The Housing Authority's cash balance in the 2003-04 financial year stood at $17.3 billion, a substantial fall of $10.3 billion compared with the previous year.

Addressing the authority's annual special open meeting today, its chairman Michael Suen said there is a pressing need to address its financial difficulties.

The authority's first and foremost work in the coming year is to resolve its structural financial problem to formulate a set of comprehensive arrangements to sustain the development of the public housing programme.

Negotiations with Government underway

The Housing Department has launched negotiations with the relevant Government Bureau, and it is hoped an agreement on some matters of principle will soon be reached.

The authority will set up a budget committee to better monitor and control costs and expenditures to ensure more rational use of financial resources.

"We will continue with our efforts to explore new sources of revenue and reduce expenditure, to streamline the organisation, to lower the cost and to enhance the efficiency," Mr Suen said.

Rent adjustment study another priority

He said another priority job is to study the rent adjustment mechanism.

Noting authority members and Legislative Councillors had discussions on rent policy, he said the majority of lawmakers who spoke in the motion debate agreed the provisions on rent adjustment in the existing Housing Ordinance should be amended.

"We will analyse and study the valuable opinions expressed by different quarters to formulate a rent adjustment mechanism which was objective and clear, and can provide a closer link to tenants' affordability and support the long-term sustainability of the public housing programme," Mr Suen said.

Referring to plans to enable the authority to divest its retail and car-parking facilities through public listing, Mr Suen said the authority has already appointed the Chief Executive Officer and the Chief Financial Officer for the new management company.

"They will work closely with other professional consultants to ensure successful completion of the divestment project and the re-organisation exercise," he said.