This note advises Members of a proposed package of allowances for District Council Members.

BACKGROUND

2. In 1981, the Legislative Council Finance Committee (Finance Committee) approved the introduction of an honorarium for District Board (DB) members with effect from April 1982. The honorarium is to meet, in part, earnings forgone due to time spent on DB matters and expenses incurred in connection with DB business. In December 1987, Finance Committee agreed that individuals holding multiple membership in different tiers of representative government should be eligible to receive in full the highest of the members allowances, any special allowance, and two-thirds of the other allowances for which they are eligible.

3. In July 1992, Finance Committee Members delegated to the Secretary for the Treasury the authority to approve annual revisions of the honorarium by reference to the movement in the Hang Seng Consumer Price Index. The current rate of honorarium for that the Provisional District Board (PDB) chairmen and members holding single membership are $37,740 and $18,870 per month respectively, and that for PDB chairmen and members holding multiple membership in different tiers of representative government are $31,450 and $12,580 per month respectively.

4. In March 1996, Finance Committee approved the introduction of an office rental allowance (ORA) payable to DB members with effect from 1 April 1996. The ORA is intended to assist DB members in the setting up of ward offices in their districts and to meet the expenses actually incurred by them in connection with the running of their offices for discharging DB duties. The allowance is fully accountable and payable on a reimbursement basis on production of certified receipts. The current maximum rate of ORA payable to members is $4,990 per month.

5. The DC will be established on 1 January 2000 in accordance with the District Councils Ordinance. The ambit and level of the accountable office rental allowance now payable to PDB members will be insufficient to meet the expenses of DC members offices, including staff costs, in view of the enhanced role of DCs. Moreover, holders the Vice Chairmen posts of DCs which will be created under that Ordinance require special allowances in recognition of their added responsibilities.

6. Since it would be desirable for prospective candidates to know their terms of service before deciding to stand for DC elections, a proposed package of allowance for DC Members would need to be submitted for approval by the Finance Committee before the summer recess of the Legislative Council.

PROPOSAL

7. We propose that -

1. DC members be eligible for an accountable allowance of up to $10,000 per month for rental, rates, management fees, charges for water, electricity and fixed telephone and/or fax lines installed in their ward offices, as well as employing staff to assist them in discharging their duties as DC members with effect from 1 January 2000;
   
   
2. DC members holding concurrently membership in other tiers of representative government be eligible for reimbursement -
   
   
   1. up to the full amount of the accountable allowance if they are operating a separate office or separate offices for their DC duties in the district and/or employ member(s) of staff solely for their DC duties; or
      
      
   2. up to two-thirds of the allowance if they are operating a single office in the district and/or employ member(s) of staff for duties relating to their multiple membership, provided that the expenses claimed have not already been met from allowances claimed in their other capacities;
   
   
3. DC Vice Chairmen be eligible for a special allowance equivalent to 50% of members allowance with effect from 1 January 2000; and
   
   
4. the Secretary for the Treasury be delegated the authority to approve future annual revisions of the accountable allowance and special allowance for Vice Chairmen of DCs by reference to the movement of the Hang Seng Consumer Price Index, which will be renamed as Consumer Price Index (C) from July 1999.

RATIONALE

8. We carried out a public consultation exercise in 1998 to solicit views on the district organisations from the community. Members of the public were generally in favour of enhancing the role of PDBs in advising the Government and monitoring services at the district level. The Chief Executive in his 1998 Policy Address has undertaken to enhance the roles of District Boards, which will be renamed DCs from 1 January 2000. The DCs will assume more responsibilities in district affairs such as building management, fire prevention, environmental improvement, transport matters, community building and promotion of recreational and cultural activities. We need to give the future DC members additional support to enable them to carry out their duties effectively. During our consultation with PDBs, many PDB members requested additional resources for employing assistants.

9. The proposed accountable allowance will be 100% accountable, payable on a reimbursement basis on production of certified receipts, for expenses actually incurred by DC members related to the running of their offices and employment of staff for discharging their DC duties in the district concerned. The Home Affairs Department will reimburse DC members in respect of claims on rental, rates, management fees and charges for water, electricity and fixed telephone and/or fax lines installed in the office and employment of staff. DC members will need to make available their claims for public inspection upon request. They may pool their allowances to run joint offices and employ staff jointly, provided that the amount claimed by each DC member does not exceed his own individual maximum allowance and the total claims made in respect of a certain office or specific member of staff do not exceed the actual expenses incurred. DC members will need to sign an agreement declaring the proportion of expenses of the joint office or staff member attributable to them.

10. As regards paragraphs 7(b)(i) and (ii) above, we consider that a DC member holding multiple membership in other tiers of representative government should be eligible for the full amount of the allowance if he is running a separate office or employing an assistant solely for his DC duties. However, in the case of a DC member running a single office to discharge the various functions under his multiple membership, we propose that he should receive only up to two-thirds of the allowance for expenses incurred on the office and/or employment of assistant(s). This is in line with the present practice governing the payment of PDB honorarium for members holding multiple membership in other tiers of representative government as approved by the Finance Committee in December 1987. In order to ensure that the total claims will not exceed the actual amount expended, DC members will need to certify that the expenses incurred have not already been met from other allowances.

11. As regards paragraph 7(c), we propose to grant the Vice Chairman of a DC a special allowance equivalent to 50% of a members allowance in recognition of his added responsibilities. At present the Chairman of a PDB is entitled to a special allowance at the same rate as a members allowance, but there is no Vice Chairman post in the PDB. The District Council Ordinance stipulates that a DC is to elect a Vice Chairman, in addition to a Chairman, from amongst its members to perform the duties of the Chairman (including presiding at meetings) if the Chairman is unable to act, is absent or if the office of the Chairman becomes vacant. At present PDB members are titled to a monthly honorarium of $18,870, which is subject to annual revision on 1 October of every year.

12. As regards paragraph 7(d), the proposed annual revision and delegation are in line with the present practice of annual revision of DB members allowance approved by the Finance Committee in March 1996 and delegation of authority to the Secretary for the Treasury in respect of the revision of DB honorarium approved by the Finance Committee in July 1992.

FINANCIAL IMPLICATIONS

13. The proposed new accountable allowance will replace the existing accountable office rental allowance, resulting in an increase of the monthly allowance from $4,990 by $5,010 to $10,000.

14. If all 519 DC members claim up to the maximum of the proposed accountable allowance, we estimate that the proposal will give rise to an additional annual recurrent expenditure of $2.6 million.

15. The proposed special allowance for Vice Chairmen of DCs will give rise to an additional annual recurrent expenditure of $2 million, or additional expenditure of $509,490 in 1999-2000.


Home Affairs Department
14 June 1999