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LCQ21: Management of education funds and scholarship schemes

     Following is a question by the Hon Ip Kin-yuen and a written reply by the Secretary for Education, Mr Eddie Ng Hak-kim, in the Legislative Council today (February 17):


     At present, there are various education funds and scholarship schemes established with public funds, including the Hong Kong Special Administrative Region Government Scholarship Fund (HKSARG Scholarship Fund) and the Quality Education Fund. The Chief Executive has stated in his Policy Address this year that with a view to attracting more students from the "Belt and Road" countries to study in Hong Kong, the Government would inject a sum of $1 billion into the HKSARG Scholarship Fund, so as to increase in phases the number of offers under its "Targeted Scholarship Scheme" from currently 10 per year by about 100, and each student can receive a scholarship in the amount of $120,000. In this connection, will the Government inform this Council:

(1) given that as the balance of the HKSARG Scholarship Fund stood as high as $2.43 billion as at August 31, 2014, the investment returns of that fund should be sufficient to cover the $120,000 scholarship to be offered to each of the aforesaid students from the "Belt and Road" countries, of the reasons for the Government still proposing to inject funds into that Fund;

(2) whether it has assessed if injecting a large amount of public money into various education funds and scholarship schemes would thin out the resources that could be directly invested in the field of education; if it has assessed and the outcome is in the negative, of the justifications for that; and

(3) regarding those education funds and scholarship schemes which have been in operation for more than five years and have the balance higher than the amounts when they were established, whether it will consider diverting some money from those funds for allocation to other educational projects or programmes with more pressing needs; if it will, of the details; if not, the reasons for that?



(1) The Government established the HKSAR Government Scholarship Fund (Scholarship Fund) in 2008 with an initial funding of $1 billion to give recognition to outstanding local and non-local students, with a view to further developing Hong Kong as a regional education hub by attracting outstanding local students and meritorious non-local students to pursue higher education studies in Hong Kong. To establish more scholarship schemes for the benefit of more students, additional injections of $250 million, $1 billion and $20 million were made to the Scholarship Fund in 2011, 2012 and 2013 respectively, bringing its total amount of capital to $2.27 billion.

     To encourage more outstanding students from countries and regions along the "Belt and Road" to pursue studies in Hong Kong, we have proposed making an additional injection of $1 billion into the Scholarship Fund and using the investment income thus generated to increase the number of offers for the "Belt and Road" scholarship to 100 in phases. Each recipient will be given an award of up to $120,000 per annum to cover the tuition fees during the normal duration of the study programme.

     Since its inception in 2008, the Scholarship Fund has been using the investment income, after deduction of its administrative expenses, for the award of scholarships. Only under exceptional circumstances will the Scholarship Fund consider using its capital.  As at January 28, 2016, the Scholarship Fund had a balance of $2.138 billion (Note). To avoid affecting the sustainability of the current schemes under the Scholarship Fund, it is necessary for the Government to inject into the Scholarship Fund a sum that can generate sufficient investment income in support of the progressive expansion of the "Belt and Road" scholarship scheme.

(2) In general, the Government will inject a lump sum when setting up new funds for designated purposes to ensure a stable source of income for the funds to support or finance programmes and measures that meet their objectives.  The stable funding source would enable the funds to formulate long-term strategies and implement longer-term and ongoing programmes.

     Currently, there are seven funds under the purview of the Education Bureau (EDB), viz the Language Fund, Quality Education Fund, Education Development Fund, Scholarship Fund, Research Endowment Fund, Self-financing Post-secondary Education Fund and Qualifications Framework Fund, which are all established for designated education purposes.  Except the time-limited Education Development Fund, all the education funds operate in the form of a seed capital fund, in which case the capital will not be used under normal circumstances. Instead, the investment income of the funds is used to cover sponsorship for various programmes to ensure the sustainability of the funds. Since injections are made on a non-recurrent basis, the establishment of funds will not affect the Government's recurrent expenditure on education each year. In 2015/16, the Government's estimated recurrent expenditure on education is $71.4 billion, accounting for 22 per cent of the total recurrent government expenditure and taking up the largest share among all policy areas. Compared with the $51 billion for 2010/11, it represents a cumulative increase of 40 per cent over the past five years. As a matter of fact, the establishment of new education funds or injection into existing funds by means of lump sum allocation reflects that the Government attaches great importance to education with long-term commitment.

(3) Of the seven education funds currently under the purview of the EDB, four have been in operation for over five years with a balance exceeding their initial injections, namely the Language Fund, Quality Education Fund, Scholarship Fund and Research Endowment Fund. These funds are operating in the form of a seed capital fund, in which case the capital will not be used under normal circumstances. Instead, the investment income is used to cover sponsorship for various programmes to ensure the sustainability of the funds. Hence, we shall not transfer money out of a fund for other purposes simply because of its relatively high level of balance. Besides, all education funds are set up in accordance with the established procedures, including the approval of the Legislative Council, and are confined to designated purposes without transfer for other use.

Note: The balance of the Scholarship Fund is an unaudited figure.

Ends/Wednesday, February 17, 2016
Issued at HKT 15:10


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