Press Releases

The Government has published an improved Subvention Reform Package comprising a lump sum grant (LSG) scheme, an enhanced service performance monitoring system and a new planning mechanism.

Announcing this at a press conference today (June 20), the Secretary for Health and Welfare, Dr E K Yeoh, said the new package had taken into consideration the concerns raised by NGOs, staff associations, professional groups and consumers groups during the initial consultation early this year.

He said that as part of the reform package, a revised planning process would be introduced in an evolutionary approach to ensure the development of a long-term vision, that service quality was maintained and that resources were targeted at meeting the changing needs of the community and priorities of each district in the most cost-effective manner.

"These will involve working closely with the sector and service users to establish our long-term vision and mission for social welfare development in Hong Kong; develop broad strategic directions; and devise frameworks for individual program areas and specific activities with clearly defined goals.

"There will be ample opportunities for consultation and dialogue with all interested parties in the welfare sector in the coming years on the future development of welfare services in Hong Kong," Dr Yeoh said.

To address the concerns raised by the welfare sector during the consultation, Dr Yeoh said the Government had decided to modify the original final package as follows :

- provident fund for existing staff occupying recognized subvented posts will be paid actual while the provident fund contribution for new service units allocated to NGOs will be increased from five per cent to 6.8 per cent;

- the Tide-over Grant Scheme which aims to allow NGOs sufficient time to adjust to the changes, will be extended from three to five years; and

- NGOs will only be required to move towards the mid-point Salary Benchmark after Year 5 of the implementation of the LSG scheme, instead of Year 3 as originally proposed.

Dr Yeoh stressed that the Government guaranteed to provide sufficient funds to enable NGOs to fulfil their contractual commitments to existing staff in recognized posts.

In addition, the Government will lay down guidelines in the LSG Manual which are aimed at strengthening the monitoring and control mechanism over financial management, accountability of NGOs, as well as revision of fees and charges.

A comprehensive program which includes the setting up of a Common Support Centre, running workshops and training sessions for NGO management will also be launched shortly to assist NGOs to go through the change process.

Dr Yeoh emphasized that under the new financial package, no NGO would receive less funding than at present, noting that over 60 per cent in fact stand to gain immediately because they are currently below the mid-point Salary Benchmark.

"The Social Welfare Department will, in due course, write to all 181 NGOs and inviting them to express interest to join the LSG scheme.

"We will work closely with individual NGOs to ensure a smooth transition and if they envisage difficulties in joining the scheme, we will look into their problems and render assistance," Dr Yeoh pledged.

Special sessions will be organized next week by the Social Welfare Department to brief NGOs on the improvements to the reform package and to clarify any questions raised.

Meanwhile, SWD will set up a Help Desk as from tomorrow (June 21) at Room 3007, 30th Floor, Wu Chung House. Members from the welfare sector wishing to seek advice regarding the subvention package may either call at the office in person or telephone the hotline 2892 0646 during office hours.

Background

The Government and the community need to be satisfied that finite resources are used cost-effectively and deployed flexibly to meet the changing needs of the community.

The existing subvention system with its emphasis on input control has been criticized for creating inflexibility for NGOs to deploy resources, entrenching disincentives for efficiency, stifling innovation and being administratively cumbersome to operate.

As early as 1994, the Social Welfare Department appointed consultants to review the subvention system with a view to shifting the emphasis from input to output control, as well as devising monitoring mechanisms to enhance public accountability and cost-effectiveness in the delivery of welfare services.

The review was concluded in 1998. The recommendation of introducing a Service Performance Monitoring System received general support from the sector and has since April 1999 been implemented by phases. However, the proposal on fixed funding arrangements was not accepted by the welfare sector. As a result, the Administration continued to explore new options to improve the existing subvention system.

In October 1999, the Administration presented to the Social Welfare Advisory Committee initial proposals to change the existing subvention mode to a lump sum grant and enhance the Service Performance Monitoring System and introduce a revised Planning Mechanism. Following a preliminary round of consultation, the Government put forward a proposed Subvention Reform Package to the welfare sector for formal consultation between February and May this year.

The Government noted NGOs' concerns raised during the consultation period and had make a number of modifications to the original financial package, details of which were announced today (June 20).

END/Tuesday, June 20, 2000

NNNN