PURPOSE

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

BACKGROUND

2. The House Committee of the first SAR LegCo appointed a Subcommittee on Review of Operating Expenses for Members of the LegCo (the Subcommittee) to review matters relating to Members' operating expenses. In response to Members' request, we proposed a revised package of reimbursable operating expenses for Members at the meeting of the Subcommittee on 1 April 1999.

3. In response to the proposed package, the Subcommittee pointed out that -

1. since there had not been reduction in the rental of district offices or salary for their staff, the operating expenses incurred by Members in running their office(s) had not come down;
   
   
2. more district offices were needed in view of the enlarged population size in each geographical constituency and the fact that the public generally preferred face to face discussion with Members. New information technology and communication equipment would not help divert the existing type of complainants to the new channel; and
   
   
3. the provision for travelling and entertainment expenses be merged with the general expenses account so that if the amount were used for employing staff, the associated severance payments would be borne by the Government.

4. Members opined that the views and suggestions should be relayed to the Independent Commission on Remuneration for Members of the Executive Council and the Legislature of the HKSAR (the Independent Commission). The LegCo Secretariat provided subsequently some statistics on Members' expenditure on staff and rental which were also forwarded to the Independent Commission.

MODIFIED PROPOSAL

5. The Independent Commission have reconsidered the case taking into account Members' views and suggestions and the statistics provided by the LegCo Secretariat. The Independent Commission appreciated Members' wish to have more resources to improve office operation but considered that, under the present economic environment, it would not be possible to increase operating expenses for Members. Instead, Members should be given further flexibility in using their operating expenses to optimize the benefits of the existing reimbursement package.

6. In this connection and in view of some Members' wish to expend more on staffing, the Independent Commission agreed that further flexibility be given to Members whereby 50% of "entertainment and travelling expenses reimbursement" may be used to meet staff expenses, with the Government bearing the financial responsibility for associated severance payments in future. Retaining a separate account for "entertainment and travelling expenses reimbursement" was considered necessary since Members would inevitably incur some entertainment and travelling expenses.

7. Whilst the Independent Commission appreciated Members' wish to operate more district offices to better serve the public, it was observed that there was a practical limit to the time that Members could spend in each district office given the heavy commitment of LegCo Members in general. At present, most Members already maintained a central office plus one to two district offices funded by the Administration. The maximum financial implication in total is $74 million per annum. Further increase for financial resources in the order of $53 million per annum to accommodate Members' wish to double the number of district offices is not recommended given the current difficult economic situation.

8. The modified proposal incorporating changes previously put forward at the Subcommittee meeting on 1 April is set out in the Annex.

FINANCIAL IMPLICATIONS

9. 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 for the setting up expenses reimbursement per LegCo term. The modified proposal including the creation of the "information technology and communication equipment expenses reimbursement would incur additional financial commitment of $6 million in capital expenditure for each LegCo term.

10. The merging of the "district office expenses reimbursement" and the "accountable expenses reimbursement for office and staff expenses" into "accountable expenses reimbursement for office operation" and, the latest proposal of allowing the "entertainment and travelling expenses reimbursement" to be used for hiring staff would entail financial implication for the Government when Members' offices are wound up. This is because retiring Members are provided with a "winding up expenses reimbursement" and actual expenses incurred by Members in making severance payment to their staff in accordance with the provisions of the Employment Ordinance are reimbursed by the Government.

11. The approval of the Finance Committee is necessary before the proposed changes to the reimbursement package can take effect. Subject to Members' views, we intend to seek the approval of the Finance Committee on the modified package as soon as possible so that the recommended changes can be implemented before the end of the current legislative session.


Administration Wing
Chief Secretary for Administration's Office
June 1999

Annex

1. Monthly remuneration of $63,870^(Note);
   
   
2. Monthly operating expenses reimbursement comprising -
   
   
   1. an accountable expense reimbursement of up to $103,360 for office operation; and
      
      
   2. an non-accountable expense reimbursement of up to $14,760 for entertainment and traveling expenses. Up to 50% of this expense reimbursement can be used by Members to meet staff expenses on an accountable basis, with the Government bearing the financial responsibility of the associated severance payments in future.
   
   
3. Other reimbursable operating expenses comprising -
   
   
   1. a setting up expenses reimbursement of up to $150,000 for each LegCo Member per LegCo term to set up their offices (up to 50% of the expenses reimbursement 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 expenses reimbursement of up to $100,000 for each LegCo Member per LegCo term to allow Members to purchase/upgrade information technology and communication equipment and Members who draw on this expenses reimbursement 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 LegCo term and will only be eligible to draw on the remaining portion of this expenses reimbursement provided to them during the first SAR LegCo term.
   
   
4. Winding up expense reimbursement comprising two parts -
   
   
   1. a fixed amount equivalent to the accountable expenses reimbursement 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 expenses reimbursement for office operation and up to 50% of the "entertainment and travelling expenses reimbursement", the amount of the severance payment 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 reimbursement of up to $177,200 and 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 expenses reimbursements as other LegCo Members receive.

The amounts under item (a), (b), (d)(i) above, the monthly remuneration and the annual entertainment reimbursement of the LegCo President and the monthly remuneration of 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 reimbursements) with two-thirds of the honorarium for the other tiers of Government.