For discussion
on 16 January 1998


Subhead 033 Home Financing Scheme

Members are invited to approve supplementary provision of $67 million under Subhead 033 Home Financing Scheme.


The approved provision for the Home Financing Scheme (HFS) under Head 46 Subhead 033 is insufficient to meet increased expenditure in 1997-98.


2. The Director of Accounting Services (DAS) proposes supplementary provision of $67 million under Subhead 033 Home Financing Scheme.


3. On the basis of actual expenditure for the nine months from April to December 1997, DAS estimates that expenditure for the HFS in 1997-98 will exceed the approved provision by about $67 million, calculated as follows -

$ million

(a) Actual expenditure from 1 April to 31 December 1997

(b) Estimated expenditure from 1 January to 31 March 1998



(c) Estimated total expenditure for 1997-98 [(a) + (b)]



(d) Approved provision for 1997-98


(e) Shortfall [(c) - (d)]


Say $67 million

4. The supplementary provision required is mainly due to -

  1. a slightly greater than anticipated increase in the number of HFS participants in 1997-98. This accounts for $27 million of the supplementary provision required. In estimating the provision required for 1997-98, DAS forecast the number of HFS participants to rise by 6.5% from 7 653 at end March 1997 to 8 154 at end March 1998. However, the number of recipients has already increased by 7% to 8 185 at end December 1997. The new entrants include 72 officers who were in receipt of the Private Tenancy Allowance (PTA) or Non-departmental Quarters (NDQs) but who gave up their entitlement to these benefits to join HFS with a reduced entitlement period after the option deadline. In the light of this, DAS estimates that the total number of HFS participants will reach 8 397 by the end of March 1998; and

  2. a higher than estimated average payment per HFS participant. This increase accounts for $40 million of the supplementary provision required. When preparing the estimated requirement for 1997-98, DAS assumed $19,560 as the average payment for each participant, based on actual expenditure and number of participants at that time. However, on the basis of actual expenditure and number of participants over the past nine months, average payment for each participant is $20,000.


5. If Members approve the proposal, we will offset the supplementary provision required by deleting an equivalent amount from Subhead 014 Home purchase allowance under the same Head. The surplus in this subhead arises mainly because the number of officers drawing the allowance is lower than originally anticipated.


6. The HFS was introduced on 1 October 1990 for officers on Master Pay Scale point 34 or above (or equivalent) to promote home ownership among civil servants and to achieve long-term savings in Government expenditure on the provision of housing benefits to civil servants. Participants are eligible for a monthly Home Financing Allowance (HFA) for a maximum period of 120 months and a one-off down-payment loan to help them to acquire residential property in Hong Kong. Officers appointed before 1 October 1990 who qualify for PTA and NDQs can opt to join the HFS by forfeiting their entitlement to PTA and NDQs before the option deadline. 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.

Civil Service Bureau

January 1998