In order to meet our vision of helping all families in need to gain access to adequate and affordable housing, we are fully committed to the followings:

• To provide affordable quality housing, management, maintenance and other housing related services to meet the needs of our customers in a proactive and caring manner;
• To ensure cost-effective and rational use of public resources in service delivery and allocation of housing assistance in an open and equitable manner; and,
• To maintain a competent, dedicated and performance-oriented team.

Our core values are: Caring, Customer-focused, Creative and Committed.

The Housing Authority has 9,114 staff (as at 31 March 2006 ) working towards achieving our role as Hong Kong's sustainable public housing provider.

As of March 2006, 68 projects were under initial development and 35 projects (around 60,000 units) were under construction.

We aim to provide safe and affordable housing for those who cannot afford private rental housing - and to do it responsibly, efficiently and as cost-effectively as possible. Such a provision over the years is regarded as an indirect contribution to the society. People in genuine need would have affordable housing so that they can spend more of their income on health, education and other aspects to contribute to their quality of living, and in turn to the prosperity of our society.

Supporting the vision and mission of the Housing Authority, quality financial management through a 'best practice' approach remained our key focus in 2005/06. We continued to explore the opportunities to improve and strengthen our financial and risk management process, in order to provide maximum financial and business value in all our activities.

The Housing Authority's cash balance at end of 2005/06 was $50.6 billion, representing a substantial increase from last year. This was mainly due to the cash received from the divestment of retail and car park facilities in November 2005 (see Major Developments ).

The total capital expenditure of the year 2005/06 was about $3.8 billion. This is around 50% of the previous year's expenditures. The lower capital expenditure this year was mainly due to the slow down of public housing programme.

In September 2005, we have revised our allocation policy for non-elderly one-person applications and set aside an annual quota of about 1,000 to 2,000 flats. This represents about 8% of the total number of PRH units available to all Waiting List applicants. Further, a point-based system has been introduced to rationalize the allocation of PRH flats to these applicants. The higher the points, the earlier the PRH units are offered to the applicant. This system is expected to efficiently allocate PRH units to those who need it the most.

In August 2005 we launched the sale of the last phase of the Tenants Purchase Scheme (TPS) units. A total of 23,290 flats in five public rental housing estates (including Cheung Fat Estate, Fu Shin Estate, Nam Cheong Estate, Long Ping Estate and Tsui Lam Estate) were put up for sale in various stages.

To facilitate better mobility in the property market, in May 2005 (ie a few months before we started selling the last phase of TPS) we decided to allow Home Ownership Scheme (HOS) and TPS flat owners to pay the premium after the lapse of the first two-year alienation restriction period.

We also ensured optimal recovery of PRH units and reduced rent arrears and vacancies through the followings:

• Implemented better tenancy controls involving increased home visits by the District Tenancy Management Office and continued investigation of cases of tenancy abuse by the Task Force Against Abuses of Public Housing Resources.
• Introduced a set of measures to reduce the rent arrear:

• Initiated vacancy reduction measures such as shortening the turnaround time between housing offers and decreasing the acceptance formality stage from 14 to 10 days.

We work at improving our relationships with contractors and property service agents through enhancement of tendering practices and introduction of new initiatives. We undertook the following activities to ensure better procurement practices:

• Improvements to our Premier League Scheme of new works building contractors as well as a review of our Guide to the Registration of Contractors help to ensure the quality, cost-effectiveness and timely delivery of our operations;
• Pre-qualification exercises where specialist expertise is required (eg Kwai Chung Flatted Factory site project);
• Launched the Modified Guaranteed Maximum Price (MGMP)/Open Book Contracting Model in a pilot project to generate cost-saving incentives from contractor and integrate contractor's expertise and innovation thus enhancing design and buildability of the project;
• Providing opportunities to contractors exceeding qualifying levels on a semi-annual basis;
• Assessment of tenders of property service contracts based on a two-envelope scoring system which takes into account both technical scores (including contractors' past performance) and management proposals; and,
• Introduction of the e-payment card for easier and quicker monthly rents payment processing. The wider adoption of e-payment is expected to save up to HK$20 million each year in operating and staff costs.
  

To ensure quality in the construction of our estates, we have established the Independent Checking Unit (ICU) in 2000 to conduct third party building controls for all of our new projects. The independent checking covers a complete cycle of any typical new construction project, starting from demolition of old buildings and ground investigations through construction, commissioning, and hand-over to occupation of existing building. Before any work can commence on our sites, ICU approval on the design submission and consent for the commencement of construction works must be obtained. The ICU then monitors the construction process based on Building Department's standard methods. This system has been proven to be very effective in quality control, particularly with regard to early identification of problems and implementation of timely corrective actions for complex contracts. We are currently extending the system to cover improvement and alteration works on our existing building stock.

We have also introduced a flexible renting mechanism for shopping centres and car parks that are not included in Link REIT. Short-term tenancy has been allowed on those premises so as to minimize vacancy and maximize our asset value. Some of those areas with high vacancy were transformed to community or recreation facilities.

We also widely use information technology system to streamline operations and enhance efficiency of our service. The Revenue Management Module of the first Phase of our Estate Management and Maintenance System (EMMS) and the Housing Construction Management Enterprise System (HOMES) were introduced at all our estates and new construction respectively. The HOMES facilities the management of our construction programmes and projects while the EMMS enables the payment of rent at any collection office, making it significantly more convenient for our tenants. The introduction of an e-Payment card has also appreciably improved efficiencies in rent collection.

Our improved financial position has enabled us to re-invest into our existing housing estates by rolling out upgrade programmes such as the Total Maintenance Scheme. Commenced in February 2006 and worth HK$6.3 billion, the scheme provides better service to our tenants. A set of technical criteria was created in conjunction with both local and international specialists to assess the condition of older estates and provide options for their preventive maintenance, restoration as well as the strengthening to ensure their structural safety. We have also undertaken comprehensive structural investigations for the older estates and enhanced their preventive maintenance, restoration and improvements. As a result of these investigations, we announced in March 2006 that So Uk Estate would be cleared. While the 16 blocks involved are all structurally sound, the extensive repairs required would, apart from the nuisance and disturbance to tenants, not be cost-effective. As such, the 5 316 flats will be cleared in two phases in 2008 and 2011. The life of Sai Wan Estate however will be prolonged for a further 15 years, with the necessary repairs being carried out as part of our routine maintenance programme.