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W(B)L. 51-7406
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annually on its own defence and internal
security measures. This sum, together
with the defence contribution, represents
12.25% (the Government's approximately 15% of Hong Kong's/entire
annual expenditure. Although the Colony's
revenue is buoyant, Hong Kong needs to
increase its exports by about 15 per cent
per year if industry is to expand
sufficiently to provide opportunities for
its school leavers in the labour market and
so avert the risk of further disturbances.
Such expansion depends on a continuance of
the present high level of outside investment
in the Colony which inhibits any increase of
taxation to meet increased defence costs.
Though reserves are high (to a large extent
because the Government's ability to spend
has not kept pace with the upsurge of
economic activity since the end of
disturbances in 1967), Hong Kong has very
large commitments towards such future
projects as a public assistance scheme,
expansion of secondary and technical education
housing for squatters and others, the cross
harbour tunnel, extension of Kai Tak airport
and possibly a mass transportation system,
and desalinisation plants and reservoirs to
help meet its needs for water.
8. In considering what is a fair
contribution to its own defence we must, I
think, also take into account the possible
dangers to the continued expansion of
Hong Kong's industry during the '70s and
consequently to its revenues and reserves.
Britain's entry into the E.E.C. may well have
deleterious effects upon Hong Kong's economy.
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/Nor.....