticipated, in the light of the actual number of beneficiaries in the past months. In particular, since serving officers at MPS point 34 or above (or equivalent) forfeit their existing entitlement to PTA/NDQs on joining the HFS, there will be savings on PTA and NDQs.

Civil Service Branch
January 1997

1 -- The option deadline was 30 September 1995 for officers appointed before 1 october 1990 and having reached MPS point 34 or above (or equivalent) on or before 30 September 1995. For officers appointed before 1 October 1990 but reaching MPS point 34 or above (or equivalent) after 30 September 1995, the option deadline would be six months after they have reached MPS point 34 (or equivalent).
2 -- Subhead 023 Quartering Item 253 Private tenancies is for payment of private tenancy allowances to existing and new recipients.


Last Updated on 5 August 1999