LegCo Panel on Financial Affairs

Policy Objective for Finance Bureau :
Prudent Management of Public Finances

Supplementary Information on the
Enhanced Productivity Programme

This note aims to provide Members with more information on the implementation of the initiative on the Enhanced Productivity Programme (EPP) to supplement that set out in the Finance Bureau's Policy Objective Booklet, particularly with reference to the target of 5% savings by 2002-03.

Achievements and Progress

2. EPP is proceeding as scheduled. Through improved productivity, it has brought about tangible savings and improvements to services. In 1999-2000, bureaux, departments and subvented organisations have achieved productivity gains of $818 million. Three-quarters of these are redeployed to provide new or improved services in the year while the remaining one-quarter reflects reduced expenditure. For 2000-01, we are on target to deliver 1% real savings, releasing some $1 billion from existing baseline expenditure for meeting earmarked growth and funding new commitments.

3. We will continue to press ahead with EPP and achieve a further productivity gains in 2001-02. We are confident that the target of 5% savings by 2002-03 will be achieved.

4. EPP has also brought about noticeable cultural changes in the use of public resources. The public sector, including the Government-subvented sector, is now more conscious of the need to economise and are more ready to adopt innovative approaches to provide services under a reduced growth environment, for example, delivering services through savings achieved by process re-engineering, using advanced technology and rationalising existing services, etc.

Enabling Environment

5. To facilitate bureaux, departments and subvented organisations to deliver their EPP plans, we have put in place the following measures to create an enabling environment.


6. One of the key determinants of the success of EPP is effective communication. Over the past year, we have -

  1. launched two rounds of over 100 Ambassador Visits to all bureaux, departments and trading fund departments. We held a seminar for over 150 Non-Government Organisations receiving Government subventions. We have met with individual subvented organisations to address their particular concern. We have briefed LegCo Members at the Finance Committee and at the Panel on Public Service;

  2. maintained liaison with the staff side through meetings with the Central Consultative Councils, the Model Scale I Council and the Disciplined Services Consultative Council, etc. Departments have also kept their Departmental Consultative Committees informed of their EPP plans; and

  3. published three issues of the EPP Newsletter. The objective of this publication is to provide an additional channel for communication on EPP which is more user-friendly, interactive and less official. We have distributed copies of the Newsletter to not only civil servants and staff of the subvented organisations, but also to LegCo Members and the general public upon request. We have also put it on the Internet to widen its circulation.

Greater Flexibility in Procurement, etc.

7. To give Controlling Officers more flexibility in the use of resources, especially with regard to procurement, accommodation and printing matters, we have introduced a range of new measures to liberalise existing regulations and devolve greater responsibility and authority to Heads of Departments. For example, we have raised the financial limits of Controlling Officers to conduct direct procurement. Controlling Officers now have greater flexibility to vary the approved accommodation provision for ancillary facilities to suit their operational needs and to contract out non-classified printing items.

One-Line Vote Facility

8. To go one step further on greater flexibility in resource management, with Members' approval, we have selected five departments to operate, on a pilot basis, as a one-line vote department from 1999-2000. Under this arrangement, other than specified exceptions, Controlling Officers are given flexibility to meet all their operational expenditure from approved funds under a single Subhead 000 Operational expenses. This is intended to facilitate the achievement of greater efficiency and enhanced productivity.

9. To strike a balance between flexibility and public accountability, we have undertaken to provide LegCo Members with regular information on the deployment of resources in these one-line vote departments. We have submitted the first quarterly report via a note for Finance Committee in September showing actual spending and any redeployment of funds between the conventional subheads of these five departments.

Save & Invest Account

10. To encourage bureaux and departments to economise, we have put in place a mechanism known as the "Save & Invest Account" which will provide a stable source of "seed money" for bureaux and departments to implement productivity improvements. Under this arrangement, bureaux and departments which spend less than their approved provision for the year may have up to half of the saved amounts credited to their "Save & Invest Account". The funds available in these accounts may be drawn in future to finance initiatives to achieve productivity gains, such as computerisation and energy savings projects, etc. These projects will in turn lead to higher productivity and greater savings.


11. With the co-operation of bureaux, departments and subvented organisations, the implementation of EPP has been smooth. There are, however, two issues to which we will pay special attention in the months ahead.

Maintaining Quality Service

12. One of the underlying principles of EPP is that enhanced productivity should not be achieved at the expense of the quality of service. We have on various occasions assured Members of our commitment to maintaining quality service. We have published an EPP Booklet 1999-2000 to inform LegCo and the public the progress of service improvements through EPP in 1999-2000. We are planning a similar publication for 2000-01 with emphasis on measures to be taken by bureaux and departments in achieving their EPP savings.

Minimising Staff Redundancy

13. The delivery of public service is labour-intensive and any productivity enhancement will inevitably involve staff redeployment. We will be extremely cautious in safeguarding interests of serving staff in the implementation of EPP. In anticipation of a surplus staff problem, the Civil Service Bureau and the Finance Bureau have worked out and promulgated a human resources redeployment strategy. One of the measures is for the centre to work as a clearing house to match surplus staff with new service requirements. We will also provide the necessary training for existing staff to meet new job requirements. The objective is that while we will press ahead with EPP, we will ensure that we are putting valuable human resources to good use and better serve the community.

Finance Bureau
October 1999