- Expresses its appreciation for the work of the Special Committee on the Scale of Contributions and Currency Problems;

- Accepts the conclusions and recommendations of the Report of the Special Committee, and adopts the scale of contributions proposed therein, together with the principles to govern changes in the FAO scale of contributions to allow for changes in the scale of contributions of the United Nations, factors introduced by the admission of new members, and provision for and adjustment in cases needing temporary relief;

- Determines, in conformity with the above, that for the financial year 1950 the assessments of new members shall be used to the extent equitable to reduce for that year the contributions of members warranting immediate relief, with particular reference to Austria, China, and Finland, the amount of the assessment for each new member and the amount of the reduction for each member receiving relief to be determined by the Conference;

- Determines that, after the financial year 1950, the adjustment referred to as "Step 7" in Appendix III, Report of the Special Committee on Scale of Contributions and Currency problems, shall be omitted from the computation of the scale, and that appropriate adjustments shall be made for countries, such as China, for which special relief is warranted; and

- Instructs the Special Committee to study other changes that might advantageously be brought into the scale, taking into account the principles and procedures outlined in its Report and the views expressed by the various delegations, and to present a revised scale to the Conference; in particular, in view of the findings of the General Assembly of the United Nations that there is room for closer relationship between the assessment of member states in the contributions of the United Nations and of the Specialized Agencies, it shall seek the recommendations and advice of the Committee on Contributions of the United Nations.

- Decides that the following shall be the percentage contributions of the new members of the Organization during 1950:

- Decides to apply "Step 7" to the contribution of the Netherlands (which formerly represented not only that of the Netherlands but also of Indonesia) so that it will be 1.59 percent for 1950; and

Noting that the above action would result in a total scale amounting to 102.43 percent, further decides

- that the assessment of Finland will be reduced to 0.20 percent;

- that the assessment of Austria will be reduced to 0.34 percent;

- that the assessment of China will be reduced to 4.35 percent.

(1) that Commission III, at the beginning of its work, set up a committee to undertake a study of the budget;

(2) that this committee should forthwith direct its attention to: (a) the income side of the budget, (b) all costs of an administrative character, and (c) the balancing of the budget;

(3) that Commission II direct its attention to the allocation of funds to the projects which constitute the programs of work as well as the desirability of such projects taking as the basis of its deliberations the total of the sums allocated in the draft budget for the needs of the technical division and the regional offices; and

(4) that the Budget Committee and Commissions I and II should, from day to day, exchange information on the nature of their deliberations which would affect the budget.

(1) Income

In the light of the decisions adopted regarding the scale of contributions for 1950, and in view of the general financial situation of the Organization, the aggregate amount of contributions to be paid by member governments should be amended to $5,000,000. In this connection, the Delegate of the United Kingdom reserved the right to reopen the question of the amounts to be paid by member governments toward future budgets, irrespective of the scale of contributions. He pointed out that contribution percentages can be applied to any total figure that might be decided upon.

The Committee recommends that an ad memoriam item be included to cover the possibility of additional contributions from new members.

As regards miscellaneous receipts, it is recommended that details be deleted and that the total figure for that item be reduced from $32,000 to $30,000 and presented without elaboration. This reduction would follow from an anticipated decline of the income from investments, which, however, should be to some degree offset by additional sales of publications. After discussing the methods of accounting for amounts reimbursed to FAO by other organizations for the loan of personnel, it is recommended that the position taken by the Committee on Financial Control be implemented, that such receipts should accrue to miscellaneous receipts and not to individual chapters of the budget.

The Committee is of the opinion that the item relating to "Work Covered by Special Grants" should specifically mention the Conservation Foundation grant.

Thus, the total on the income side of the budget would be $5,030,000.

(2) Expenditure

In order to balance the budget at $5,030,000, a new item should be inserted on first page of the Budget: Balance of the Budget - $30,000.

Salaries. The Committee takes note of the Director-General's intention to increase certain lower-grade salaries, if necessary, without modifying the aggregate appropriations for the corresponding sections of the budget.

Chapter I--Council. The Committee recommends that provision be made for only two sessions of the Council during 1950, the estimate being reduced from $70,000 to $52,500, a saving of $17,500.

Chapter I--Regional Pre-Conference Meetings. It is recommended that the proposed allotment of $40,000 for regional pre-conference consultations be reduced to $30,000.

Chapters IV and V. The Committee, noting that the post of internal auditor is now carried in the Budget and Finance Branch, recommends that the Director-General consider the desirability of transferring that post to Chapter III--Office of the Director-General, Administrative, Financial and Personnel Policies.

It also suggests that in future budgets some consideration be given to a rearrangement of expenditures in Chapters IV and V, and in particular that relating to Documents Reproduction and Distribution, so that the cost of internal publications can be more easily discerned.

At some future date it may be desirable to request an analysis and explanation of certain administrative expenditures which are contained in chapters other than Chapter IV, and also to examine the question of administrative and general operational expense.

Chapter VI. The Committee has considered the proposals of the French Delegation (C49/II/25) requesting that a more detailed presentation be given of the program and budget of the technical divisions. It agrees with the intent of the French proposals, on the understanding that cost accounting to relate expenditure to project allotments is not intended. Only such analysis should be made as will assure reasonable accuracy of project figures shown in the Budget and Program of Work, the purpose of a project presentation being to facilitate the examination of the Program of Work. The Committee therefore recommends that the French proposals he forwarded to the Director-General for his consideration along with those of the Australian Delegation (49/II/Ag/17) so that, while also bearing in mind the desirability of co-ordination with the Consultative Committee on Administrative Questions of the United Nations and Specialized Agencies, he can make recommendations to the Committee on Financial Control for submission to the Council at its next session.

With the exception of the proposals with regard to the Forestry Division and the utilization of the residual assets of the International Institute of Agriculture, which are dealt with below, no proposals which would result in amendments to the budgets of the technical divisions have been submitted formally by Commission II.

The proposals submitted in document C49/II/F Panel 15, with regard to additional work to be done by the Forestry Division, would result in an increased expenditure of $13,000. The Committee feels that it cannot recommend the provision of additional funds to the Forestry Division for this purpose and recommends that the funds be found from savings made by the Forestry Division out of its present allocations.

In order to maintain the Rome Library during 1950, the Director-General proposes to use a part of the net cash balance resulting from the liquidation of the former International Institute of Agriculture in the amount of $30,000 (C49/III/22). The Committee recommends that this proposal be approved.

With regard to a proposal submitted by Commission II that a further amount of $9,500 of the net cash balance resulting from the liquidation of the former International Institute of Agriculture be used to finance the Legislative Service in Rome, the Committee, having been informed that such a service is of a desirable and continuing nature, thinks it should be financed out of the General Funds of FAO and not as proposed by Commission II. It recommends that funds for the Legislative Service be provided from savings elsewhere, and that the balance of IIA funds be earmarked to help maintain the Rome Library, if necessary, until the Organization is financially settled in Rome in 1951.

The Committee feels some concern over the amounts proposed for travel. It appreciates that one of the main functions of the Organization is to send representatives on technical missions to various countries, but recommends (a) that the Director-General be requested to review the scale of per diem allowances with a view to establishing differential rates according to the level of costs of maintenance in different countries; such a review should take into consideration methods recently adopted by the United Nations; the decisions taken should be reported to the Committee on Financial Control; and (b) that international travel be cut by $2,000.

The Committee is also concerned over the possibility of excessive expenditures resulting from the apparent overlapping of the functions of the Economics, Marketing, and Statistics Division and the Distribution Division. Having heard an explanation by the Deputy Director-General, and having been informed of a statement on this matter in the Report of Commission II (C49/II/34), the Committee associates itself with this statement.

The Committee notes that the proposed budget for the Information Division does not provide for a Senior Information Officer in the Near East Regional Office, as formerly included in the budget. It also notes that this question has been discussed in Commission II and that the Director-General, in conjunction with the regional representative, will review the necessity of increasing the effectiveness of the information service in that region, including the possibility of attaching an information officer to the Near East Regional Office.

The Committee notes that the Information Division budget has been amended to include the Documents Sales Unit in the information Division budget, and recommends approval of this amendment.

Chapter VII. The Committee notes that, as a consequence of the recent devaluation of certain currencies, there will be some savings in the budgets of regional offices, but that the secretariat is not yet in a position to appraise these savings. The Committee therefore recommends that the budget proposal in Chapter VII be accepted.

Income Tax. The total amount provided in the draft budget for income tax is only $135,970. Taking note of information received since the preparation of the Budget, the Committee recommends that the provision for income tax be increased by $20,000 to $155,970, this increase being distributed among the relevant sections of the Budget.

Preliminary Funds for Technical Assistance. The Canadian and United States Delegations have indicated that, although they appreciate the importance of preparatory work on the Technical Assistance Program, they deem it inadvisable to use funds from the Working Capital for this purpose, as proposed, for two reasons: (a) If reimbursement is anticipated from funds made in the future for the Technical Assistance Program objection would have to he raised since such action would constitute an obligation on funds which are not yet authorized or appropriated. (b) The Working Capital Fund, if not reimbursed, will be lower than is desirable, particularly since the determination to move the Headquarters of the Organization to Rome will require the allocation of surplus funds for that purpose and thus create additional demands upon the Working Capital Fund for current operating expenses pending receipt of members' contributions.

The Committee agrees with these views. While it is unable to suggest any particular saving which would meet such expenditure, it does not feel that the Working Capital Fund can be used. This Fund is already at its lowest possible size in order to meet the general financial needs of the Organization, and there is no certainty of any advance being refunded.

The Committee therefore recommends that the Director-General be authorized by the Conference to carry out, through the technical divisions as far as practicable, any work of this kind which he considers necessary, even though this may involve slowing down the programs of work of the technical divisions during 1950.

Commodity Problem Expenditures. The Committee has before it a letter from the Chairman of Commission I regarding possible expenses that may grow out of Conference action on commodity problems. It has no information on the nature of such expenses, but notes that the Distribution Division has as one of its functions to provide secretariat services for any commodity committees established by FAO through the Council or Conference, and the Economics, Marketing, and Statistics Division to undertake economic studies on distribution problems.

Summary. To summarize, the Committee recommends the following savings:

to be balanced by the following additional expenditures:

- Adopts the Draft Budget for 1950 (C49/4), subject to the following amendments proposed in the Report of Commission III:

- Authorizes the Director-General to incur such preliminary administrative expenditure in furtherance of the expanded Program of Technical Assistance as be may consider necessary, the funds being found from within the amounts voted in the respective chapters of the approved Budget for 1950, it being recognized that this may involve some adjustment of the work of the technical divisions in 1950.

Considers that the level of the Working Capital Fund makes it inadvisable to draw upon it for ordinary recurring expenditures, and observing that over the next two years there will be extraordinary expenditures by reason of the removal of Headquarters of the Organization to Rome;

- Requests the Director-General to seek and take every opportunity for economy which may be afforded by the establishment of the Headquarters of the Organization at Rome, and to frame his budget for 1952 accordingly.

- Directs the Council to set up a Special Working Party of Experts to review Financial Regulation XI, governing the Working Capital Fund, in the light of the practices of the United Nations and other Specialized Agencies, and, after studying the proposals put forward by the Australian and French Delegations and such other proposals as may be offered, to submit a report to the next session of the Council; and

- Directs that the annual audited accounts include a statement of the respective credits and debits of member countries in the Working Capital Fund.

"4. Any savings which accrue during the operations of a financial year may be transferred by the Director-General to the Contingency Reserve Fund at any time; however, the transfer of such savings from the Contingency Reserve Fund shall be subject to the provisions of paragraph 3 of this Regulation.''

Taking note of the communication from the Secretary-General of the United Nations, which states that the reservations made by the Forth Session of the Conference constitute a bar to FAO becoming a member organization of the UN Pension Fund;

Considering that the advantages of adherence to the UN Pension Fund outweigh the considerations which prompted the reservations governing FAO membership as expressed by the Fourth Session;

Realizing the desirability of a joint pension plan for the United Nations and Specialized Agencies;

- Authorizes the Director-General to negotiate and enter into agreement with the Secretary-General of the United Nations for FAO's entrance into the UN Pension Fund with the same benefits and substantive provisions as those established for the UN Pension Plan as soon as possible but not later than 1 July 1950, provided that the individual rights in the Staff Provident Fund of staff members eligible for the Pension Fund be liquidated by purchase of retroactive service or by payment to the staff member at the time of entrance into the UN Pension Fund, and subject only to such amendments of an administrative character as may be necessary equitably to effect FAO entry into the UN Pension Fund and provided further that suitable arrangements be made to reimburse UN for necessary administrative services required in connection with entering and participating in the UN Pension Fund.

- Desiring to impose a direct assessment on staff members of the Food and Agriculture Organization which is comparable to national income taxes, in order that they may not constitute a tax-privileged group of international public servants, and in anticipation of early action by all member governments to accede to the Convention on Privileges and Immunities of the United Nations (if they have not already done so), or to exempt their nationals employed by Specialized Agencies of the United Nations from national income taxation with respect to salaries and emoluments paid by the Specialized Agencies, or otherwise to grant relief from double taxation to such nationals;

- Resolves

1.

2. That all other payments to staff members (including but not limited to installation allowance and travel expense) shall be exempt from this assessment;

3. That the Organization shall adjust salaries paid at a "net" (tax-free) rate to a "gross" (subject to assessment) rate in order to ensure continuation of staff members' pay at substantially the current rates;

4. That the assessment shall be calculated according to the following rates:

5.

6. That the contribution by the staff member and the Organization to the Provident Fund (or the Pension Fund) shall be made at the equivalent net salary rates in effect for persons without dependents;

7. That the assessment computed under the preceding provision shall be collected by FAO by withholding it from salary payments; no part of the assessment so collected shall be refunded because of cessation of employment during the calendar year;

8. That the amount of the assessment shall be calculated according to the annual rate of the income paid for each salary period with no refunds for partial-year employment and no yearend adjustments because of increase or decrease in assessable income during the year;

9. That all funds collected under this assessment shall be treated as casual revenue of FAO, with respect to both the accounting records and the budget;

10. That the above action is taken on the assumption that member governments will take the necessary legislative action to exempt their nationals employed by FAO from national income taxation; and

11. That the Director-General is authorized to establish a staff assessment plan, effective 1 January 1950, or at such other date as he may determine in the light of developments effecting the attainment of the stated purposes of the Staff Assessment Plan.