The Director of Audit has recommended that Hongkong Post (HKP) increase postage rates and close post offices that operate at a loss.

The Audit Commission in its latest report disclosed that between 2008 and 2009, 97 of the city's 125 post offices incurred losses ranging from HK$13,000 to HK$6.8 million. The total amount of the losses was over HK$117 million. Among them, 18 earned revenue of less than HK$500,000 while incurring operating losses of more than HK$1 million each. Kwun Tong Post Office lost HK$6.8 million, Mong Kok Post Office lost HK$4.7 million and Kowloon Central Post Office lost HK$3.4 million.

In view of this, the Audit Commission has called on the Postmaster General to conduct regular evaluations of public demand for postal services, taking into consideration the financial viability of individual post offices.

The losses of post offices are largely attributable to underpayment of postage. Auditors checked 1,299 mail items and discovered that the amount of underpaid postage was as high as 38 percent of what it should have been. The report foresees a substantial financial impact of underpayment since postage comprises a significant proportion of HKP's revenue. The Postmaster General has been urged to devise an effective system for detecting and deterring underpayment of postage.

The report also noted that box services provided by HKP are underused. Losses on box services amount to HK$4.9 million in 2008-09. As of the end of last year, about 7 percent of the total 49,565 post office boxes were unused. The report recommended that HKP take expeditious measures to reduce losses in box services.

Some HK$50 million was needed to supplement HKP's fleet of 295 vehicles in 2008-09. The commission estimated the cost of using hired vehicles would be lower than for the post office to use its own vehicles. The report suggested HKP invite private commercial vehicles to deal with the transport of mail.

Apart from implementing practical measures to reduce losses, the report suggested HKP increase postage rates. HKP submitted a proposal to increase postage rates by as much as 9.4 percent in October 2007. The Audit Commission suggested HKP resubmit its proposal to raise postage, taking into account the latest economic outlook.

The report also called on the Commissioner of Inland Revenue to ensure that measures are in place to detect non-payment of stamp duties on property sales. The auditor discovered that the government lost almost HK$54 million on stamp duties between 2005 and 2009.

On another matter, the commission advised the Hong Kong Chinese Orchestra (HKCO) to make better use of its artistic staff. Artistic staff are required under their employment contracts to work 28 hours a week. However, based on a sample check of the 2008-09 duty rosters and attendance records of artistic staff, actual working hours of 20 staff members averaged 703 as opposed to the 1,236 they were expected to work for the year.

In response, the HKCO explained that the minimum of 28 hours per week does not take into account individual practice, or small group rehearsals, nor does it count work done for publicity and outreach, such as individual recitals, media interviews and shooting and meetings.

China Daily

(HK Edition 04/22/2010 page1)