Legislative Council

LC Paper No. CB(2)461/98-99
(These minutes have been
seen by the Administration)

Ref : CB2/PL/ED

LegCo Panel on Education

Minutes of Special Meeting
held on Friday, 11 September 1998 at 10:00 am
in the Chamber of the Legislative Council Building

Members Present :

Hon YEUNG Yiu-chung (Chairman)
Prof Hon NG Ching-fai (Deputy Chairman)
* Hon CHEUNG Man-kwong
Hon LEUNG Yiu-chung
* Hon Andrew WONG Wang-fat, JP
Hon SZETO Wah

(* Also a member of the LegCo Panel on Public Service)

Members Absent :

Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon SIN Chung-kai
Dr Hon YEUNG Sum
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk

Public Officers Attending :

Mr Matthew K C CHEUNG, JP

Deputy Secretary for Education and Manpower

Mrs Carrie LAM, JP

Deputy Secretary for Treasury

Mr Nigel J FRENCH, JP

Secretary General, University Grants Committee

Miss Angelina FUNG

Principal Assistant Secretary for Education and Manpower (Ag.)

Clerk in Attendance :

Mrs Constance LI

Chief Assistant Secretary (2) 2

Staff in Attendance :

Mr Stanley MA

Senior Assistant Secretary (2) 6

I. Home Financing Scheme for eligible staff of the University Grants Committee (UGC) - funded institutions
[Paper No. CB(2)223/98-99(01)]

The Chairman said that the special meeting was convened at the request of the Administration to brief members on the proposed Home Financing Scheme (HFS) for eligible staff of the UGC - funded institutions. The financial proposal would be considered by the Finance Committee at its meeting on 18 September 1998. Members of the Panel on Public Service were also invited to attend the briefing.

2. At the Chairman's invitation, Deputy Secretary for Education and Manpower (DS for EM) briefed members on the proposed HFS for UGC staff. He said that the scheme was proposed against the following background -

1. eligible staff of UGC - funded institutions had strong inspirations for home ownership;
   
   
2. the proposals were in line with the recommendations in a recent report of the Public Accounts Committee which urged the Administration to launch an HFS for eligible staff of the UGC - funded institutions; and
   
   
3. the proposed arrangements would reduce Government's long-term expenditure.

3. With these objectives in mind, DS for EM said that the Administration had, in consultation with UGC and UGC - funded institutions, proposed an HFS for eligible UGC staff along the lines of the Civil Service HFS based on the following five principles -

1. ensuring that the terms and conditions of staff of the UGC - funded institutions were broadly comparable to, but no better than, those of comparable ranks in the Civil Service;
   
   
2. meeting the home ownership aspirations of eligible staff of the UGC - funded institutions;
   
   
3. reducing the Government's long-term expenditure on housing benefits;
   
   
4. putting to optimum use of the surplus quarters arising from the operation of the HFS; and
   
   
5. recognizing the unique and essential operational needs of the institutions such as the continued requirement to recruit internationally and the policy to recruit initially on contract terms.

4. DS for EM added that the implementation of the proposed HFS would bring about an estimated saving of about $2.7 billion (in money-of-the-day prices) in Government's subvention to UGC - funded institutions over a 15-year period. On the features of the HFS for UGC staff, DS for EM said that unlike the HFS for civil servants (who are on permanent pensionable terms), the Government would not provide any downpayment loan to UGC staff. The Government however saw no objection to institutions making their own arrangements for downpayment loans by using private funds or the entitled superannuation of eligible staff. As regards details of implementation such as disposal plans or alternative uses of vacated quarters, a Task Force would be set up under the chairmanship of UGC Secretariat with representatives from the Administration and institutions to consider and advise on proposals from institutions.

5. On the management of surplus quarters following implementation of HFS in UGC - funded institutions, Deputy Secretary for Treasury (DS for Tsy) said that the Government had made reference to the experience gained in the implementation of the Civil Service HFS since 1990 and the enhancement of housing benefits in the Hospital Authority. For the mutual benefits of the Government and the institutions, a flexible approach would be adopted for the disposal and utilisation of surplus quarters which were scattered over the territories and many were located within the campus of institutions. The Government considered that, with sufficient guidelines and assistance, the institutions would be in a better position than the Government in managing the surplus quarters in a cost-effective manner. In this connection, the Task Force would provide the necessary communication and co-ordination between the Administration and the institutions.

6. The Deputy Chairman declared interest as a staff member of an UGC - funded institution. He said the proposal was welcomed by staff members of UGC - institutions in meeting their aspirations of purchasing their own homes. The provisions of the proposed HFS had been thoroughly discussed with and agreed by the institutions concerned. While details of the proposed HFS could still be further refined, the new scheme was definitely an improvement over existing schemes such as the Private Tenancy Allowance which were susceptible to abuses.

7. Mr CHEUNG Man-kwong supported the proposal. He asked whether the proposed HFS scheme had provided for a tighter control mechanism to guard against abuses and double benefits. For example, procedures should be put in place to check whether an HFS recipient had used the HFS allowances to rent an accommodation which his or her family had a direct pecuniary interest. He stressed that it would be important to ensure that the scheme was implemented in a fair and equitable manner, and verification of application information was a crucial factor for effective implementation. Secretary General, University Grants Committee (SG, UGC) responded that respective UGC - funded institutions were responsible for ensuring the proper use of funds under the HFS. Similar to the Civil Service HFS, an eligible UGC staff member applying for HFS would be required to sign a declaration form in respect of housing benefits currently enjoyed by the applicant and his/her spouse. Random checks would be made on such declarations. If false information was discovered, the applicant or recipient concerned would be subject to disciplinary proceedings of the relevant institution.

8. Noting that it would be practically impossible for institutions to conduct thorough checking on all HFS applications, Mr CHEUNG Man-kwong asked whether the Administration had required the institutions to tighten their vetting procedures. In this respect, he quoted a recent court case in which certain teaching professionals were convicted of providing false information in obtaining housing benefits. In response, SG, UGC assured members that all UGC - funded institutions had put in place procedures for vetting applications for housing and other benefits. Following the court case, UGC - funded institutions had reviewed their procedures and increased checks on housing benefits applications. He acknowledged that it was difficult to check the directorship of shell companies which were purported to own the accommodation, but the institutions would make their best efforts to detect and prevent abuses. He reiterated that it was the responsibility of the institutions rather than the Administration to review and enforce the control measures to prevent fraudulent HFS applications from UGC staff.

9. Mr SZETO Wah asked whether there was any mechanism to determine that the property transaction prices under the HFS were reasonable or not. He was concerned about the possibility of under-table prices with an aim to maximize the allowances obtainable under the HFS. DS for EM responded that it was the usaul practice of lending banks to assess the market price of the property in question before granting a mortgage loan. DS for Tsy added that there should be little incentive for cheating in such manner under the HFS, as the HFS allowance would only be 50% accountable if used for reimbursing actual mortgage repayments, up to a maximum period of 120 months. It was therefore not necessary for the applicant to boost the transaction prices in order to obtain a bigger mortgage loan for maximizing the allowance.

In response to a member, Principal Assistant Secretary for Education and Manpower said that under the Civil Service HFS scheme, eligible staff could apply for change of property.

10. Noting that the new scheme would bring about an estimated saving of $2.67 billion (in money-of-the-day prices) in Government expenditure over a period of 15 years, Mr LEUNG Yiu-chung enquired whether this would lead to a reduction in tuition fees in UGC - funded institutions. DS for Tsy pointed out that according to the cost-benefit analysis in Annex C to Paper No. CB(2)223/98-99(01), savings arising from the operation of HFS would start to accrue from 2008/09 onwards. Assuming that there was no change to existing factors contributing to the calculation of student unit cost and policies on cost-recovery through tuition fees in the coming years, she saw no reason why the tuition fees in UGC - funded institutions could not be reduced in real terms after 2008/09.

11. Concerning the profit-sharing agreement on vacated quarters, Mr CHEUNG Man-kwong expressed concern that some institutions might not be able to pay the Government 70% of the notional rental income as agreed, if some vacated quarters could not be rented out after the grace period of 12 months. He was worried that the institution might have to cut its expenditure in other areas and this would jeopardise the quality of education.

12. In response, DS for Tsy acknowledge that there might be difficulties for institutions to rent out those quarters which were very old, exceptionally large in floor area, in remote location or within the campus of institutions. She stressed that the Government would adopt a positive approach to consider proposals for alternative usage of these surplus quarters while safeguarding proper use of public funds. A Task Force would be set up for this purpose. Alternative usage possibilities would include converting the surplus quarters into student hostels or taking back the sites for disposal or redevelopment by the Government. Where the proposal for alternative usage was accepted by the Government, the Government's share of the notional rental income from these quarters would cease. As regards the basis of notional rental value for the purpose of the sharing arrangement, the Administration had suggested that where institutions felt that the prevailing rateable values had over-estimated the value of the quarters, they could raise this with the Rating and Valuation Department. The Task Force would be happy to arrange such meetings for exchange of views.

13. Some members were concerned that the proposed terms of HFS might not be attractive enough for recruiting and retaining outstanding or prestigious teaching staff from overseas. They considered that the HFS scheme should provide some flexibility to enable the institutions to offer exceptional terms to certain prominent senior teaching staff from overseas, in order to retain these exceptional talents in institutions. SG, UGC replied that new recruits from overseas could have the option of taking up university accommodation or rent allowance during their first 3-year contract, after which they would be required to join HFS subject to the double-benefit rule. The Government would monitor the situation to ascertain if the HFS terms would have any adverse impact on recruitment and retention of quality professors in UGC-funded institutions. Responding to members?concern, DS for EM undertook that the Government would review in three years?time the impact of HFS on recruitment from overseas.

Adm

14. The Chairman thanked representatives of the Administration and SG, UGC for briefing the Panel on the new proposal.

II. Any other business

15. There being no other business, the meeting ended at 11:00 am.



Legislative Council Secretariat
20 October 1998