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BACKGROUND NOTE
General Constitutional Position
Hong Kong is a Colony, administered by the Governor, assisted by entirely nominated Executive and Legislative Councils, over which he presides. The Executive Council has an unofficial majority. The Governor is required to consult
with it except over unimportant or too urgent matters. But he may act contrary to the Council's advice provided he
reports to the Secretary of State when he does so. The Legislative Council has a majority of official votes if the Governor's own original and casting votes are included.
unofficials are members of the Finance Committee.
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2. The power to legislate rests with the Governor "by and
with the consent of the Legislative Council". The Crown
reserves the power of disallowance and may legislate by Order
in Council.
3. The Secretary of State thus has ultimate responsibility for the Government of the Colony and can direct the Governor
either generally or in relation to particular issues.
Royal Instructions
4. The Royal Instructions describe in Clause 26 certain sorts
of Bill not to be assented to without reference to the Secretary of State. One such is "any Bill affecting the currency of the Colony
Thus any proposed amendment to the borrowing powers of the Exchange Fund must be referred to the Secretary
of State. But the Legal Adviser has said that the Secretary of State could agree to an amendment of the Exchange Fund Ordinance so as to allow Legislative Council to make future amendments by resolution and the Royal Instruction referred to above would
thus be overridden i.e. the Secretary of State could transfer his powers of control over this matter to the Legislative
Council.
5.
Clause 24 of the Royal Instructions provides that only the Governor may propose a resolution, the object or effect of which is to dispose of, or change, any part of the Colony's revenue.
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