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W(B)L 51-7406
Secret
Flag G
year period (i.e. a little under 9 per cent
per annum).
10. The Ministry of Defence maintain that
these figures do not bear out the Governor's
claim that a price inflation of roughly 10 per
cent per annum would be provided for.
11. Comment on Ministry of Defence's Argument
There is some substance in the Ministry of
Defence's argument as will be seen from the
figures in paragraph 8 above.
•
those figures However, they
do allow for an overall increase of nearly ₤
over the five year period and this does not
seem unreasonable.
12.
The following arguments might also be
deployed in support of theGovernor's revised
offer:
(i)
(11)
Under the existing agreement, Hong Kong
contributes £5 m. per annum towards
total annual budgetary Garrison costs
estimated in 1966 at £16 m, i.e. 31 per
cent of the total budgetary cost. The
figure of £7 m. per annum represents
35 per cent of the total estimated post-
1971 annual budgetary cost of £22 m.
The Governor's offer of £71⁄2 m. would
meet the whole of the estimated recur-
rent local costs of that proportion of
the Garrison required for internal security purposes; and in addition it
would
/provide £870,000 per annum towards the
capital costs. Under the current agree
ment Hong Kong provides £5 m. per annum
to cover recurrent local costs estimated
in 1966 at £4.5 m., beaving £1⁄2 m. as an
annual contribution towards capital
costs.
Secret
/(iii)