FCR(98-99)82

For discussion
on 12 March 1999

DELEGATION OF FINANCIAL POWERS

Members are invited to authorise under section 39(1) of the Public Finance Ordinance the disposal of surplus serviceable stores by the Financial Secretary without financial limits under specified conditions.

PROBLEM

At present, the limit of powers for the Financial Secretary¹ to supply surplus serviceable stores without charge to institutions or organisations established solely or principally for educational, scientific, cultural or charitable purposes is $20,000². This is not conducive to the effective disposal of surplus serviceable stores to eligible organisations for worthy purposes. A case in point is the disposal of surplus serviceable computers to interested institutions or organisations for benefiting needy students and promoting the wider use of information technology amongst students.

PROPOSAL

2. We propose that Members, exercising the powers conferred on them by section 39(1) of the Public Finance Ordinance (PFO), delegate to the Financial Secretary the authority to supply surplus serviceable stores without financial limits subject to the following conditions -

1. the recipient organisations are established solely or principally for educational, scientific, cultural or charitable purposes;

2. the recipient organisations will only use the surplus stores for non-profit-making purposes; and

3. the provision of surplus stores will not have any capital or recurrent expenditure implications on the Government.

Where the above conditions cannot be met, the approval of the Finance Committee will be sought on a case-by-case basis.

JUSTIFICATION

3. In accordance with Government's Stores and Procurement Regulations, the Director of Government Supplies disposes of surplus stores by way of public auction or tender, or authorises the dumping or destruction of such stores if they are of no saleable value or if the administrative costs of disposing them are higher than the potential proceeds. The Financial Secretary has the delegated authority to supply, without charge, surplus serviceable stores of up to $20,000 to institutions or organisations established solely or principally for educational, scientific, cultural or charitable purposes. The current level of delegation is not conducive to the efficient and expeditious disposal of surplus serviceable stores to eligible organisations for worthy purposes.

4. A case in point is the disposal of surplus serviceable computers to interested institutions or organisations for benefiting needy students and promoting the wider use of information technology amongst students. With the upgrading of computer facilities in Government, departments now have more than 700 outmoded computers surplus to their requirement which are ready for disposal. We envisage that more will be identified in due course. In view of the promotion of wider use of information technology amongst school children, some local organisations have started a non-profit-making project to collect surplus serviceable computers from companies and institutions for distribution to needy students. These organisations have also approached the Government for donation to support this cause. We consider such requests worthy of our support. The project is in line with the Government's initiative of preparing our students for the challenges and benefits of the information age. It is also a more meaningful way of disposing of surplus Government computers as the conventional mode of a public auction or tender normally involves administrative work but fetches a very low price.

5. In the light of the above and to enable us to respond more efficiently to requests of a similar nature whenever a stock of surplus serviceable items and a recipient organisation are identified, we consider that it would be appropriate for the Financial Secretary, or any public officer authorised by him, to be given the authority to give away those surplus serviceable Government stores without being made subject to any financial limits subject to the following conditions -

1. the recipient organisations are established solely or principally for educational, scientific, cultural or charitable purposes;

2. the recipient organisations will only use the surplus stores for non-profit-making purposes; and

3. the provision of surplus stores will not have any capital or recurrent expenditure implications on the Government.

Where there are more applications for surplus serviceable stores than the stock of stores available, we shall consider applications on a first-come-first-served basis. We shall also limit the size of each donation to a particular organisation or project by a maximum number to be provided or a defined period of supply.

6. Accordingly, we recommend Members to approve the proposed delegation of authority under section 39(1) of the PFO. Where the conditions set out in paragraph 5 cannot be met, Members' approval will be sought on a case-by-case basis.

FINANCIAL IMPLICATIONS

7. The proposal will not give rise to additional Government expenditure, capital or recurrent. With regard to the surplus computers, if they are to be disposed of by public auction or tender, each computer is likely to be sold for $15 (for Model 286) to about $200 (for Model 486) based on past experience. The price of other store items should also be small as they are normally used for a number of years before they are replaced and considered to be surplus to the department's requirements. The amount of revenue forgone is therefore insignificant.

BACKGROUND INFORMATION

8. Section 39(1) of the PFO empowers the Finance Committee to specify any conditions, exceptions or limitations for the Financial Secretary to authorise the gift of serviceable Government stores or other property to any institution or organisation where it is in the public interest to do so. Exercising this power, the Finance Committee approved on 12 October 1983 vide Item B.49 the proposal that where the value of any serviceable Government stores or other serviceable Government property exceeds $20,000 or where the recipient institution or organisation is not established solely or principally for educational, scientific, cultural or charitable purposes, the gift of that property should be referred to the Finance Committee for approval.

Finance Bureau
March 1999


1. By virtue of Interpretation and General Clauses Ordinance (Cap. 1), the Financial Secretary means the Financial Secretary and the Secretary for the Treasury.


2. The value of serviceable government stores is defined as Government Supplies Department stock price or the original purchase cost or, where neither of these can easily be determined, the replacement cost.