For discussion FCR(96-97)63
on 25 October 1996
ITEM FOR FINANCE COMMITTEE
DELEGATION OF FINANCIAL POWERS
Members are invited to approve -
- amendments to the delegation of financial powers made under section 8 of the Public Finance Ordinance in respect of expenditure under the General Revenue Account; and
- amendments to the delegations applicable to Head 708 (other than capital subventions projects) and Head 710 of the Capital Works Reserve Fund.
The limit of the powers delegated by Members to the Financial Secretary to approve supplementary provision and to increase and create non-recurrent commitments (i.e. capital account commitments) in respect of expenditure under the General Revenue Account (GRA) is currently $8 million. This applies similarly to projects (other than capital subventions projects) under Head 708 Capital Subventions and Major Systems and Equipment1 and in respect of projects under Head 710 Computerisation of the Capital Works Reserve Fund (CWRF). The limit was set in July 1993 and has been eroded by inflation.
(a) Delegation under section 8 of the Public Finance Ordinance
2. In order to maintain the real value of the level of delegation, we propose that Members, exercising the power conferred on them by section 8(3) of the Public Finance Ordinance, raise from $8 million to $10 million the delegated authority of the Financial Secretary to approve supplementary provision for departmental expenses subheads, other charges subheads, capital account (block vote) subheads, personnel related expenses subheads, and recurrent subventions subheads (where supplementary provision is required for expenditure other than on salaries and allowances)2. As is the current practice, this new limit will apply to the cumulative value of supplementary provision that may be approved under delegated powers in respect of each subhead in any one financial year.
3. With regard to individual capital account items which are funded from the GRA, we propose to increase the Financial Secretarys existing delegated authority to approve new commitments from $8 million to $10 million. Likewise, for existing capital account commitments, we propose to raise the limit on the Financial Secretarys power to increase the commitment from $8 million to $10 million. As is the current practice, this new limit will apply to the cumulative value of any increases that may be approved under delegated powers.
4. Subject to approval of the proposals contained in paragraphs 2 and 3 above, we further propose, in compliance with section 8(4) of the Public Finance Ordinance that the Financial Secretary may further delegate his powers to approve changes to designated public officers.
(b) Delegations applicable to Heads 708 and 710 of CWRF
5. The level of financial powers delegated by Members under Head 708 (other than for capital subventions projects) is in line with the limit applied to capital account items in the GRA. We therefore propose that the new limit of authority set out in paragraph 3 above should extend to projects (other than capital subventions projects) under Head 708 and to projects under Head 710. Subject to approval of this proposal, we intend that the Financial Secretary will further delegate his powers to approve changes within the new limit to certain public officers in accordance with paragraph (a) of the Resolution of 15 May 1985 concerning the CWRF.
6. Members approved the existing limit of delegated authority in July 1993. Since then, the cumulative inflation as measured by the Consumer Price Index (A) amounted to 125%, derived as follows -
where 135.9 represents the value of the Consumer Price Index (A) at July 1993, 170.2 represents the value at August 1996.
To restore the real value of the limit of delegated authority, we propose to increase it by 25%, that is increasing the limit from $8 million to $10 million.
7. There are no additional financial implications arising from the proposals. However, their implementation should result in quicker and simpler procedures for the approval of relatively minor items of expenditure.
8.For Members information, a copy of section 8 of the Public Finance Ordinance which deals with delegations in respect of the GRA is at Enclosure 1. With regard to the use of the CWRF, in accordance with paragraph (a) of the Resolution of 15 May 1985, the Financial Secretary may delegate his power of administration to other public officers. An extract of the Resolution is at Enclosure 2.
9. Of the 220 Finance Committee agenda items (excluding Public Works Subcommittee and Establishment Subcommittee recommendations) considered in the 1994-95 and 1995-96 legislative sessions, nine would have been dealt with by means of the delegated authority now proposed. The proposed amendments to the delegation of financial powers will not significantly reduce the volume of business of Finance Committee. It will, however, simplify the procedures for the approval of relatively minor items of expenditure.
Enclosure 1 to FCR(96-97)63
Section 8 of the Public Finance Ordinance
8. (1) Subject to this section, no changes shall be made to the approved estimates of expenditure except with the approval of the Finance Committee upon a proposal of the Financial Secretary.
(2) Without limiting the generality of subsection (1) such changes may provide for all or any of the following matters -
- the creation of new heads or subheads;
- supplementary provision in approved or new subheads;
- variations in the establishments of posts;
- increases in the limit to the commitments which may be entered into in respect of expenditure which is not annually recurrent.
(3) The Finance Committee may delegate to the Financial Secretary the power to approve changes subject to such conditions, exceptions and limitations as are specified in the delegation.
(4) The Financial Secretary, where a delegation by the Finance Committee under subsection (3) so provides, and subject to such conditions, exceptions and limitations as are specified in the delegation, may further delegate his power to approve changes to any public officer.
(5) A delegation to any public officer under subsection (4) shall be subject to such further conditions, exceptions and limitations as the Financial Secretary may specify.
(6) Nothing in subsection (1) shall be construed as limiting or affecting -
- the power of the Governor to make any proposal, or allow or direct any proposal to be made, to the Legislative Council, the object or effect of which is to require a change to the approved estimates of expenditure; or
- a requirement under any enactment that expenditure be met from the general revenue.
(7) The Financial Secretary shall cause such changes to be made to the approved estimates of expenditure as are necessary in respect of any -
- approval given under subsection (1), (3) or (4);
- expenditure pursuant to a proposal referred to in subsection (6)(a); or
- requirement referred to in subsection (6)(b) not otherwise provided for by approval under this section.
(8) The Financial Secretary shall at the end of each quarter of the financial year or as soon as practicable thereafter -
- report to the Finance Committee changes made to the approved estimates of expenditure in that quarter upon approval by him or by any public officer pursuant to a delegation under subsection (3) or (4), as the case may be; and
- table in the Legislative Council a summary of all changes made to the approved estimates of expenditure in that quarter under this section.
(9) Without prejudice to section 9, expenditure in respect of which a change to the approved estimates is made under this section shall be charged on the general revenue notwithstanding that there has been no appropriation in respect thereof by an Appropriation Ordinance.
Enclosure 2 to FCR(96-97)63
Extract -- CAPITAL WORKS RESERVE FUND RESOLUTIONS OF THE LEGISLATIVE COUNCIL
Resolution made and passed by the Legislative Council under section 29(1) of the Public Finance Ordinance (Cap. 2) on 15 May 1985.
XXX RESOLVED with respect to the Capital Works Reserve Fund established by resolution made and passed by this Council on 20 January 1982 and published in the Gazette as Legal Notice No. 18 of 1982, and for the purpose of giving effect to arrangements for implementing paragraph 6 of Annex III to the Joint Declaration of the Government of the United Kingdom and the Government of the Peoples Republic of China signed in Peking on 19 December 1984, that with effect from the entry into force of the Joint Declaration -
- the Fund be administered by the Financial Secretary, who may delegate his power of administration to other public officers;
- the Fund comprise a suspense account, a works account and a reserve account;
- there be credited to the suspense account -
- premium income obtained from land transactions covered by paragraph 6 of Annex III to the Joint Declaration, pending deduction of the average cost of land production and sharing in accordance with paragraph 6 of Annex III to the Joint Declaration;
- all moneys received by way of interest or dividends earned in respect of moneys held in the suspense account; XXX
1 -- Members approved on 6 January 1995, vide FCR(94-95)96, inter alia, that for capital subventions projects under Head 708, the limit of the delegated powers of the Financial Secretary to increase approved project estimates and to approve new projects should be $15 million.
2 -- Members approved on 23 July 1986, vide FCR (86-87)76 that the Financial Secretary be delegated the authority to approve supplementary provision without limit in recurrent subventions subheads provided that the supplementary provision is required for salaries and allowances in accordance with approved pay scales and rates.
Last Updated on 5 August 1999