Press Releases

The Government has proposed a new lump sum funding (LSF) arrangement together with planning reforms to improve the welfare subvention system and related mechanisms.

Announcing details today (Thursday), Deputy Secretary for Health and Welfare, Mr Robin Gill, who is also Chairman of the Working Group on Implementation of the 1999 Subvention Review Exercise Proposals, said the package aimed at providing greater flexibility to non-governmental organisations (NGOs) in the deployment of resources to meet present-day needs in the community.

"It would also streamline procedures to achieve greater efficiency and cost-effectiveness, encourage innovation in service delivery, improve service quality, and enhance public accountability," he said.

Mr Gill outlined a number of key features under the proposed package :

* in 2000/01 no NGO will receive less than what they will get under the existing subvention system;

* there will be a Tide-over Grant covering the next 3 years to guarantee NGOs' ability to meet commitments to their existing staff;

* NGOs will be able to retain unspent funds (up to 25% of their operating expenditure) in their reserves;

* NGOs will be able to retain all donations and income other than subvented service fees;

* NGOs can determine their own staffing structure and remuneration, if necessary; and

* it is intended that in consultation with the Sector, medium term plans of 3 - 5 years duration will be developed for each programme area.

Based on the latest information available, Mr Gill estimated that of the 186 subvented NGOs, 111 would immediately receive a higher level of subvention in 2000/01. Of these 111 agencies, 48 will receive an increase of five per cent or more, and 63 will receive an increase of below five per cent.

The remaining 75 agencies will receive the same level of subvention as under the existing mode in 2000/01, and will be given sufficient funds to cover their commitments to existing staff in the coming three years.

To address the concerns of the welfare sector that the fixed lump sum grant may not be sufficient for NGOs to meet their commitments to serving staff, including incremental creep and Provident Fund contributions, the Government proposes to introduce a Tide-over Grant Scheme to NGOs who can demonstrate that they have difficulties in meeting their commitments in the coming three years.

Mr Gill noted that it is proposed that NGOs will have a two year period to join the Scheme starting from April 1 this year . Taken together these factors, the Scheme should allow NGOs sufficient time to adjust to the changes.

The Social Welfare Advisory Committee was briefed on the proposed package which was subsequently discussed by the Working Group on Implementation of the 1999 Subvention Review Exercise Proposals, today.

Letters explaining the proposed package and inviting views will be issued to all NGOs today and a number of large scale briefing sessions for NGOs will be arranged in mid-February. In addition, teams from SWD will be available to visit individual NGOs to discuss the proposed Package in early April.

"We hope to complete the consultation exercise in early April," Mr Gill said.

Mr Gill stressed that the focus of the changes was to improve the quality of service delivered to the community and to enable the Sector to respond more rapidly to changing needs in the community. To achieve this, a new planning mechanism was proposed and details would be worked out in conjunction with the Sector, he added.

END/Thursday, February 10, 2000

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