REMUNERATION PACKAGE FOR MEMBERS OF
THE LEGISLATIVE COUNCIL OF
THE HONG KONG SPECIAL ADMINISTRATIVE REGION

PURPOSE

This paper informs Members of the Government's proposal to revise the package of allowance for Members to cover operating expenses.

BACKGROUND

2. The House Committee of the first SAR LegCo appointed a Subcommittee on Review of Operating Expenses for Members of the LegCo (the Sub-committee) to review matters relating to LegCo Members' allowances. At the meeting of the Sub-committee on 17 September 1998, Members proposed changes to the allowance available for operating expenses as follows -

1. to increase the number of district offices from 2 to 4, with a corresponding increase to the monthly district office allowance, to take account of the larger geographical constituencies LegCo Members are required to serve;
   
   
2. to increase the allowance for staff expenses to support the operation of additional district offices and to enable Members to employ better qualified staff (e.g. staff with legal background) to support Members' Council work;
   
   
3. to use the "entertainment and traveling allowance" for meeting staff and office expenses and vice versa; and
   
   
4. to increase the setting up allowance to enable Members to better equip their offices with up-to-date office equipment such as computer hardware and software.

CONSIDERATION

3. The existing remuneration package for Members including allowances for operating expenses was approved by the Independent Commission on Remuneration for Members of the Executive Council and the Legislature of the HKSAR (the Independent Commission) in December 1997. Details of the package is at Annex I. In endorsing the remuneration package for Members of the first SAR LegCo, the Independent Commission agreed to consider ad hoc requests to review any aspects of the remuneration package during the first SAR LegCo term.

4. In considering Members' request, it is relevant to note that -

1. both the public and the private sectors are currently trying to reduce rather than increase expenditure, given the tight financial situation and the current economic downturn. With deflation and reduction in salary level in general, the costs incurred in running offices should have come down. It would be difficult to justify, in the present economic climate, a request for increase in operating expenses;
   
   
2. while the geographical constituencies are larger than before, Hong Kong is nevertheless small in size and conveniently served by the public transport system. The electorate should hence be able to reach LegCo Members at their existing district office(s) without much difficulty. In addition, the public can also raise their problems with LegCo Members through other means such as by phone or by fax or even electronic mail. Moreover, it would be impractical for LegCo Members to have many district offices since Members could only be in one office at any one time;
   
   
3. instead, LegCo Members could maintain contact with their electorate through other means and their offices would need to be equipped with modern communication equipment (e.g. computer with e-mail capability and video conferencing facilities);
   
   
4. LegCo Members should be given greater flexibility in using their allowances to optimise the existing package;
   
   
5. the "entertainment and travelling expenses" allowance, as its name suggests, is for a purpose different from that for running a Member's office and should be maintained as such; and
   
   
6. allowances should continue to be made on a reimbursement basis and the principle that the same package should be available to all LegCo Members, irrespective of how they are returned, should be maintained.

PROPOSALS

5. Taking into account the foregoing, we propose to revise the package of allowances for operating expenses for LegCo Members as follows -

1. to maintain the "district office allowance" and the "accountable allowance for office and staff expenses" at the existing level, subject to an annual adjustment in accordance with variations of the Hang Seng Consumer Price Index;
   
   
2. to maintain the setting up allowances for the central office and for the district offices at the existing level;
   
   
3. to merge the "district office allowance" with the "accountable allowance for office and staff expenses", and the total amount of $103,360 per month should be made available as an "accountable allowance for office operation";
   
   
4. to remove the 50% ceiling on the non-accountable portion of the "entertainment and travelling allowance". This allowance should nevertheless continue to be kept separate from other allowances;
   
   
5. to merge setting up allowance for the central office with that for district office(s), making a total of $150,000 for use by each LegCo Member in setting up offices for each LegCo term; and
   
   
6. to make available a new "information technology and communication equipment allowance" of up to $100,000 for each LegCo Member for each LegCo term. This allowance is to be drawn, on a reimbursement basis, after the merged setting up allowance at (e) above has been depleted.

Since the first SAR LegCo term is only for a period of two years, LegCo Members who draw on this allowance within the first SAR LegCo term and who are re-elected in the second SAR LegCo term will not be entitled to a fresh provision in the second SAR LegCo term and will only be eligible to draw on the remaining portion of this allowance provided to them during the first SAR LegCo term.

With the above proposals, the remuneration package for Member will be as set out in Annex II.

FINANCIAL IMPLICATIONS

6. The existing remuneration package for Members entails a maximum financial commitment of over $132 million per annum in recurrent expenditure and $9 million in capital expenditure per LegCo term. The creation of the "information technology and communication equipment allowance" will entail an additional maximum financial commitment of $6 million (i.e. $100,00 x 60 LegCo Members) in capital expenditure for each LegCo term.

7. The merging of the "district office allowance" and the "accountable allowance for office and staff expenses" into "accountable allowance for office operation" could have financial implication on the winding up allowance. If LegCo Members used the original "district office allowance" amount (i.e. $14,760) to employ staff, the maximum financial implication arising from the actual severance payments that need to be paid to staff employed would be increased.

8. The merging of the setting-up allowances for the central office and district office(s), and the removal of the 50% ceiling of the non-accountable portion of the entertainment and travelling allowance do not entail any additional financial commitment.


Administration Wing
Chief Secretary for Administration's Office
March 1999

Annex I

Remuneration Package of LegCo members

1. a monthly remuneration of $63,870^(Note);
   
   
2. a monthly operating expenses reimbursement comprising -
   
   
   1. an accountable allowance for office rental, rates, management charges and utilities expenses of up to $14,760 (also known as "District Office Allowance");
      
      
   2. an accountable allowance for office and staff expenses of up to $88,600;
      
      
   3. an allowance for entertainment and traveling expenses of up to $14,760 (50% of which are non-accountable portion); and
   
   
3. a setting up allowance of up to $100,000 for LegCo members to set up district office(s) (up to 50% of the allowance for re-elected members for the purposes of renovation, removal, expansion and/or setting up of additional office(s));
   
   
4. a setting up allowance of up to $50,000 for members to take up their allocated central offices;
   
   
5. a winding up allowance comprising two parts -
   
   
   1. a fixed amount equivalent to total monthly operating expenses reimbursement covering allowance for office and staff expenses and district office allowance, payable on a reimbursement basis, i.e. a total of $103,360, to enable members to cover all expenses incurred when they cease to be members of the legislature, either because they decide not to stand for re-election or for reasons beyond their control such as death, serious injury, defeat in an election or the dissolution of the legislature; and
      
      
   2. a separate amount with no pre-set ceiling, payable on the basis of the actual severance payment that needs to be paid to staff employed using the operating expenses reimbursement, the amount of the latter being made in accordance with the provisions of the Employment Ordinance; and
   
   
6. the LegCo President is entitled to a monthly remuneration of $127,730, an annual entertainment allowance of up to $177,200 and operating expenses reimbursements as other LegCo members receive. The President's Deputy, i.e. Chairman of the House Committee, is entitled to a monthly remuneration of $95,810 and operating expenses reimbursements as other LegCo members receive.

The allowances under item (a), (b), (e)(i) above and the monthly remuneration of the LegCo President and the President's Deputy are annually adjusted in October with reference to the Hang Seng Consumer Price Index (Hang Seng CPI). The current level of allowances is applicable since October 1998.

Annex II

Proposal of Revised Remuneration Package of LegCo Members

1. Monthly remuneration of $63,870^(Note);
   
   
2. Monthly operating expenses reimbursement comprising -
   
   
   1. an accountable allowance of up to $103,360 for office operation; and
      
      
   2. an non-accountable allowance of up to $14,760 for entertainment and traveling expenses.
   
   
3. Other reimbursable operating expenses comprising -
   
   
   1. a setting up allowance of up to $150,000 for each LegCo Member per LegCo term to set up their offices (up to 50% of the allowance for re-elected Members for the purposes of renovation, removal, expansion and/or setting up of additional office(s)); and
      
      
   2. an information technology and communication equipment allowance of up to $100,000 for each LegCo Member per LegCo term to allow LegCo Members to purchase/upgrade information technology and Members who draw on this allowance within the first SAR LegCo term and who are re-elected in the second SAR LegCo term will not be entitled to a fresh provision in the second SAR LegCo term and will only be eligible to draw on the remaining portion of this allowance provided to them during the first SAR LegCo term.
   
   
4. Winding up allowance comprising two parts -
   
   
   1. a fixed amount equivalent to the accountable allowance for office operation, i.e. $103,360, payable on a reimbursement basis, to enable Members to cover all expenses incurred when they cease to be Members of the legislature, either because they decide not to stand for re-election or for reasons beyond their control such as death, serious injury, defeat in an election or the dissolution of the legislature; and
      
      
   2. a separate amount with no pre-set ceiling, payable on the basis of the actual severance payment that needs to be paid to staff employed using the accountable allowance for office operation, the amount of the latter being made in accordance with the provisions of the Employment Ordinance.
   
   
5. The LegCo President is entitled to a monthly remuneration of $127,730, an annual entertainment allowance of up to $177,200 and operating expenses reimbursements as other LegCo Members receive. The President's Deputy, i.e. Chairman of the House Committee, is entitled to a monthly remuneration of $95,810 and operating expenses reimbursements as other LegCo Members receive.

The allowances under item (a), (b), (d)(i) above and the monthly remuneration of the LegCo President and the President's Deputy are annually adjusted in October with reference to the Hang Seng Consumer Price Index.



(Note):

LegCo Members who also sit on the Executive Council will receive two-thirds of the salary components of the LegCo remuneration package. For LegCo Members who also serve on the Provisional Municipal Councils and Provisional District Boards, they receive the LegCo remuneration package in full (including the expense allowance) with two-thirds of the honorarium for the other tiers of Government.


(Note)

LegCo Members who also sit on the Executive Council will receive two-thirds of the salary components of the LegCo remuneration package. For LegCo Members who also serve on the Provisional Municipal Councils and Provisional District Boards, they receive the LegCo remuneration package in full (including the expense allowance) with two-thirds of the honorarium for the other tiers of Government.