Secret
Hong Kong Defence Contribution
When the Governor made his original offer of £8 million
per annum for the Hong Kong post-1971 defence contribution he
based it on a Garrison of 73 major Army units. The Ministry of
Defence and the Treasury were not satisfied with the offer and
they held out both for annual adjustments to cover pay and price
increases over the period of the Agreement and also for a higher
starting figure than £8 million.
2.
In the light of the latest estimates of the costs of the
Garrison for 1971/72 (based on 63 major Army units) the Governor
has reduced his original offer to £7.5 million per annum. In
all the circumstances, this revised offer seems to be both fair
and reasonable.
3.
(a)
(6)
In support of the reduced offer, the Governor has argued
that "local spending is lower than we had estimated in our
and the direct economic gain to Hong Kong
calculation
from the presence of the Garrison is therefore correspon-
not entirely dingly less". (His letter is far from clear on this point
but it seems that he is referring to the local spending of
individuals as opposed to local expenditure from Army
He assesses this at £1 million.)
Votes.
that "official" local expenditure is also correspondingly
less. (He puts this reduction at £.45 million, but the
actual figure is £.48 million.)
T
4. As a result of the reduction in the Garrison by one major
Army unit, and working on the revised MOD estimates at 1970
prices, the Governor arrives at a figure of £6.55 million a year.
He then says that this takes into account recurrent costs at
Secret
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