Following is a question by the Hon Chris Ip and a written reply by the Secretary for Culture, Sports and Tourism, Miss Rosanna Law, in the Legislative Council today (November 11):

Question:

     Hong Kong's First Five-Year Plan proposes "reforming the funding mechanism for arts groups to drive high-quality development and continuous innovation in the sector", and the Chief Executive has also announced in the 2026 Policy Address the proposal to "inject $200 million into the Arts and Sport Development Fund (Arts Portion)" and that "while maintaining the current overall funding level for major performing arts groups (PAGs), a funding and in-and-out mechanism tied to performance and artistic merit will be introduced". In this connection, will the Government inform this Council:

(1) of the resources allocated by the Government to major PAGs in the past three years, including recurrent subvention, the Arts Development Matching Grants Scheme and other funding (set out in a table);

(2) of the specific directions of reform of the funding mechanism and the relevant timetable; whether PAGs wishing to become major PAGs are required to submit applications on their own initiative; if so, of the eligibility and assessment criteria for such applications; of the arrangements put in place by the Government to assist PAGs in adapting to the new funding mechanism, including whether a transitional period will be provided; and

(3) as the Government indicated in a paper submitted earlier to the Panel on Home Affairs, Culture and Sports of this Council that key performance indicators will be set under the new mechanism, and that the funding for underperforming PAGs will be reduced, of the relevant key performance indicators; how the Government will ensure that the artistic merit and other contributions of PAGs are fully taken into account, so as to prevent PAGs from neglecting inputs in other areas in their pursuit of meeting targets; and whether the Government will put in place an appeal mechanism for PAGs assessed as substandard to lodge an appeal?

Reply:

President,

     My consolidated reply to the question raised by the Hon Chris Ip is set out below.

     The Government has always placed great emphasis on the long-term development of arts and culture. Since 2007, the Government has been providing recurrent subvention to the Major Performing Arts Groups (MPAGs) (Note 1) to support them to curate programmes with high artistic merits, build audiences and conduct cultural exchanges.

     The Government has been providing funding to MPAGs since 2007. Over the past two decades, the Government's annual funding allocation to the nine MPAGs has increased from approximately $220 million to around $450 million at present, representing an increase of over 104 per cent. Meanwhile, there has been a notable decrease in the total number of paid audience and total attendance rate at MPAGs' performances. Specifically, the total number of paid audience fell from 360 000 to 310 000, while the total attendance rate dropped from around 77 per cent to 69 per cent. These trends suggest that the value of public resources and the social value generated under the current funding mechanism have not yet been fully maximised.

     In the past three years (from 2023‑24 to 2025‑26), the Government's annual funding to the nine MPAGs is tabulated as follows:
 

	2023-24 ($ million)	2024-25 ($ million)	2025-26 ($ million)
Recurrent Subvention	399.6	395.7	387.6
Art Development Matching Grants Scheme	52.3	50.8	61.4
Total	451.9	446.5	449.0

     With the development of Hong Kong's social environment and arts and cultural atmosphere, both the general public and the arts and cultural sectors have expressed various observations and views over the years on the funding mechanism for MPAGs and the allocation of public resources. As such, the Government will take forward the reform of the funding mechanism for MPAGs. On the prerequisite of maintaining the current overall level of funding for MPAGs, funding and "In-and-Out" mechanisms tied to performance and artistic merits will be introduced. This reform aims to incentivise MPAGs to strive for continuous innovation, while offering capable, consistently outstanding medium‑sized arts groups the opportunity to ascend to MPAG status. There is no fixed quota for MPAGs. Through the reform, the Government expects to make more effective use of public resources, optimise the tiered structure of performing arts groups, and foster the sustainable development and industrialisation of the performing arts sector.

     To allow ample time for MPAGs to adapt and taking into account their subvention cycle, a five-year transitional period will begin from 2027-28. The reform will be implemented in a gradual and structured manner, leading to the full implementation of the new mechanism from 2032-33 onwards.

     Specifically, under the new funding mechanism, the total annual allocation will comprise a "Baseline Subvention" and a "Performance-based Subvention". The "Baseline Subvention" will be gradually reduced from its current level of approximately 77 per cent to 50 per cent of the total allocation. The remaining 50 per cent will be "Performance-based Subvention" and calculated dynamically, taking into account each MPAG's non-government revenue (including box-office income, other operating income, donations and sponsorship) and its achievement of key performance indicators (KPIs). Under this performance-linked framework, MPAGs demonstrating exceptional performance may receive increased funding, whereas underperforming groups will face corresponding reductions in subvention, and those consistently failing to meet the required standards will lose their status as MPAGs.

     To achieve a holistic assessment of an MPAG's performance and social value, the KPIs are split into quantitative and qualitative domains. Quantitative KPIs mainly encompass the number of paid audience, the number of paid performances, box office income, total attendance rate, and the cultural exchange performances held in the Chinese Mainland and overseas. These parameters allow for an objective evaluation of MPAGs' performance. For instance, high attendance rates and box office revenues reflect public endorsement of an arts group's artistic quality, while the frequency of performances in the Chinese Mainland and overseas serves as a metric to evaluate an MPAG's role and achievements in promoting cultural exchange. On the other hand, the qualitative KPI covers artistic excellence, grooming local artistic talent, promoting industry development, audience building, community arts education, promoting cultural exchanges, sound governance and management, and effective financial management and sustainability. This balanced matrix helps assess an MPAG's overall performance, ensuring that its broader contributions to cultural development will not be overlooked or evaluated solely on the basis of quantitative data.

     Recognising that individual MPAGs differ in their artistic nature, operational scale, and strategic focus, the specific KPI targets will be formulated considering each group's unique circumstances. During the initial stage of implementation, the calibration of targets will make reference to the past performance and data of each MPAG as a starting point. This approach ensures that MPAGs have reasonable and sufficient time to adapt. Once the mechanism is well-established and operating smoothly, the Government will regularly review and adjust the indicator requirements in due course, taking into account actual implementation experience and changes in the social environment, to maintain the forward-looking nature of the mechanism.

     Currently, the Government conducts performance evaluations of MPAGs through the Advisory Committee on Arts Development (ACAD), which comprises representatives from the sector and professional experts, to determine subvention levels for the upcoming financial year. The ACAD will continue to be responsible for conducting performance evaluations under the reformed funding mechanism. During the assessment, the ACAD will conduct meetings with MPAGs, allowing MPAGs to elaborate on their work and effectiveness, and to explain the reason behind any specific KPI target that is not met. If an MPAG can provide a reasonable explanation for failing to meet a specific KPI target (for example, if an individual performance has to be cancelled due to a typhoon, thereby affecting the number of performances and the attendance rate), the ACAD will give this due consideration. The ACAD will not decide whether an arts group should lose its status as an MPAG solely on the basis of whether individual KPIs is not met in a single year.

     At the same time, medium-sized arts groups with sustained excellence may apply to become MPAGs. Currently, small and medium-sized arts groups receive annual funding primarily through the Hong Kong Arts Development Council, with the "Eminent Arts Groups Scheme" serving as the highest tier of this ladder. After the reform, eligible groups under this scheme will have the opportunity to apply for MPAG status. The ACAD will conduct performance evaluations for these candidates against the same KPI framework applicable to MPAGs, allowing those with sustained compliance and capacity to advance. The Culture, Sports and Tourism Bureau will brief relevant arts groups on the application arrangements later this year and begin accepting applications from 2027. Subject to ongoing performance monitoring, it is anticipated that eligible medium-sized arts groups that consistently meet the required standards may be admitted to MPAG status as early as 2031-32.

Note 1: The current nine MPAGs are Chung Ying Theatre Company, City Contemporary Dance Company, Hong Kong Ballet, Hong Kong Chinese Orchestra, Hong Kong Dance Company, Hong Kong Philharmonic Orchestra, Hong Kong Repertory Theatre, Hong Kong Sinfonietta and Zuni Icosahedron.

Ends/Wednesday, November 11, 2026
Issued at HKT 12:18

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