FCR(1999-2000)31

For discussion
on 2 July 1999

HEAD 63 - HOME AFFAIRS DEPARTMENT
Subhead 110 Honoraria for members of committees

Members are invited -

1. to approve a new accountable allowance to replace the existing office rental allowance for District Council members and a special allowance for Vice Chairmen of District Councils with effect from 1 January 2000;

2. to note that subject to the above changes, the existing honorarium for members and special allowance for Chairmen of Provisional District Boards will apply to District Councils from 1 January 2000; and

3. to delegate to the Secretary for the Treasury the authority to approve future revisions of the honorarium and accountable allowance for District Council members, and the special allowances for Chairmen and Vice Chairmen of District Councils annually on 1 January by reference to the movement of the Consumer Price Index (C).

PROBLEM

The ambit and level of the accountable office rental allowance (ORA) now payable to Provisional District Board (PDB) members will be insufficient to meet the expenses of District Council (DC) members' offices, including the costs of employing assistants, in view of the enhanced role of DCs. Moreover, DC Vice Chairmen require a special allowance in recognition of their added responsibilities.

PROPOSAL

2. We propose that with effect from 1 January 2000 -

1. DC members be eligible for an accountable allowance of up to $10,000 per month for meeting rental, rates, management fees, charges for water, electricity and fixed telephone and/or fax lines installed in their offices, as well as the costs of employing assistants to help them in discharging their duties as DC members;

2. DC members holding concurrently membership in the Executive Council and/or another tier of representative government be eligible for reimbursement -
   1. up to the full amount of the accountable allowance if they are operating a separate office or separate offices for their DC duties in the district and/or employing assistant(s) solely for their DC duties; or

   2. up to two-thirds of the allowance if they are operating a single office in the district for duties relating to their multiple membership and/or employing assistant(s) for these duties, provided that the expenses claimed have not already been met from allowances claimed in their other capacities;

   3. DC Vice Chairmen be eligible for a special allowance equivalent to 50% of a member's honorarium; and

   4. the Secretary for the Treasury be delegated the authority to approve future revisions of the honorarium and accountable allowances for DC members, and special allowances for DC Chairmen and Vice Chairmen annually on 1 January by reference to the movement of the Consumer Price Index (C).

Members are also requested to note that subject to the above changes, the existing honorarium for members and special allowance for Chairmen of PDBs will apply to DCs from 1 January 2000.

JUSTIFICATION

3. We carried out a public consultation exercise in 1998 to solicit views on the district organisations from the community. Members of the public were generally in favour of enhancing the role of PDBs in advising the Government and monitoring services at the district level. The Chief Executive announced in his 1998 Policy Address that we will enhance the role of District Boards (DBs). Following the enactment of the District Councils Ordinance in March 1999, 18 DCs will be established on 1 January 2000 to replace PDBs. DCs will assume more responsibilities in district affairs such as building management, fire prevention, environmental improvement, transport matters, community building and promotion of recreational and cultural activities. We need to give the future DC members additional support to enable them to carry out their duties effectively.

4. Currently PDB members receive an honorarium of $18,870 and an accountable ORA with a ceiling of $4,990 per month. The PDB Chairman is eligible for an additional special allowance equivalent to the rate of honorarium for members, due to his heavier responsibilities. These should apply to DCs with effect from 1 January 2000. Moreover, during our consultation with PDBs, many members requested additional resources to help DC members perform their enhanced role in future, particularly in meeting the costs of employing assistants. Although DC members can meet the costs of employing assistants out of their current monthly honorarium of $18,870, this is considered insufficient given that the honorarium is also intended for meeting earnings forgone due to time spent on DC business. In light of these, we propose to replace the existing ORA by a new accountable allowance for DC members at $10,000 per month. This new allowance is a considerable increase over the existing ORA and may be spent on a much wider ambit than rental and related expenses. It should be able to meet, at least in part, the costs of employing assistants and help increase the effectiveness of DC members in discharging their responsibilities.

5. The accountable allowance will be payable entirely on a reimbursement basis on production of certified receipts for expenses actually incurred by DC members and related to the running of their offices and employment of assistants for discharging their DC duties in the district concerned. The Home Affairs Department will reimburse DC members in respect of claims on rental, rates, management fees and charges for water, electricity and fixed telephone and/or fax lines installed in the office and employment of assistants, including remuneration, medical benefits and insurance payments. Such claims will be made available for public inspection upon request. DC members may pool their allowances to run joint offices and employ assistants jointly, provided that the amount claimed by each member does not exceed his individual maximum allowance and the total amount of claims made in respect of a certain office or assistant does not exceed the actual expenses incurred. DC members will need to sign an agreement declaring the proportion of expenses of running the joint office or on assistants attributable to them.

6. We consider that a DC member holding multiple membership in the Executive Council and/or another tier of representative government should be eligible for the full amount of the allowance only if he is running a separate office and/or employing assistant(s) solely for his DC duties. In the case of a DC member running a single office and employing assistants to discharge the various functions under his multiple membership, we propose that he should receive only up to two-thirds of the accountable allowance. This is in line with the present practice governing the payment of PDB honorarium for PDB members holding multiple membership in other tiers of representative government as approved by Members on 9 December 1987. In order to ensure that the total amount of claims will not exceed the actual amount expended, DC members will need to certify that the expenses incurred have not already been met from other allowances.

7. At present there is a Chairman post but no Vice Chairman post in a PDB. The District Councils Ordinance stipulates that a DC is to elect a Vice Chairman, in addition to a Chairman, from amongst its members to perform the duties of the Chairman (including presiding at meetings) if the Chairman is unable to act, is absent or if the office of the Chairman becomes vacant. Chairmen of PDBs at present receive an additional special allowance equivalent to the rate of a member's honorarium. We propose to grant the DC Vice Chairman, in recognition of his added duties, a special allowance equivalent to 50% of a member's honorarium (i.e. $9,435 per month based on the current level of honorarium).

8. The proposed annual revision and the delegation of approval sought are in line with the present practice of annual revision of DB members' honorarium and allowance which are approved by the Secretary for the Treasury under authority delegated by the Finance Committee. The honorarium for PDB members and special allowance for PDB Chairmen are now revised annually in October, but the proposed new accountable allowance for DC members and the special allowance for DC Vice Chairmen will be introduced on 1 January 2000 and revised at the same time in subsequent years following our normal practice of an annual revision. To synchronise adjustments to the whole package, we propose that the Secretary for the Treasury be delegated the authority to approve revisions to DC members' honorarium and accountable allowance, as well as DC Chairmen and Vice Chairmen's special allowances, all of which to take effect on 1 January of each year. The revisions will be made by reference to the movement of the Consumer Price Index (C) over the past year.

FINANCIAL IMPLICATIONS

9. The proposed new accountable allowance will replace the existing accountable ORA, resulting in an increase of the ceiling of the monthly allowance from $4,990 by $5,010 to $10,000. If all the 519 DC members claim up to the maximum of the proposed accountable allowance, the proposal will give rise to an additional expenditure of $7.8 million in 1999-2000 (covering the period 1 January to 31 March 2000) and $31.2 million in a full year.

10. The proposed special allowance for Vice Chairmen of DCs will give rise to an additional expenditure of $509,500 in 1999-2000 and $2 million in a full year.

11. Subject to Members' approval of the proposals, we shall approve under delegated authority the supplementary provision required in 1999-2000 under Head 63 Home Affairs Department Subhead 110 Honoraria for members of committees.

BACKGROUND INFORMATION

12. In 1981, Members approved the introduction of an honorarium for DB members with effect from April 1982. The honorarium is to meet, in part, earnings forgone due to time spent on DB matters and expenses incurred in connection with DB business.

13. On 9 December 1987, Members agreed that individuals holding multiple membership in different tiers of representative government be eligible to receive in full the highest of the members' allowances, any special allowance, and two-thirds of the other allowances for which they are eligible.

14. On 24 July 1992, Members delegated to the Secretary for the Treasury the authority to approve annual revisions of the honorarium by reference to the movement in the Hang Seng Consumer Price Index. The current rate of honorarium for PDB members holding single membership is $18,870 per month, and for those holding multiple membership in different tiers of representative government is $12,580 per month.

15. On 8 March 1996, Members approved the introduction of an ORA payable to DB members with effect from 1 April 1996 and delegated to the Secretary for the Treasury the authority to approve future annual revisions of the ORA to DB members by reference to the movement of the Hang Seng Consumer Price Index. The ORA is intended to assist DB members in the setting up of offices in their districts and to meet the expenses for rental, rates, management fees, charges for water, electricity and fixed telephone and/or fax lines installed in their offices. The allowance is fully accountable and payable on a reimbursement basis on production of certified receipts. The current maximum rate of ORA payable to members is $4,990 per month.

Home Affairs Bureau
June 1999