Dear Colleagues,

Review of Civil Service Allowances
First Phase Review of Fringe Benefit Type of Allowances

On 3 June 2004, I informed you that we were consulting the staff sides on the change proposals under the first phase review of fringe benefit type of civil service allowances.  I have since received views and comments from many of you.  I would like to address a number of common concerns raised so far.

Let me first recapitulate the background to the current exercise so that it could be considered in a proper light.  In March last year, I informed you of the Government's decision to conduct a comprehensive review on all civil service allowances in pursuit of our objective to control the Government's operating expenditure in the next few years and having regard to the stated Government policy that we should keep our civil service management system under review in line with present day circumstances.  In April this year, I informed you that taking account of staff feedback, we have decided to adopt a phased approach in reviewing those fringe benefit type of allowances.  The phased approach is intended to space out the consultation on a fairly wide range of proposals while allowing more time for us to formulate detailed proposals on those change measures that are likely to have a more extensive impact within the civil service. 

It is a fact that certain civil service allowances have been criticised by the public and the Legislative Council as being out of line with today's circumstances and there are calls for such allowances to be reduced or removed.  Against this background, it is incumbent upon the Government to consider, in consultation with staff, the scope for rationalising the terms of provision of these allowances where justified.

I fully appreciate that the phase one review proposals will, if implemented, affect existing eligible officers as well as officers who may potentially become eligible for the concerned allowances in future.  It is understandable that affected officers would like to give the matter careful thought, and we have received suggestions that more time should be allowed for the consultation.  In response to these suggestions and as a demonstration of the Administration's sincerity, I have decided to extend the consultation period by one month up to 14 August 2004.  I also aim to present, for staff consultation in October 2004, the proposals under the second phase review, concerning principally education allowances and school passage allowance as well as housing allowances.

I cannot over-emphasise that the change proposals we have put forward under the phase one review are for staff consultation and do not necessarily represent the Administration's final decision.  Following the close of the consultation period, we shall give careful consideration to all the comments received and seek the views of the advisory bodies on civil service salaries and conditions of service before making a final decision.  Given the above process, I envisage that any measures necessary to implement the decision on the phase one proposals will be taken after the release of the proposals under the phase two review for staff consultation.

On the common concerns expressed by colleagues in response to the phase one proposals, such as the terminology used in the review, the legal considerations underlying the phase one proposals, the rationale in support of the change proposals concerning leave passage allowance and the future rate adjustment mechanism, the Civil Service Bureau has prepared a supplementary explanatory note which is appended to this letter.  Please look at it closely.  I would like to emphasise once again that the changes we have proposed are, in our view, lawful in the context of both the Basic Law and the contractual arrangements between the Government and civil servants.

I take the opportunity to assure you that the Government has no plan or intention to use this allowance review as a pretext for curtailing civil servants' salaries or pensions. I hope you will consider the change proposals concerning civil service allowances as presented without any unwarranted worries over your salary or pension entitlements.

Yours sincerely,

(Joseph W P Wong)
Secretary for the Civil Service