1. 1 Forums on Lump Sum Grant Review Forum Three 9 May 2008

2. 2 1Progress Update Core Group’s Meeting with LSG Independent Review Committee – 14 April 2008 Briefing Session on Subvention Inspection – 21 April 2008 Seminar organized by LSG Independent Review Committee – 29 April 2008 Coming LegCo Panel on Welfare Services – 16 May 2008 Core Group’s Second Meeting with LSG Independent Review Committee – 28 May 2008 Agency Seminar with LSG Independent Review Committee – June 2008

3. 3 Brief recap on major views of Agency Members in Forum One & Two Issues of concerns for the sector: Basic principles & spirit of LSG - flexibility - partnership between SWD & NGOs - transparency Irregularities & inconsistencies in actual implementation

4. 4 Brief recap on major views of Agency Members in Forum One & Two Issues of concerns for the sector: Funding level -the true benchmark -adequacy of funding (i) use of mid-point allocation (ii) notional staffing establishment -central administration and supervisory support Use of LSG reserves Accountability & corporate governance of NGOs

5. 5 2Focus of today’s discussion 2.1Impact of LSG on the quality of welfare service 2.2Link between the subvention system & welfare planning framework 2.3Complaints-handling mechanism 2.4Recommendations to the LSG Independent Review Committee Other issues for sharing: -Use of the additional recurrent subventions of $200M & the interim one-off subsidy of $200M -Use of SOG surplus

6. 6 LSG Independent Review The Terms of Reference of the Committee: 1.To review LSG with a view to assessing its overall effectiveness and identifying areas and scope for improvement covering but not limited to- a)overall implementation; b)flexibility, efficiency & cost-effectiveness in the use of public funds and in service delivery by subvented NGOs; c)the accountability and corporate governance of subvented NGOs; d)the impact of the LSG on the quality of welfare service; and e)the handling of complaints related to implementation. 2.To report findings and make recommendations to the Secretary for Labour and Welfare

7. 7 Impact of LSG on the quality of welfare service Different points of view from different parties: Agencies: Agencies have already fulfilled FSAs, SQS and all kinds of financial & audit reports. Indeed, the unit costs of various services have dropped in the past years.

8. 8 Impact of LSG on the quality of welfare service Staff: Staff members have dissatisfaction on salary, use of contract, heavy workload and not concentrating on ‘normal’ work, like writing proposals. Users: Users have complaints on high turnover of workers, fee-charging & reduction of ‘service’ time and/or attention.

9. 9 Link between the subvention system & welfare planning framework According to the LSG Manual, the Govt should put in place an integrated & forward-looking planning framework comprising long term Strategic Directions, Medium Term Plan for individual programme areas and service development and delivery of Annual Plans by SWD & NGOs. But in reality, such a robust planning mechanism does not exist…….. Moreover, an integrated planning at district level seems to be missing too……..

10. 10 Complaints-handling mechanism How to solve complaints / disagreements? According to the Terms of Reference of the LSG Steering Committee, the Committee is “to receive representations from NGOs, staff and service users”, which implies a very limited role in handling complaints. The present complaint-handling system seems to be a mechanism more for complaints against agencies’ management. The existing complaint-handling mechanism needs much improvement, in particular, the scope as well as the mandate/authority needs more specification.

11. 11 Complaints-handling mechanism Proposed measures for improvement: -To set up an independent (from the Department level) mechanism under the Bureau to handle complaints from all stakeholders including employees, agency management and users, etc -Must have clear rules and scope to guide the process of investigating the complaints and to ensure fair hearing process -The mandate, authority, accountability and the power of the complaint-handling mechanism has to be clarified

12. 12 Recommendations for Improvement 1.On the funding level, numerous areas have to be looked into: 1.1The true benchmark – to give back to NGOs the ‘promised’ and ‘contracted’ level of subvention 1.2To review adequacy of funding level & then set up review mechanism on: (i)use of mid-point allocation - the growing maturity of the work force of the sector - the ‘market’ demand of different posts - the variation among different services (ii)notional staffing establishment for each key service in face of growing complexity of problems and service requirements (iii)salary adjustment/inflation level (iv)core service extension/improvement – fair calculation (v)central administration & supervisory support given to NGOs for different services, in particular new services

13. 13 Recommendations for Improvement On the funding level, numerous areas have to be looked into: 1.3To redefine the present ‘reserves’, mark out the sum due to snapshot staff as provisions for PE 1.4To set up criteria & a mechanism in assisting NGOs facing financial difficulties, and consider whether there could be any ‘opt-out’ clause for NGOs

14. 14 Recommendations for Improvement 2.To reaffirm the basic principles & spirit of LSG : On flexibility, has to clarify the extent → in particular, the flexibility given to agencies in the deployment of funds to meet the service needs in the Preamble must be reconfirmed (to correct the contradiction mentioned in Chapter 2). The flexibility should be agency-based cross-service.

15. 15 Recommendations for Improvement To reaffirm the basic principles & spirit of LSG : The definition of FSA related activities must be looked into on an annual or biannual basis to gauge the relevance of output indicators to meet the ever- increasing service needs, taking into consideration district variations.

16. 16 Recommendations for Improvement To reaffirm the basic principles & spirit of LSG : To have an overview on all the irregularities & inconsistencies that depart from the LSG principles and tidy them up -To clarify with NGOs on non-transparent areas, such as allocations for new services -To sort out all the inconsistencies in actual implementation (such as financial and accounting requirements)

17. 17 Recommendations for Improvement 3.To improve the partnership relationship between SWD and NGOs: Should continue the present LSG Steering Committee with representatives from different stakeholders – have to review & redefine its TOR and consider looking into service specific improvement Should make joint efforts in promoting that adequate accountability mechanisms for NGOs are already in place; and in setting up an improved complaints-handling mechanism Should make joint efforts linking up the subvention system with the welfare planning framework -Long-term strategic directions to guide policy development -Medium-term plan to define service priorities for each service target area -Annual or Bi-annual plan to re-affirm/review objectives and scope of FSA

18. 18 The use of the additional recurrent subventions & the interim one-off subsidy and the use of SOG surplus -The allocation of additional recurrent subventions of $200 million is to “help strengthen NGOs’ central administrative capacity for greater accountability & effective delivery of welfare services” -The allocation of $200 million from LF is to “reinforce NGOs’ organizational re- structuring and service reengineering efforts”