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Following is the speech by the Secretary for the Civil Service, Mr Joseph W P Wong, on the Appropriation Bill 2003 today (April 9):

Madam President,

I would like to extend my gratitude to the many Members who, during the Budget Debate last week, gave their views on policies and matters concerning the civil service and expressed their concern for and appreciation of our civil service colleagues taking part in the fight against Atypical Pneumonia.

Continuation of the Civil Service Reform

The HKSARG is committed to maintaining an excellent, clean and efficient civil service. The objective of the Civil Service Reform, introduced by the Civil Service Bureau (CSB) since 1999, is to ensure that Hong Kong continues to have a world-class civil service keeping with the changing circumstances. I have briefed Members about the latest development of the reform at the Policy Debate in January this year. In future, we would continue to make significant changes to the pay and management of the civil service, so that our civil service can provide better, more efficient and more cost-effective services for the public, enhancing the competitive advantages of Hong Kong.

I understand that some Members have different views about the size as well as the pay and allowances of the civil service and I would brief you later on our latest progress in this regard. However, I have to stress that the Civil Service Reform is an on-going process and more vigorous measures should be taken, particularly in the light of the current economic downturn and financial constraints.

Reduction in Civil Service Establishment

In line with the Government's target to reduce expenditure, we would reduce the size of the civil service from the current establishment of around 178 000 posts to around 160 000 by 2006-07. Some Members proposed to increase the magnitude of the cut. Some expressed concerns over the impact of the cut on overall employment and provision of government services. I would like to take this opportunity to point out that in 1999, the civil service establishment was in the size of around 198 000 posts. To bring it down to 160 000 posts, an equivalent of that in the mid-80s of the last century, is not a simple task. The target would be achieved through normal retirement and resignation, a freeze in civil service recruitment and the launch of the second Voluntary Retirement Scheme. In addition, I would like to point out that directorate grade staff in the civil service accounts for less than 1% of the total strength, a proportion comparable with Singapore. We expect that the cut in establishment would be matched with a reduction in the strength of directorate grade staff. In fact, bureaux and departments have deleted a number of directorate grade posts while reviewing their organisation structures over the past months.

After the outcome of the Second Voluntary Retirement Scheme is known, Directors of Bureaux would be requested to carry out a comprehensive review of the manpower arrangements for the departments under their purview and to submit manpower estimates advising a timeframe for streamlining establishment. We would consider all necessary measures to achieve the target of staff retrenchment.

Review of Civil Service Pay and Allowances

Following the civil service pay cut in the previous financial year effective from October last year, the Government has decided to further bring the salaries of the civil service back to the 30 June 1997 levels in cash terms. The pay reduction would take effect by two adjustments in the current and next financial years respectively. In short, it is a 3-3 rather than the so-called 0-3-3 package. We plan to submit the bill to the Legislative Council in May this year so as to implement the pay cut decision as early as practicable. With the full implementation of the civil service pay reduction, the Government will save about $7 billion annually on salary expenses and subventions to subvented organisations.

The Government has decided to develop an improved civil service pay adjustment mechanism on the basis of the existing mechanism and to conduct pay level surveys to compare civil service pay levels with those in the private sector. To enhance the impartiality of the review, a steering committee comprising members from the three advisory bodies on civil service pay and conditions of service has been set up to advise me on matters related to this exercise. The new mechanism will comprise the periodic conduct of pay level surveys, the conduct of annual pay trend surveys based on an improved methodology as well as a means for implementing both upward and downward pay adjustments. We would take careful account of all the relevant factors and fully consult the staff in the process. We aim to complete the review within next year.

The Government announced last month that it would conduct in the coming year a comprehensive review of civil service allowances to consider the need to revise the current arrangements and rates in response to changes of circumstances. We would examine all possible options of reducing expenditure. In carrying out the review, we would consult civil servants fully and adopt the principles of lawfulness, reasonableness and fairness.

Strengthening of Performance Management

To improve the efficiency of service, we have recently revised the procedures to facilitate the work of Heads of Departments/Grades in handling persistent non-performers. Under the new procedures, if the performance of an officer is rated unsatisfactory within an appraisal period of 12 consecutive months and evidence shows that appropriate counselling and warning have been given by the management, the Administration may take action under Section 12 of the Public Service (Administration) Order to require him/her to retire in the public interest. The CSB aims to settle such cases within three months on the receipt of recommendations from Heads of Departments/Grades.

Concerted Efforts to Map out the Future

The reform measures outlined above would bring challenges to the civil service. The CSB would work in close cooperation with Heads of Departments and civil service associations to meet these challenges. We would continue to promote staff training and encourage colleagues to pursue continuous learning, for which a sum of $140 million has been allocated, offering more than 40 000 places to beneficiaries. Moreover, we would gather staff suggestions through the Staff Suggestion Scheme, so as to achieve the targets of reducing expenditure and enhancing productivity by wholehearted partnership between the management and the staff.

The recent outbreak of Atypical Pneumonia has dealt a blow to the economy of Hong Kong and the health of our citizens. In these difficult times, it is crucial to maintain a stable, clean, efficient and dedicated civil service. I hope the Legislative Council and all sectors of the community would work together with the Government and the civil service to overcome the difficulties and with our concerted efforts, Hong Kong would achieve success once again.

Thank you.

End/Wednesday, April 9, 2003

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