Decision to replace university rental subsidy backfires

PUBLISHED : Monday, 17 January, 2000, 12:00am
UPDATED : Monday, 17 January, 2000, 12:00am

Taxpayers have emerged as victims of the success of a government scheme to cut university staff rental subsidies by offering them allowances to buy their own homes.

An extra $362 million has to be sought because of an unexpectedly good response to the home-financing scheme, according to the Education and Manpower Bureau.

In a paper to be discussed at today's Legco education panel meeting, the bureau says it had estimated 'slightly more than one-third' of staff would opt to join.

But as of the end of last month, 2,785 eligible staff in the eight publicly funded tertiary colleges had signed up, representing an acceptance rate of 54 per cent.

This rate is expected to remain largely unchanged in the remainder of the 1999-2000 financial year, according to the paper.

'Because of the higher than anticipated take-up rate, University Grants Committee-funded institutions will need around [$1 billion] to meet the [scheme] requirement in 1999-2000, representing an increase of $362 million over the 1999-2000 estimates provision,' the paper said.

But the bureau maintains it is hopeful savings could be achieved in the long run.

'According to the cost and benefit analysis, over a 15-year period, the introduction of the scheme will cost $5.6 billion less than the continued provision of the original housing benefits,' it says in the paper.

The home-financing scheme was introduced in October 1998 to replace private tenancy allowance as the only form of housing benefit available to new staff of government-funded institutions.