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The following is the speech by the Secretary for Health and Welfare, Dr E K Yeoh, in resuming the second reading of the Appropriation Bill 2000 in the Legislative Council today (April 5):

Madam President,

I wish to thank Members for their interests and support to the provision of health and welfare services in fulfilling various objectives and targets.

Health

On the health side, good progress has been made in expanding and improving the provision of health care services over the years. Recalling the past, when the Hospital Authority was first established, our total recurrent expenditure for health services was $12.3 billion accounting for 13.5% of Total Recurrent Public Expenditure. Our investment in the health sector has since grown steadily. The provision of $30.8 billion we propose for health services for 2000-01 will account for 14.7% of Total Recurrent Public Expenditure.

Health Care Reform

Over the years, we have developed an enviable health care system that provides accessible, affordable and quality medical care to the citizens of Hong Kong. That said, I do agree with Members that our current system is under considerable stress. Some Members are concerned about the increasing pressure on public hospitals and frontline staff. I share this concern too, but I must caution that the problems cannot be resolved merely by pouring in additional public resources, which are finite, without addressing the more fundamental aspects of the organisation of the health care system and its funding. We also need to encourage individuals to take responsibility for their own health, maintain a healthy lifestyle, and make early plans for their future health care needs. Maintaining good health is a life-long investment, which helps all of us to better enjoy life in old age and relieve the burden on our future generations.

Members are aware that we are preparing a public consultation document which will set out our directions for reform to our health care system. I would like to emphasize that our proposals are not related only to financing. The scope of our deliberations will be comprehensive and the proposals we put forward seek to address all the key aspects of our system, including preventive and primary care, service re-organization, development of Chinese medicine, quality assurance and financing options. I look forward to a constructive and in-depth discussion with Members of this Council in the months to come on our consultation document.

Social Welfare

Turning to welfare side, I would like to stress that despite financial constraints, we are still fully committed to ensuring that people in need, particularly the elderly and the disadvantaged are provided with the necessary care and support. The provision we propose for welfare services for 2000-01 will account for 14.2% of the Total Recurrent Public Expenditure, which is close to an 80% growth comparing to the 7.8% ten years ago. Of the $29.8 billion we are budgeting for next year, $8.8 billion will be used for providing direct services, which is an increase of approximately 9.7% over the current financial year. This is very notable growth in the context of our financial constraints.

Elderly Services

Honourable members made reference to the needs of the aging population in Hong Kong. With a life expectancy of 77.2 years for men and 82.6 years for women, 10.7% of our population are now over the age of 65.

I agree with members that the long term care needs of our population have been constantly rising as our population aged. Accordingly, provision of subsidized long term care services has been rising rapidly throughout the 1990s, an example of which is the provision of care & attention (C&A) and nursing home beds. In 1991-92, a total of 2,948 C&A beds were provided. At present, the combined supply of C&A and nursing home beds is more than 12,884, including 2,492 purchased from the private sector.

Public expenditure on direct welfare services for the elderly has registered phenomenal growth in the past decade, rising from $410 million in 1991-92 to an estimated $2.7 billion this financial year. This is an approximate 560% growth over a 10 year period.

Our recent experience is similar to that in many communities facing a rapidly aging population. Demand for long term care services outpaces supply, even though considerable amount of public resources are committed to service expansion. Other than continuing to provide additional services, we have three major tasks to tackle in relation to our system of long term care for the elderly.

First, we have to ensure that the services are taken up by elderly people genuinely in need of long term residential care. We are putting in place an enhanced gate-keeping mechanism by this summer. Care needs of elderly people will be assessed by an objective tool and will be matched with the appropriate care to be provided. Second, we should ensure that our long term care services are provided in a cost-effective manner. To enable more of the frail elderly an option of aging in their own homes, we have commenced re-engineering of our home help and home care services, and are re-examining the operation modes of our various community care services. In parallel, we have also initiated strategies to increase the supply of residential care beds at the most cost-effective manner.

Third, we should also examine how this service should be financed. At present, direct welfare services for the elderly including some long term care services in the private sector are heavily subsidized. Financing is derived mainly from general tax revenue. International experience has clearly demonstrated that this will not be financially viable in the long term particularly as the population continues to age. This is a subject which was raised for discussion in the Harvard report on health care reform and which we need to consider and will be discussing with the community on the future financing options.

Before turning to other policy areas, I would also like to state what may be obvious, but is often overlooked because of misconceived stereotypes of the elderly. Elderly people are not all consumers of expensive long term care services, most elderly people in Hong Kong enjoy good health. The great majority are able to care for themselves, and in many families, they help to look after other members, such as grand children, or their elderly spouse. Research has shown that by maintaining a healthy life-style and staying active, many elderly people can continue to live healthily and independently and contribute to our society. Our current generation of individuals aged over 65 are healthier than the previous generation. The next generation will be even more healthy. Older persons are an asset both to their families and to community at large, and not a burden. The Director of Health will work closely with the community in promoting this concept of healthy aging.

Lump Sum Grant

A number of Honourable Members have also spoken about the subvention reforms focusing primarily on the Lump Sum Grant package. The existing subvention system has long been criticized as inflexible, complex and bureaucratic. Under this system there is tight control on inputs of "resources" but little control on "outputs" and "outcomes" of services, with no incentive for effective use of resources and to reassess the evolving social needs of the community. It is widely recognized that reform is required. It is certainly not one of the objectives of the reform to reduce the level of funding for the welfare sector. The objectives of the proposed reforms are firstly, to introduce a funding system which allows the Government to link funding to our policy objectives and to enable welfare services respond more quickly to changing social needs. Secondly, to provide for the most cost-effective use of finite resources. Thirdly, to give flexibility and responsibility to NGOs to manage and to be accountable, for their resources thereby encouraging greater innovation and more effective service delivery. As a result, a less bureaucratic system will emerge which in turn will, allow the Welfare Sector to focus on the quality of service provided to clients, which is our prime concern. Fourthly, to more clearly define the different roles and responsibilities of both the Government and the NGO Sector. And finally, to introduce an improved planning process which will regularly review each major programme area so as to ensure that the evolving needs of different sectors of our community are continued to be met.

We are not, as has been alleged by some, to be rushing ahead with the subvention reforms. Quite the contrary, the reforms are long overdue and are desperately needed. The review of the current subvention system started way back in 1994. Since then, we have consulted the Welfare Sector on a number of proposals culminating in the present package. The Sector's views have been taken into account and the proposals have been modified.

In this current exercise, we have taken into account feedback collected from the Welfare Sector on the proposed Lump Sum Grant package obtained during our preliminary round of consultations which took place between November 1999 and January 2000. After announcing the proposed package on 10 February 2000, we have consulted the Sector widely. So far, we have met with over 80 NGOs, and exchanged views with the relevant advisory bodies including the Social Welfare Advisory Committee, Subvention and Lotteries Fund Advisory Committee, the Elderly Commission, the Rehabilitation Advisory Committee, other concerned groups, staff associations and consumer groups. In fact, the present package represents further improvement on that proposed by the Sector through the Hong Kong Council of Social Service last year.

As a direct result of these extensive consultations, we intend to introduce a "Tide-over Grant" to ensure that NGOs have adequate funds to meet their contractual commitments to their existing staff over the next three years. The purpose of this Grant is to give NGOs sufficient time to adjust to the new funding system and where necessary, to re-engineer their operations.

We are aware of the anxiety of some NGOs in facing the changes brought about by the Lump Sum Grant and in particular the adequacy of the funding to enable them meet their contractual obligation to existing staff and the arrangements and details of the Tide-over Grant. We are aware that a few NGOs, without waiting for information on the proposals of the Tide-over grant have pre-emptively proceeded to re-negotiate the employment packages of staff. We are asking all NGOs, their Boards, management and staff to adopt a positive and prudent attitude in facing these changes. In particular, we have also written to NGOs to urge them to consult and involve their staff in managing the re-engineering initiatives in a gradual and structured manner and not to resort to unwarranted measures which adversely affect staff morale.

Partnership with the Welfare Sector

We are also aware of the requirement for better management capabilities in the Sector. The Government will be working with the Sector to identify practical ways in which to assist NGOs to deal with the new environment particularly, in terms of human resource, financial management and information technology. In this regard, we have commissioned consultants to map out detailed plans to help the Sector manage the changes in the coming months ahead. In the short-term, we intend to arrange a series of practical seminars and workshops on these issues so as to equip NGOs to start to manage the change process. The idea of setting up a common support centre to provide tailor-made advice and assistance to individual NGOs will be explored.

The Government has already obtained much useful feedback from the Sector in recent weeks. The views and concerns will be carefully considered in the weeks ahead prior to the implementation of the reforms.

We do not for one moment underestimate the complexity and enormity of the proposed reforms and the impact and anxiety which it has generated on the welfare sector. We will be working closly with the Welfare Sector to address its concerns and to effect the changes. In the final analysis, we need to continue to work together to ensure that the current day needs of the community are met in the most cost-effective manner and the interests of our clients remain of paramount importance. The quality of service provided remains our prime focus and we are convinced that the subvention reforms with their emphases onto developing a new planning mechanism and accountability mechanism for results or outcomes and outputs will ensure that the changing needs of our community for welfare services are met and accounted for in a cost-effective manner. The subvention reforms are very badly needed and will ultimately lead to further improvements in welfare services which will benefit those whom we seek to serve.

Thank you, Madam President.

END/Wednesday, April 5, 2000

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