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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Seminar on Corporate Governance for Subvented Organisations at Hong Kong Polytechnic University this afternoon (May 31):
Ladies and gentlemen,
Good afternoon.
Thank you very much for being here this afternoon. Today's seminar is the last in the initial series held to launch the new Guide to Corporate Governance for Subvented Organisations.
Today, I will touch briefly on some of the key elements in corporate governance. But I wish to start by thanking you for the work that you do, and to assure you that the Government's intention in producing the new guide is to give you practical help as you seek to fulfill the duties that you have taken up.
Hong Kong is blessed by the number of dedicated individuals who willingly give up their own free time to do voluntary work for the many boards of our community organisations. You do not ask for any reward or recognition. Some of you even pay from your own pocket for the privilege of service. On behalf of the community, we are grateful to you all.
Subvented organisations have served the Hong Kong community for many years. They provide a vast range of services, from district and rural organisations, youth groups, national sports associations, health providers, educational groups, arts organisations and welfare providers. These organisations can deliver services with innovation and flexibility, tapping into deep wells of experience and expertise that you have kindly offered. It would be difficult to imagine Hong Kong without you.
While there are many differences among the subvented organisations, they do share some common features. Apart from delivering needed public services, they all receive some or all of their funding from taxpayers. In some cases, public funding represents a modest token of support. In other instances, it can amount to hundreds of millions or even billions of dollars a year. About 40% of recurrent public expenditure every year is channelled through subvented organisations.
The Executive, the Legislature and the general public place great emphasis, naturally, on good standards of governance in organisations that receive public funds. Good governance ensures accountability and transparency. It also focuses on public value. These qualities in turn help build and sustain public trust and confidence in the organisations.
The aim of the Guide to Corporate Governance for Subvented Organisations is to provide a clear, non-prescriptive framework, tailored to the circumstances of Hong Kong's subvented organisations. It does not advocate a one-size-fits-all solution. Nor does it encourage government departments to adopt a micro-management mentality. Indeed, and I will state this explicitly, the responsibility for management of each organisation rests with the individual boards.
Departments do have a responsibility to ensure that organisations receiving public funds have in place mechanisms that give assurance that public funds are properly managed and spent. Among other things, departments need to satisfy themselves that subvented organisations establish specific objectives and performance targets, and evaluate their performance regularly; that prudent budgetary practices and appropriate procurement practices are followed; and that suitable auditing and reporting arrangements are in place.
At the same time, both departments and subvented organisations need to exercise common sense and judgement where monitoring and reporting is concerned. What is appropriate for a multi-billion dollar agency will not be suitable for a small district organisation.
The new Guide to Corporate Governance for Subvented Organisations will assist you all in reviewing your current arrangements. The guide provides a clear description of corporate governance best practices. It also highlights some of the common pitfalls identified by the Director of Audit. In the coming months, I hope that you will start to consider what is applicable to you, and how best to enhance arrangements where needed.
Some of you may need additional assistance. We have started to consider what support may be appropriate. Among the documents we have placed on your seats are questionnaires intended to help us better understand your concerns and priorities. Please do fill them in and return them to us before you leave. This will help us to consider how we can best help you after this seminar. Improving corporate governance is not a one-off event that can be resolved with the publication of a guide and holding of a few seminars. It is an on-going exercise that requires a long-term commitment.
Government will play its part in offering support; but the responsibility for decisions, as I have indicated earlier, rests with the board of each and every organisation.
In closing, I would like to thank all of the speakers this afternoon for giving their time and sharing their expertise and experience with us. I especially thank those who have contributed to the drafting of the guide.
I hope you have found this afternoon's seminar helpful. If you have any ideas about how the Government can assist further, do let us know. I wish you well with all your future endeavours.
Thank you.
Ends/Monday, May 31, 2010
Issued at HKT 16:20
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