Dear Colleagues,

Review of Civil Service Allowances

It is stated Government policy to keep our civil service management system under review and to ensure that the continued provision of various allowances is justified and in line with present day circumstances.  It is also the Government's commitment to achieve significant economy in its operating expenditure in the next few years. Against this background, in March last year I informed you that we would review all allowances payable to civil servants, including those related to the performance of duty and those provided as fringe benefits. I am writing to apprise you of the latest developments on the review.

Duty-related allowances

Since the announcement of the comprehensive allowance review last year, we have made the following progress in respect of duty-related allowances :

(a) we completed two phases of the review on job-related allowances payable to civilian grades in 2003. As a result, certain allowances were ceased and areas of improvements identified for some others; and

(b) we have recently consulted the staff sides and departmental management on our proposals to rationalise the payment rules for acting allowance and to reduce the allowance rates.  We shall, taking account of the comments received, make a decision on the change proposals soon.

We shall continue to pursue rationalisation measures for duty-related allowances to ensure that their continued payment is justified and to enhance administrative efficiency.

Fringe benefit type of allowances

As regards allowances payable as fringe benefits, the Department of Justice has advised us that there is some scope under the Basic Law and the employment contracts with serving officers for rationalising their payment.  We have during the past months explored the possible directions and scope of changes for individual allowances.  I have also met with the staff sides of the four central consultative councils to listen to their views.  Taking account of the feedback received from the staff sides and other relevant considerations, we shall take forward the review in two phases.

Under the first phase, we shall pursue change proposals for allowances that affect relatively fewer civil servants and those changes that are less complicated.  The allowances include leave passage allowance, sea passage, sea baggage allowance, hotel provision and hotel subsistence allowance, the provision of furniture and domestic appliances and furniture and domestic appliances allowances, removal allowance and air-conditioning allowance.  We aim to consult staff on the detailed proposals in about a month's time.  As regards those change proposals which are likely to have a more extensive impact within the civil service (such as change proposals concerning education allowances and housing allowances), we aim to consult staff on the detailed proposals later this year under the second phase of the review exercise.

We are guided by the principles of lawfulness, reasonableness and fairness in carrying out the review.  In developing the detailed change proposals, we shall ensure that they are consistent with the Basic Law and other legal considerations.  As undertaken, we shall fully consult staff in the process.  We shall also seek the views of the advisory bodies on civil service salaries and conditions of service.  Before making a decision, we shall give due considerations to all relevant policy, legal and other factors, including impact on staff.

We have today issued a paper to the Legislative Council Panel on Public Service setting out the way forward for the allowance review as outlined above.  The paper has been uploaded onto the CSB homepage at www.csb.gov.hk.

I look forward to your continued support and understanding as we take forward the review exercise.

Yours sincerely,

(Joseph W P Wong)
Secretary for the Civil Service