Panel on Welfare Services(Minutes) 8 Mar 99

Legislative Council

LC Paper No. CB(2) 154/99-00
(These minutes have been
seen by the Administration)

Ref : CB2/PL/WS

LegCo Panel on Welfare Services

Minutes of meeting
held on Monday, 8 March 1999 at 10:45 am
in the Chamber of the Legislative Council Building

Members Present:

Hon CHAN Yuen-han (Chairman)
Hon Cyd HO Sau-lan
Hon LEE Cheuk-yan
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming, JP
Hon Fred LI Wah-ming
Hon Ronald ARCULLI, JP
Hon CHOY So-yuk
Hon LAW Chi-kwong, JP

Members Absent :

Hon HO Sai-chu, JP (Deputy Chairman)
Hon David CHU Yu-lin
Dr Hon YEUNG Sum
Hon YEUNG Yiu-chung

Public Officers Attending :

Item III - Funding problems of welfare agencies faced with the prospect of reduced subsidy from the Community Chest
Mr Robin GILL: Deputy Secretary for Health and Welfare 3
Miss Victoria TANG: Principal Assistant Secretary for Health and Welfare (Welfare) 2
Mrs June SHERRY: Assistant Director of Social Welfare (Subventions)
Item IV - Implementation of the Enhanced Productivity Programme in the Social Welfare Department and welfare agencies
Mr Robin GILL: Deputy Secretary for Health and Welfare 3
Miss Victoria TANG: Principal Assistant Secretary for Health and Welfare (Welfare) 2
Mrs June SHERRY: Assistant Director of Social Welfare (Subventions)
Mr K J BRADLEY: Assistant Director of Social Welfare (Finance)
Mr Horace YUEN: Head, Resource Management Unit, Health and Welfare Bureau
Item V - Any Other Business (Contracting out of home-help services)
Mr HO Wing-him: Deputy Secretary for Health and Welfare 2
Mr Laurie LO: Principal Assistant Secretary for Health and Welfare (Welfare) 1
Mrs June SHERRY: Assistant Director of Social Welfare (Subventions)

Attendance by Invitation :

The Community Chest of Hong Kong
Dr Dennis T L SUN: Chairman, Executive Committee
Mr Darwin CHEN: Chief Executive
The Hong Kong Council of Social Service: Ms Cynthia CHAU; Mrs Victoria KWOK; Dr Joyce CHANG; Mr CHOW Yin-ming; Ms Kay KU; Mrs Cecilia KWAN; Mr Angus TSANG; Ms Betty WOO

Clerk in Attendance :

Ms Doris CHAN: Chief Assistant Secretary (2) 4

Staff in Attendance :

Mrs Eleanor CHOW: Senior Assistant Secretary (2) 4

I. Confirmation of minutes of meeting held on 14 December 1998 and matters arising
(LC Paper No. CB(2) 1353/98-99)

The minutes of the meeting held on 14 December 1998 were confirmed.

II. Date of next meeting and items for discussion
(LC Paper No. CB(2) 1395/98-99(01))

2. Members agreed to discuss the following at the next meeting to be held on 12 April 1999 -

Services for demented elderly;
Active Employment Assistance Programme;
Strengthening of social security field units and the Special Investigation Team; and
Creation of one Chief Clinical Psychologist post in the Social Welfare Department

III. Funding problems of welfare agencies faced with the prospect of reduced subsidy from the Community Chest
(LC Papers Nos. CB(2) 1395/98-99(02), (03) and (04))

3. At the invitation of the Chairman, Dr Dennis SUN, Chairman of the Executive Committee of the Community Chest of Hong Kong (the Chest) and Ms Cynthia CHAU of the Hong Kong Council of Social Service (HKCSS) briefed members on the main points of the submissions of the Chest and HKCSS.

4. At the invitation of the Chairman, Deputy Secretary for Health and Welfare 3 (DS/HW3) said that the Chest had, in the past 20 years, been an important source of funding for innovative welfare projects and complementary social welfare services. He explained that the role of the Government was to provide essential welfare services to those in need. Given the limited resources, any injection of public funds into charitable trusts would have to be at the expense of funding other essential welfare services. The Government supported the Chest's new initiatives but had no plans to inject funds into the Chest at this stage. DS/HW3 also pointed out that since the Chest was an independent entity , the Administration did not consider it appropriate to interfere with its allocation of funds system.

5. Responding to the submission of the HKCSS, DS/HW3 provided the following information-

Despite the economic downturn, the 1999-2000 budget estimate for social welfare services had increased by more than 13% in real terms;
The long-term objective of the Government remained to provide full subvention to elderly welfare service. However, given the present level of resources, it had to prioritize expenditure items and ensure that available resources were allocated to different welfare services in a cost-effective manner. The Administration was aware that one-third of existing multi-service centres and half of social centres for the elderly run by non-government organizations (NGOs) received no funding support from the Chest. These NGOs had however been able to raise sufficient funds on their own to support these services; and
The Administration had secured some $27 M in the 1999-2000 year for allocation to subvented NGOs to support their central administration work arising from implementation of service, compliance with the service quality standards and Funding and Services agreement, etc.

6. Noting that the Chest had been using income generated from its reserve to support the cost of administration and fund-raising campaigns, Mr Fred LI asked whether the Chest had implemented measures to reduce its staffing and administrative expenditure, similar to the enhanced productivity programme implemented by the Government.

7. Dr Dennis SUN of the Chest replied that the Executive Committee of the Chest had all along committed to controlling staffing and administrative expenditure. Despite significant increase in workload during the period from 1994-95 to 1997-98, the Chest had been able to reduce its staff and administrative costs by 14.11% exclusive of inflation. He pointed out that apart from income generated from the reserve, the Chest also received funding support from the Jockey Club for its internal administration and staffing expenditure. All donations and income collected from any fund-raising programmes were used for social welfare services without any deductions.

8. In view of the 20% reduction of the Chest's allocation in 1998/99 year, Mr Fred LI was concerned about the current and future financial position of social and multi-service centres for the elderly. He urged the Administration to consider providing full funding support to these services as soon as possible.

9. In response, DS/HW3 reiterated the Government's ultimate objective was to give 100% funding support to social and multi-service centres for the elderly but this could not be achieved in the short-term. Given the existing level of resources provided for social welfare services, the Government had to prioritize its subvention allocation and could not afford an additional expenditure of $65-70 M at this juncture. The Chest was an independent entity, and he noted that the Chest would re-consider its funding priorities and re-deploy resources to maintain its current level of allocation to these elderly centres.

10. Mr LAW Chi-kwong enquired about the remedial actions the Government would take if a subvented agency was unable to continue operating a social centre for the elderly with only the 80% subvention from the Government. Given that the donation income of the Chest would very likely remain unsatisfactory in the next three years, he asked whether the Government could undertake to provide 100% funding support for these social and multi-service centres. He anticipated that if the Administration's target date for providing 100% support was only a couple of years later, the Chest might be able to continue using its reserve to supplement its deficit budgets for the years concerned.

11. In response, DS/HW3 said that the Administration could not set a target date for full subvention at this stage. Any agency which could not maintain a social or multi-service centre should notify the Social Welfare Department (SWD) of its intention to discontinue the service. SWD would offer the service to another agency and assist in transferring the elderly clients to other elderly centres in operation. The Administration had no evidence to suggest any shortage in NGO' willingness to operate these Centres even on the basis of partial funding.

12. Mr LAW Chi-kwong commented that if the Government was determined to provide full subvention to the operation of social and multi-service centres for the elderly, there should be no difficulty in setting a target date for achieving the goal. He queried why the Government could not make an early decision on the matter.

13. DS/HW3 responded that the Administration would have to adopt a flexible approach in the use of public resources, given that unexpected demand for highly essential welfare services might emerge at any time. He pointed out that the allocation of resources for individual expenditure items was based on their relative competing priorities. In response, Mr LAW observed that in Government's view, flexibility in its use of resources was more important than its pledge to look after the elderly.

14. Noting that every year the Jockey Club had reserved allocations for providing funding support to special social welfare projects, the Chairman enquired whether the Administration could assist the Chest in seeking the additional $30 M funding support from this allocation. DS/HW3 replied that the Jockey Club would inevitably consider the merits of the Chest's application but the Government would clearly support the allocation of additional funds by the Club for welfare purposes. In response to the Chairman, Dr Dennis SUN of the Chest said that the Jockey Club would consider the views of the Government in its allocation process.

15. Mr LEE Kai-ming shared the view of HKCSS that social welfare needs would increase during a period of economic downturn. He asked about the Chest's measures to increase its donation income. He also asked whether the Administration would consider giving priority to the Chest's financial needs and provide an additional allocation of around $60 M from its 13.5% budget increase for social welfare services. He commented that the Government could not expect the public to contribute more donations if it did not give a priority consideration to help to relieve the Chest's financial difficulty.

16. Dr Dennis SUN of the Chest responded that whilst the Chest was facing a financial difficulty which it had not experienced in the past 30 years, it would continue to organize fund-raising activities to balance its budget deficits as well as to complement the Government's efforts in building up a caring community. In the 1998/99 year, the Chest had organized about 100 fund-raising activities, involving a few thousand volunteers and attracting a million participants. He anticipated that the Administration would continue to provide assistance to facilitate arrangements for the Chest's annual major fund-raising events. He stressed that the percentage of the Chest's allocation to member agencies as compared with the SWD's subvention for social welfare services had decreased from 52% in 1970-71 to 3% in 1999-2000.

17. Responding to Mr LEE Kai-ming' question, DS/HW3 said that the Administration would consider the priorities suggested by the HKCSS and determine the expenditure budget for individual welfare activities in the light of prevailing economic conditions and community needs. Responding to Dr SUN's comments, he said that the Administration would continue to assist and support, the Chest in its fund-raising programmes and arrangements as much as possible.

18. Mr LEE Cheuk-yan referred to Annex B of the Administration's paper and said that he was worried about the future as the Chest was already dipping into its reserve. He noted that the Chest's present critical situation was not a matter of priority for the government and expressed regret and dissatisfaction with the Government's uncaring attitude. Noting that the Administration supported the Chest to review its allocation policy and consider allocation on the basis of achieved output, he opined that the Government was in fact pressurizing the Chest to scale down its level of support to some of its member agencies.

19. In response, DS/HW3 said that Government was sympathetic towards the Chest's financial situation and would continue to assist the Chest in raising funds in a number of ways. He stressed that the Administration would not interfere with the Chest's policy on allocation of its funds. He pointed out that apart from its current substantial reserves, the Chest had allocated some $40 M to support a number of welfare services which already received 100% subvention from the Government. Given the anticipated financial difficulty, he suggested that the Chest should, aside from applying for additional support from charity trust funds, work on new initiatives to attract more donations from the public. He assured members that the Administration would do everything possible to assist the Chest in its fund-raising initiatives.

20. At the Chairman's request, Mr Darwin CHEN, Chief Executive of the Chest, briefed members on the Chest's annual resources allocation exercise. He said that the Allocations Committee of the Chest comprised equal numbers of members from donors, social workers and professional bodies including accountants and doctors. Each year its five subcommittees would carefully consider each application with supporting accounting documents from its 140 member agencies. In general, the final allocations would be based on the previous allocations for similar services and the current inflation rate. He stressed that member agencies were now provided with flexibility in uses of allocated funds.

21. Noting that the Government's main role was to provide essential welfare services to the needy and vulnerable in the community, Miss Cyd HO enquired how the Administration would draw the demarcation line between essential and desirable/innovative welfare services. DS/HW3 agreed that it was difficult to draw a clear demarcation line and there was a need for certain flexibility. He said that the Government provided funding support for pilot projects through the Lotteries Fund and the Chest also provided funding for some innovative services/projects. Assistant Director of Social Welfare (Subventions) (AD/SW(S)) supplemented that SWD played a monitoring role in these pilot projects. Subject to satisfactory outcome of these projects, the innovative welfare services might become part of the mainstream social welfare services in the future.

22. Mr Eric LI declared interest as Chairman of the HKCSS. Given the hitherto harmonious partnership relationship between the Government and HKCSS, the Chest and its member agencies in the provision of welfare services, he said that it would be disappointing if member agencies were forced to close down due to a shortage of funds. He pointed out that the Administration had set ambitious plans to widen the scope of welfare services, but had not provided sufficient subvention to NGOs for implementation purposes. Given the financial difficulties faced by elderly welfare services providers, he urged the Administration to consider providing 100% funding support to recognized welfare services including the social and multi-service centres for the elderly as soon as possible.

23. Mrs Victoria KWOK of HKCSS clarified that the Chest's allocations of $40M to welfare agencies which already received full Government subvention were used for innovative and additional services which were not yet recognized by the Government. This was in essence the Chest's main function in supplementing Government's funding. Mr LAW Chi-kwong agreed that it was common that the range of essential services recognized by a Government for the purpose of giving 100% funding support could not meet the needs for services in full. This was why organizations such as the Chest should exist to fulfill a needed role. He considered that the Administration should not force the Chest to accept the Government's views on services required. In response, DS/HW3 reiterated that the Administration would not interfere with the Chest's allocations to member agencies. AD/SW(S) added that the services 100% funded by the Administration were existing services provided by member agencies. The Chest's $40 M was used by the agencies to fund additional programmes and professional support above Government recognised level. The Chairman commented that the Administration should demonstrate a proactive attitude and take the initiative to help the Chest.

24. On the mission of the Chest, Mr Eric LI said that the Chest had hitherto been assuming the role of providing funding support for innovative social welfare projects. In deciding to support these projects, the Chest might have consulted the views of the Administration. Most of these innovative services were considered justified by the Government but due to established procedures, allocations from public funds could only be granted after successful trials by member agencies. In this connection, he said that cancellation of these services would have adverse impacts on the future development of social welfare services in Hong Kong and was unfair to the Chest.

25. Miss CHOY So-yuk declared interest as a member of one of the Chest's fund-raising committees. She shared the view that in the light of the Chest's financial difficulty, the Administration should re-consider its funding priorities and provide 100% funding support to social and multi-service centres for the elderly.

26. The Chairman summed up the views expressed at the meeting and requested the Administration to review the Government policy on the matter. DS/HW3 undertook to consider members' views and to see how the Government could further support the Chest.

27. Responding to Mr Eric LI, Mr Darwin CHEN of the Chest said that the Chest would decide the 1999-2000 allocations to member agencies before April 1999. In this connection, he anticipated that the Jockey Club would confirm its funding support and the Administration would decide on its funding policy for social and multi-service centres for the elderly in mid-April 1999.

28. The Chairman thanked representatives of the Chest, HKCSS and the Administration for attending the meeting.

IV. Implementation of the Enhanced Productivity Programme in the Social Welfare Department and welfare agencies
(LC Paper No. CB(2) 1395/98-99(05))

29. At the invitation of the Chairman, DS/HW3 briefed members on the main points of the Administration's paper on the implementation of the Enhanced Productivity Programme (EPP) in the Social Welfare Department (SWD) and subvented welfare agencies. He stressed that the main objective of EPP was to improve productivity and efficiency in the delivery of social welfare services across the Government and the subvented sector, without affecting the quality of services provided.

30. Given the overall unsatisfactory results of fund-raising campaigns during a period of economic downturn, Mr LAW Chi-kwong expressed concern about the ability of the subvented sector to meet the EPP target. He reminded the Administration to observe Article 144 of the Basic Law which stipulated that the policy previously practised before the change of sovereignty in respect of subventions for NGOs should be maintained. He asked whether the Administration would exercise flexibility in implementing EPP and give special consideration to those NGOs whose income from fund-raising campaigns had substantially dropped by 40-50%. He cited that to achieve a 5% saving, an NGO operating a social or multi-service centre with only the 80% support from the Government would in effect have to achieve an overall 14% saving in three years

31. DS/HW3 said that EPP was a financial discipline which both the Government and the subvented NGOs had to achieve. He pointed out that SWD had suggested a number of strategies for achieving the target cumulative savings of 5% of baseline operating expenditure by 2002-03. The initial response from the subvented sector was positive. He reiterated that despite adverse economic conditions, the Administration had increased the social welfare budget by more than 13% in the coming financial year.

32. On the strategy to rationalize services, Mr Fred LI enquired about the types of services which were no longer needed in the light of changing community needs. On the target cumulative savings of 5%, he asked whether NGOs producing outputs in excess of the subvented services prescribed by SWD were still required to meet the EPP objective.

33. In response, DS/HW3 cited two typical EPP programmes to illustrate his point. The SWD had combined the operations of two Boys Homes and would re-deploy resources from the declining Day Creche Services to the expanding Day Nursery Service. He said that the Secretary for Treasury had made it clear that all Government departments and subvented NGOs were required to achieve a productivity gain amounting to 5% of their baseline operating expenditure by 2002-03. He understood that HKCSS had in collaboration with NGOs, prepared a preliminary list of EPP initiatives for future discussion with the Administration. He added that implementation of the EPP initiatives would start from April 2000.

34. Mr LEE Cheuk-yan asked whether the Administration had specified the scope of services that could be contracted out. DS/HW3 replied that the Administration was still formulating policies in relation to contracting-out of welfare services. As an initial start, the meal service of new home-help teams would be contracted out on a pilot basis. Principal Assistant Secretary for Health and Welfare (Welfare) 2 (PAS/HW(W)2) supplemented that NGOs could consider contracting out works such as office security and cleansing to external agencies.

35. On employment of part-time and contract staff for provision of social welfare services, Mr LEE Kai-ming expressed concern about the quality of the output services and enquired about the areas of work which could be taken up by part-time staff. AD/SW(S) responded that the use of part-time and contract staff in provision of social welfare services was an existing practice. She pointed out that to ensure quality of services, such staff were required to have the same basic qualification and skills requirements as their permanent counterparts. DS/HW3 supplemented that the quality of services should not fall as a result of EPP initiatives. He added that SWD would play an active monitoring role in this regard.

36. Mr LAW Chi-kwong was concerned about the impact of the 5% productivity gains on existing welfare services. He said that the methodologies for calculation of the baseline operating expenditure should be different for the Government and the NGOs. He asked about the types of services which would be affected by EPP and pointed out that expenditures on staff provident fund, rent and rates were beyond the control of NGOs.

37. In response, DS/HW3 said that the Administration was awaiting proposals from the HKCSS and would work with the subvented sector to identity feasible EPP initiatives. Head, Resource Management Unit said that the overall objective of EPP was to inspire changes in management culture. It aimed to ensure that the community got maximum value from available resources, and the public sector must direct these resources to achieve the best possible results. The reduction of the 5% from the baseline operating expenditure could be achieved in many ways such as through process re-engineering, outsourcing, use of technology or service rationalization. As regards the provident fund provision for NGOs, he explained that if there was a reduction in PE expenditure on civil servants in a Government department, there would be a corresponding cut in retirement benefit provision in another subhead. The same principle was therefore being applied to provident fund provision for NGO sector. He pointed out that for the time being the only item which would be excluded in calculation of EPP in subvented sector was the payment of rates.

38. Miss CHOY So-yuk expressed doubt about the significance of using savings from productivity gains to fund the new initiatives of establishing five teams to examine the eligibility for admission into residential care homes for the elderly. DS/HW3 replied that the new initiative could help ensure that the services were targetted at those most in need.

39. Mr Eric LI said that the HKCSS was very willing to co-operate with the Government on the proposed productivity gain initiatives. He pointed out that in view of the recent outcome of fund-raising campaigns, if Government subsidies were to be reduced, NGOs would be placed in a difficult position to achieve the preset 5% EPP target. He considered that the Government should show its understanding of their difficulties. He expressed reservation about the long-term effects of employing more part-time and contract staff for delivery of social welfare services. He requested the Administration to provide sufficient resources and assistance to NGOs in simplifying procedures and in providing appropriate training to their staff to ensure continued delivery of quality welfare services to the community.

40. In response, DS/HW3 said that the Administration recognized the need to provide appropriate training to social welfare sector personnel and had set aside sufficient resources to achieve this. In the light of the EPP and the development of output-based system, the provision of management training for supervisory staff of NGOs was essential. In this connection, the Administration had set aside $27 M for the provision of central administration and supervisory support to NGOs.

41. The Chairman summed up members' views and requested the Administration to give special consideration to NGOs having difficulties to achieve the EPP target.

V. Any other business

Contracting out of home-help services
(LC Paper No. CB(2) 1440/98-99(01))

42. At the invitation of the Chairman, Deputy Secretary for Health and Welfare 2 (DS/HW2) briefed members on the salient points of the Administration's paper which was tabled at the meeting. He highlighted that the delivery of meals to home help clients had taken up about 60% of the manpower resources of the existing home help teams. In anticipation of the increasing demand and to provide flexibility to NGOs providing the service, the Administration would like to experiment with the allocation of home-help services to service operators through competitive bidding. This could be a cost-effective solution to improve the quality of home-help services in the long-term.

43. Mr Fred LI enquired whether cost saving was the main aim of contracting out home-help services, particularly the delivery of meals to the elderly. He pointed out that the delivery of meals to the elderly by home-helpers involved other caring services which would cease after contracting out.

44. DS/HW2 replied that in order to provide an effective package of care services to the elderly in the long run, the Administration would have to, in addition to providing more resources for home help services, review the current mode of service delivery to identify other more cost-effective arrangements. More resources could be directed to provide upgraded home care services if the meal service could be provided more cost-efficiently through competitive bidding. Responding to Mr LI's further enquiry, DS/HW2 said that according to the consultants and NGOs, the home-helpers were capable of providing other care services to the elderly and that better deployment of staff resources in providing the meal service would help improve the cost-effectiveness of the service.

45. Mr LEE Cheuk-yan was concerned whether contracting-out of meal service would bring about a surplus of home-helpers. He opined that the contracting-out of home-help services should be given to non-profit-making organizations.

46. DS/HW2 replied that the pilot scheme would only cover additional home help teams. The existing service units would not be affected. He also pointed out that savings arising from contracting-out of meal service would be used to fund home care services. But the current plan was to contract out only new service units and initially, only NGOs would be invited to bid for the home care services.

47. The Chairman requested the Administration to provide more detailed information on the subject when the consultant's report was available at the end of April. She hoped to discuss the subject again in more detail at a future meeting.	Adm

48. There being no other business, the meeting ended at 1:10 pm.

Legislative Council Secretariat
21 October 1999.