Review Report on the Lump Sum Grant Subvention ... - lwb.gov.hk

were exempted from EPP/ES, namely, provident fund, foster parent allowance,incentive payment to sheltered workers and rent and rates reimbursement.4.38 EPP and ES were implemented not only on subvented bodies, but also on allGovernment bureaux and departments, including the SWD. For the welfare sector,subvented NGOs achieved 6.5% savings as compared to the target of 9.3%, and theremainder was borne by the SWD.4.39 Although NGOs had to deliver EPP/ES savings, the Government had alsoassisted them through TOG and SOG. In the six years between 2001-02 and 2006-07,the total amount of such assistance amounted to almost $2.4 billion. This wasfollowed by further assistance measures in 2007 and 2008 which included, amongother things, another one-off grant of $200 million from the LF and an additional$200 million recurrent funding from 2008-09 onwards. Between 2000-01 and2008-09, subventions for NGOs on LSG have increased by over $2 billion, and arestill on the rise. The total subventions to these NGOs now amount to about$8 billion, representing a 16% increase over the 2007-08 allocation.4.40 During the review, some NGOs have suggested to the IRC that savingsdelivered under EPP/ES should be returned to them, so that they can be fundedaccording to the “true benchmark” when the LSGSS was first introduced. Asexplained in Chapter 1, EPP and ES were initiatives to alleviate the Government’sfinancial pressures at the time. NGOs are of the view that while there was apractical need for them to reduce expenditures in times of financial constraints, theirfunding level should be returned to the original level now that the economy hasrecovered. Besides, their expenditures have increased as a result of otherdevelopments, such as the adjustments to civil service starting salaries, inflation andhigher labour costs. They hope the EPP/ES savings can be returned to them toalleviate their financial pressures.4.41 The argument for returning EPP/ES savings to NGOs once the economyrecovers is now weakened by the recent financial turmoil which is expected to persistin the near future. In any event, the IRC does not consider it appropriate for welfarefunding to fluctuate with the state of the economy. Moreover, NGOs should haveachieved the bulk of their EPP/ES savings through service re-engineering andenhanced productivity. Such savings should not be cyclical, but should bepermanent. If efforts have been made to do more with less, service quality shouldnot have been compromised despite the reduction in funding level.- 47 -