Money matters first for new finance body
Financial Services Development Council faces question over who will pay its bills in future
The new Financial Services Development Council is already mired in controversy, including the central question of who is going to pay its bills and other expenses.
The council has not decided how to finance itself over the long term even though it is going to have its first meeting tomorrow.
For a city like Hong Kong where money matters always come first, that may seem a strange omission.
The council, chaired by Executive Council member Laura Cha Shih May-lung, has 22 members appointed by Chief Executive Leung Chun-ying.
It includes heavyweights such as Levin Zhu Yunlai, the chief executive of China International Capital and son of former premier Zhu Rongji, and many international fund managers, brokers and academics.
They will meet every two months to discuss how to promote Hong Kong's financial services sector overseas and to advise the government on how to develop the sector.
The government has said the establishment of the council follows overseas practices such as the City of London Corp, which supports and promotes London and its financial services worldwide.
The funding model of City of London, however, is much more transparent than Hong Kong.
The City of London has three funding sources - a portion of business rates collected from the city; an annual grant of £15 million (HK$185.3 million) from the Bridge House Estates, a charitable trust set up to maintain bridges; and City's Cash, which is a combination of funds including endowments accumulated over the centuries.
The Financial Services Development Council has no power to collect any business rates or charges because it is a private company.
Obviously, Hong Kong has nothing like the Bridge House Estates or the City's Cash. It, therefore, could not copy the City of London funding model.
Secretary for Financial Services and the Treasury Chan Ka-keung said the government would second staff to the council for the first three years. After which, it would have to find ways to finance itself.
Because the council is using taxpayers' money for its initial operations, it should be subject to taxpayers' scrutiny. The taxpayer has the right to know what will happen in three years - will taxpayers have to continue to pay for its operations, or will it be supported by private donations.
If it is to depend on taxpayers' money, how much will it cost and will it be value for money?
And if it were to rely on private donations, what will it do to prevent a conflict of interest?
When the government set up the Mandatory Provident Funds Schemes Authority in 2000, it provided HK$5 billion in one-off funding as seed money.
The Financial Reporting Council, set up in 2007, as well as the more recent Financial Dispute Resolution Centre, established last year, also had a clear funding model announced before they kicked off.
Before doing any promotion or roadshows, Cha and her council members should first discuss who pays the bills in future.